Falsely claiming to be a contractor or employee of a webmaster

Government agencies in some countries are more likely to hire a person who is claiming to earn in $, have paypal income. So some paypal account holders find that the government agencies are falsely claiming that various high status well connected housewives, scammer students and other frauds who steal data, do no computer work are working for them. It can be legally proved that there is no connection at all, yet all the frauds get government jobs with monthly salary only for making fake claims, while the hardworking paypal account holder is slandered, criminally defamed as being idle.
What is the best way the paypal account holder can ensure that no one falsely claims to be associated with them, misleads government agencies, internet companies?

You can't find 100% protection for anything, not for this case. Everything is on PayPal holder. If something is fishy for him/her, they must give up. No matter how attractive is money.

Many people are doing this bad practice unfortenally.

There are all sorts of scammers online, you need to be very careful. You should never share your data online.