A recent investigation by the Star-Telegram and The News & Observer in Raleigh, N.C. has revealed that construction laborers are being treated as independent contractors – a tactic that is costing taxpayers money and failing to protect workers.
Treating workers as independent contractors is not a decision that a company owner should be making, the Internal Revenue Service and Department of Labor should have the final say in worker classification.
Since 2013, federal and state governments have been using taxpayer money to start construction projects. The funds flowed into private companies as developers used money for financing to build housing, roads, bridges, etc. Subcontractors were then hired to complete construction work – although some of these firms followed the law and treated employees as workers, others did not. These ‘other’ companies treated workers as independent contractors, which left workers having to settle their taxes with Uncle Sam.
In Texas, the rate of classification was nearly 40 percent, more than double the rate in Florida; upwards of 4,900 workers were misclassified. The investigation estimates that more than 316,000 workers are misclassified in the Lone Star State.
All in all, Texas taxpayers lose about $1.2 billion in payroll tax revenues when companies mislabel workers at independent contractors.
By mis-classifying their workers, companies are able to shave off nearly 20 percent from their bid, which gives them an edge over competitors who follow the law. Unfortunately, many contractors do not know much about labor laws that govern federal projects.
Being classified as an independent contractor means that when workers were hurt on the job, they were not covered by workers’ compensation. Construction is considered the most dangerous industry in the U.S. and thousands of workers are injured each year.
Unfortunately, the investigation goes on to note that there is lax enforcement from the state and federal government on penalizing companies who are using these methods to cut corners.
The workers’ compensation attorneys at Simien & Simien are committed to fighting for the rights of injured workers.
If you or someone you love has been hurt in a construction accident, contact our firm for a free review of your claim.