Mislabeling construction workers as contractors draws federal scrutiny

men working at construction site

From the Houston Chronicle —

Betty Campbell, the Labor Department’s deputy regional administrator for wage and hour in Dallas…said the pervasive practice of misclassifying employees as independent contractors deprives them of the right to earn minimum wage and overtime as well as protection offered by such federal laws as the Family and Medical Leave Act and Americans with Disabilities Act.

Misclassified workers are also forced to pay the employer portion of the Social Security taxes, she added. And if they’re injured at work, they have no workers’ compensation. Or if they lose their job, they’re denied unemployment benefits….

A study last year by the Workers Defense Project and the University of Texas found that more than 40 percent of construction workers in Texas are either classified as independent contractors or paid under the table. The study, based on nearly 1,200 interviews with construction workers, estimated that payroll fraud alone represents an estimated $54.5 million loss in unemployment insurance tax revenue.

Campbell said it’s not just workers who are hurt by misclassification. Employers who play by the rules can’t compete when some employers don’t pay taxes or overtime.

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