Reporters at The News & Observer in Raleigh, N.C. and the Star Telegram recently completed an investigation that revealed that many construction workers are being classified as contractors a tactic that is illegal.
By treating workers as independent contractors rather than employees, the company is cutting corners. The Internal Revenue Service and Department of Labor are the ones who should be having the final say on how to classify a worker.
As funds from taxpayers flow into private companies, developers use the money for financing new roads, bridges and housing. The subcontractors are then hired to complete this construction work. Unfortunately, many of these subcontractors treat employees as independent contractors rather than employees. This misclassification was investigated in seven states, including Florida.
A yearlong investigation by the Miami Herald and McClatchy Newspaper1 found that unethical contractors were able to bid lower on some projects because they were ignoring labor laws and thus avoided paying state and federal taxes. When workers are misclassified, they will end up having to deal with the taxes themselves.
About one in five Florida companies wrongly treated their workers as independent contractors.
Incorrectly classifying these employees is costing taxpayers money, as well as forcing companies that abide by the rules to miss out on jobs. Worst of all, this misclassification is affecting workers who are injured on the job.
In Florida, contractors are required to purchase a workers compensation insurance policy for their employees. To get around high premiums, a facilitator will set up a shell company with a vague name and use it to purchase a cheap workers compensation policy. The facilitator will then rent the shell company’s name and insurance to subcontractors without insurance. The uninsured subcontractors will present this insurance to general contractors as proof of coverage. The majority of their employees though and are kept off the books and thus not protected if they are injured.2
According to the Miami Herald, at least 12 workers were injured on the job and had to go to workers compensation court because the company they worked for had hired a facilitator to handle their workers compensation policy.
A workers compensation lawyer at Gordon & Partners are committed to fighting for the rights of injured workers. If you or someone you love has been injured in a construction accident, our personal injury lawyer s can help you fight for the compensation you deserve.