According to some estimates, $2.6 billion in payroll tax fraud is lost annually, while Nashville construction projects add up to more than $2 billion.
Victor White, Guest columnist
Dec. 30, 2019
In November, a seldom-covered but far too common crime surfaced in Nashville’s news media: the case of wage theft at a Metro Nashville Public Schools-funded construction site.
A subcontractor working on the project allegedly refused to pay a local group of concrete workers, robbing them of $43,000 in wages for their work at a local school. These laborers have been calling attention to the theft for weeks and finally brought their case to MNPS at a school board meeting.
Members of the Southeastern Carpenters Regional Council were proud to stand with our brothers fighting for fair wages at the meeting, but the problems we face in the construction industry go well beyond one case of wage theft in Nashville.
Fraud is rampant across construction industry
The construction industry today is fundamentally built to allow rampant payroll tax fraud, wage theft, workers’ compensation premium fraud and worker misclassification. At each construction site a general contractor hires a subcontractor to manage different jobs: laying drywall, putting down concrete, or installing plumbing and lighting. Each of those subcontractors hires a labor broker to recruit a team of workers to get the job done. Each subcontractor competes for bids, promising they can get the job done for the least amount of money.
Many subcontractors recruit labor brokers they know will cut corners and trim costs. Sometimes, as in the case of the concrete workers, the subcontractor will fail to pay laborers and outright steal their wages. Other times subcontractors will classify workers as independent contractors, committing payroll tax fraud by avoiding paying taxes on their employees. These schemes cause law-abiding construction employers to suffer as they are underbid by rivals who keep costs down through breaking the law. …
Beyond the rampant fraud that is allowed to continue, the lack of oversight and regulation on construction sites in Nashville led to the largest rise in construction-related deaths over a 2-year period than any time in the last 30 years.