Feds, Florida reach deal on construction industry rip-off

Posted by National Alliance for Fair Contracting on

BY NICHOLAS NEHAMAS
01/13/2015 7:39 PM

 

Taxpayers were cheated.

Workers were swindled out of a fair shake.

Law-abiding businesses were forced to cut corners or go belly up.

A year-long investigation by Miami Herald and McClatchy Newspapers published in September found all this and more in Florida’s construction industry during the recession.

Publicly available documents and interviews with workers around Florida showed that contractors broke state law and cheated on their taxes in order to get work on the federally financed projects that were the lifeblood of the building industry between 2009 and 2013.

Now the U.S. Department of Labor has announced an agreement with the state Department of Revenue to crack down on the accounting trick that bad actors use to evade taxes and cheat their employees.

The problem, known as “worker misclassification,” happens when companies treat their workers as independent contractors instead of permanent employees. The companies don’t withhold income tax or file payroll taxes on those workers. They don’t pay unemployment taxes.

Bill Filed to Crack Down on Worker Misclassification in Texas Construction Industry

Posted by National Alliance for Fair Contracting on

By Scott Braddock on Mon, 12/08/2014 – 12:49pm 

Far too often, construction companies cheat taxpayers and their workers by pretending their employees are independent subcontractors when, by law, they should be paid as employees. It’s a practice known as worker misclassification. Some ethical contractors have called it a “cancer that is eating at the heart of our industry.”

If a person is paid as a subcontractor, that individual is on the hook for payroll taxes and benefits like health insurance. When they’re injured, uninsured workers are often dropped off at county hospitals and the rest of us end up paying more in health costs and local property taxes.

Construction Citizen’s Special Report, “Thrown Away People,” outlined many of the problems presented to society by the degradation of the employer – employee relationship. The McClatchy Newspaper chain this year followed up with a powerful series called “Contract to Cheat,” which took another in-depth look at the problem.

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Labor Department announces grants to fight tax cheats

Posted by National Alliance for Fair Contracting on

WASHINGTON – The U.S. Department of Labor on Monday awarded $10.2 million to nearly two dozen states to beef up enforcement of a labor scheme that companies employ to evade their tax obligations.

The announcement of the first-of-their-kind grants comes one week after McClatchy’s five-part series that uncovered the federal government’s failure to stop companies that wrongly classify their workers as independent contractors instead of employees on federal contracts.

Labor Secretary Tom Perez said the grants, which range from $28,000 to $1.3 million, will help states identify and stop so-called worker misclassification and protect state unemployment insurance benefits.

“This is one of many actions the department is taking to help level the playing field for employers while ensuring workers receive appropriate rights and protections,” Perez said in a statement.

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(Related Link – McClatchy’s “Contract to Cheat”)

How New York and Illinois Curb a Key Labor Violation While Other States Fall Short

Posted by National Alliance for Fair Contracting on

This story is part of the series called “Contract to Cheat” published by McClatchy DC. The series tracks how several states fail to prevent construction companies doing public projects from misclassifying their workers as independent contractors 2014 a practice that cheats taxpayers out of billions of dollars each year and denies workers protections.

Read the entire series on McClatchy’s site

On an overcast July afternoon, with the clock ticking on their lunch break, men in blue jeans and hard hats filed out of the four-story Fairfield Inn & Suites under construction near Interstate 270.

Jon Gould, a Carpenters Union job site investigator, stood in the parking lot of a nearby filling station and gazed at the half-finished motel. Three months earlier, on a hunch, investigators from Gould’s union had started videotaping the people building the motel.

The surveillance was taking place to answer a big question: Was Road Runner Construction, of Little Rock, Ark., the motel framing contractor, trying to get away with a practice known as misclassification? Repeated countless times nationwide, often with impunity, the practice enables dishonest companies to underbid honest competitors by categorizing employees as independent contractors-thereby dodging laws that require the payment of state and federal taxes.

(Read More)