Employers across the country have made it a practice to classify workers as independent contractors rather than employees. This is a widespread problem in Texas, particularly in the construction industry. When workers are misclassified on construction projects, not only are the workers missing out on benefits, but the taxpayer is affected too.
Employers classify workers as independent contractors to save money. The do not have to provide independent contractors with benefits and protections required on federal projects. Employers also avoid paying into unemployment, payroll, and Social Security taxes. In many cases, the employers also do not provide workers’ compensation protections.
Construction companies that improperly classify employees as independent contractors have been able to shave off up to 20 percent from their bid, giving them an edge over competitors who follow the law. According to the Star Telegram, this practice is costing Texas taxpayers more than $1.2 billion a year in lost federal income, payroll, and unemployment tax revenues.
In Texas alone, there are more than 150 construction companies that misclassify carpenters, laborers, and mechanical workers as independent contractors when they should be classified as employees. This causes the workers to lose workplace protections, the right to join a union, the right to overtime pay, and protections from workplace injury disputes. The workers also suffer increased tax burdens. This can cause serious complications if a construction worker is injured on the job and is seeking help paying for expensive medical bills.
How a worker is classified is not simply a decision that can be made by an employer. Rather, employee classification is dictated by legal guidelines. If an employer largely decrees a worker’s hours, attire, and work product, the worker is probably an employee. Even if an employer and worker sign an employment agreement stating that the worker is an independent contractor, this is not conclusive evidence that the worker is not in fact an employee.