Why Not Misclassify?
In the construction industry, where independent contractors often work alongside regular employees, misclassification is prevalent. Designating hired workers as independent contractors allows you to avoid paying taxes, fair wages, and overtime.
This kind of decision seems like a shrewd business move, so why, according to this post’s title, is it so wrong to misclassify workers and independent contractors?
Defining ‘Independent Contractor’
Legal experts can endlessly debate this topic, but the following criteria are some basic parameters. Independent contractors…
- own their own business,
- work for various customers
- control their hours
- are (at least partly) responsible for
- payroll taxes
- unemployment tax
- workers comp insurance
One 57 year old construction worker from Dayton, Ohio, did not fit this description. In 2010, he was hired and forced to file as a independent contractor. “I felt like my back was up against the wall. I have a family. I’m the only bread winner”.
Sadly, the following year he was hurt on the job, and after being let go, he was denied unemployment benefits because he was an independent contractor.
An Ethical Stand
On a positive note, some construction companies are taking an ethical stand. One Tennessee company made the statement, “It’s principle for us. We just don’t want to make money off of people that are being exploited.”
From New York to California, states cracking down on employers who improperly classify their workers or fail to declare their income. Over thirty states have laws on worker misclassification.
So maybe this issue will start trending in the right direction.
This blog post is a discussion on this original article by Insurance Journal