Construction Companies Fraudulently Classify Employees as Independent Contractors

An investigative report led by the Star-Telegram and The News & Observer in Raleigh, N.C. has revealed rampant employment fraud among construction companies as well as companies in other industries. Companies are avoiding paying state and federal income taxes by misclassifying their employees as independent contractors.

Construction companies have been bidding on contracts finances by state and federal dollars to build apartments, roads and other structures. Many of the projects are a product of federal and state stimulus dollars that were set aside after the 2008 recession. The monies were supposed to boost the economy. But employers have been skirting and violating the law, states are losing hundreds of millions of dollars in tax revenue each year.

These companies are then able to underbid other construction companies who are also bidding on state and federal contracts. They also manage to save tens of millions of dollars by exploiting the independent contractors.

Labor, contract and IRS violations occur when construction companies and employers fail to withhold state and federal income taxes. Tens of thousands of employees are improperly classified as independent contractors all around the U.S. The amount of lost revenue in just one state like North Carolina is over $140 million each year.

More than 50% of the construction workers employed by federal dollars in North Carolina were considered independent contractors, but they should have been classified as employees. The report noted that regulators at the state and federal level failed to enforce U.S. and state labor laws.

The report indicates that the problem is widespread. Companies based in California, Texas and North Carolina are particularly high violators with more than 30% of employees in the construction industry being misclassified.  The violation rates are similar in other states.

The construction industry leads to many work injuries. But these companies are denying worker’s compensation benefits to their injured workers. Under workers’ compensation laws, an employee has access to workers’ compensation benefits if they are injured while at work.

Employers can avoid paying workers’ compensation insurance premiums and medical benefits simply by classifying an employee as an independent contractor. In between the cracks of different agencies, billions of dollars are being lost each year and hundreds of thousands of workers are being exploited.

If you or a loved one has been injured at work and your employer denied you workers’ compensation benefits, you may be able to successfully challenge your status. Our attorneys can help.

Call the experienced workers’ compensation lawyers at Inkelaar Law. 1-877-537-4665.