Countering Worker Misclassification

Worker misclassification is becoming more and more of a problem as underhanded hiring by some companies harms not just the underpaid workers, but also the employers who play by the rules. Employers who hire legal workers and abide by the laws are put at a disadvantage when their competitors hire illegal workers for cash. The Houston chapter of the Associated General Contractors of America (AGC) has put together a task force and an alliance to address some of the issues facing the construction industry and ultimately the entire community who end up shouldering the burden of higher taxes and insurance premiums when employers avoid paying workers’ compensation, health insurance and employment taxes by misclassifying workers as independent contractors.

Mike Holland, a 39 year veteran of the construction industry who currently serves as President of the Houston Chapter of the American Subcontractors Association, writes in a blog on ConstructionCitizen.com:

“Except at the more responsible companies, the once valued partnership between employer and worker has been replaced by the hiring of independent 1099 contractors, “pieceworkers” and temporary staffing companies. In response to owners demanding lower prices, general contractors and specialty contractors alike have largely become “brokers” of the construction process, using contracts and questionable employment arrangements to manage labor on construction sites. What began in an effort to compete during a difficult time in the 80s has persisted through extended periods of prosperity, only to accelerate during the current economic difficulties we now face.”

Holland goes on to explain how the practice has not actually lowered the cost of construction, but instead has redistributed the cost to the workers and to the general public. This problem is one of the reasons that the Construction Industry Sustainable Workforce Alliance (CISWA) has been developed by AGC Houston. It is hoped that their mission to enable owners and contractors to practice responsible hiring and to improve the construction industry may become an example and encouragement for other industries to develop similar responsible hiring practices, which will end worker misclassification and the burden it places on tax-paying citizens.

If the construction companies and contractors are held accountable for illegal hiring practices and misclassifying  workers, then the incentive for workers to come into this country illegally will decline drastically.