Employee Misclassification Leads to Worker Abuse - Republicans Fail to Lead on "Rule of Law" Issue

The construction industry is rampant with workers who are misclassified as independent contractors when they are really employees, according to a study by the University of Texas. Workers who are misclassified are often abused by their workers and even have wages stolen from them. Now it seems the University of Texas itself has subsidized this illegal and unethical practice during the construction of one of its new student residence luxury apartments. Republican lawmakers have failed to show leadership in coming up with solutions to attack this problem because of behind-the-scenes influences of major home building construction companies.

A report on Construction Citizen this week details the case of workers who were building new student apartments in Austin this summer. The article cites the website for the 2400 Nueces Apartments where management states a student can "share your life with an exciting community of friends while enjoying one of Austin's newest first-class high rise communities." The apartments are available for less than $800 per month thanks to the construction company's abuse and mistreatment of workers. 

I find it interesting that people will get outraged about tennis shoes and clothes that are sold cheaply in stores because of the cheap labor of abused and mistreated workers in foreign countries, but when construction companies do the same thing and provide cheap labor from workers who are abused, mistreated, underpaid and stolen from, no one seems to care.

Workers from the apartment project have filed complaints with the U.S. Department of Labor as well as the City of Austin according to Greg Casar, a spokesman for the Worker Defense Project in Austin. Some of the workers told Scott Braddock of Construction Citizen that even when afternoon temperatures hit in excess of 100 degrees, workers were not allowed to take breaks for water. The workers, who were misclassified as independent contractors, were only paid for 40 hours of work when often they would work in excess of 60 hours per week.

Misclassification is also a haven for workers who are in this country illegally. The lack of a guest worker program makes these people particularly vulnerable to workplace abuse. Some of the workers from this project spoke with Construction Citizen under condition of anonymity because of fear of deportation and retaliation. “A horrible job where you’re mistreated is still better than no job at all,” one worker said. “At least you have some chance you might get paid.” That man has two children, ages 2 and 7. He said that he goes to work so early in the morning they’re asleep when he leaves, and he often gets home so late at night they’re asleep again before he arrives. “But they’re fed and they’re safe,” he said. “That’s what’s important to me.”

Is this what we have come to? Construction "Sweat Shops" to build cheap housing for rich college students? The General Contractor, Hensel Phelps and subcontractor Texas Exterior Systems refused to return phone calls inquiring about the complaints. However, Francisco Palomo with Palomo Drywall did take a call from Construction Citizen.

Francisco Palomo said that he paid about 70 men as independent subcontractors to do drywall at 2400 Nueces. He confirmed to Construction Citizen that he’s dealing with Department of Labor complaints on the job and that he has retained an attorney for that purpose. “This is something that’s going on with my lawyer right now,” Palomo said. He did not answer questions about whether the men on the site were denied water breaks or overtime pay. Palomo declined to comment further or say which attorney he has hired to handle his case. His phone disconnected as we were asking questions and he did not answer a follow-up call.

This is not the first example of problems at this site.“It’s a site where we've seen problems before,” said Greg Casar with Workers Defense. Casar pointed to an incident about a year ago at 2400 Nueces when a worker fell on two others – sending all three to the hospital. “We've been keeping an eye on this site very closely ever since then," he said. I have to wonder if these workers were covered by workman's compensation insurance or if taxpayers were left to pick up the hospital tab.

For the past several sessions, the Texas Legislature has looked at legislation to put teeth into the existing laws about employee misclassification and payroll fraud. This past session, Senator John Carona (R-Dallas) worked closely with the Texas Workforce Commission and major commercial construction companies to try and pass meaningful legislation. While some legislation did pass and get signed into law, the primary bills addressing this problem failed to get a floor vote in both the House and the Senate.

In an article in The Salon, Scott Braddock reported on Carona's efforts to pass this legislation and the obstacles that got in the way including the lack of key Republican leadership from as high as Gov. Rick Perry, who was apparently influenced by companies who wish to continue cheating workers and taxpayers.

For months, Carona’s office held weekly meetings where business, labor and others came together to talk about a fair way to address the problem. The trick, he said, is to figure out who’s intentionally breaking the law, who’s just making a mistake because they don’t know any better, and who’s using independent subcontractors in a legitimate way. “There’s nothing simple about this,” Carona told me. “We’re facing headwinds,” he said. “Certain elements within the business community” would work hard to make sure this kind of legislation doesn’t pass, he said. He was right.

Harvey Kronberg and I reported on his website for political insiders, the Quorum Report, that there were rumors the largest home builders were personally lobbying Texas Gov. Rick Perry to squelch Sen. Carona’s efforts. This was not a stretch at all. As WFAA Television’s David Schecter reported, the major home builders have been prolific campaign contributors to Perry and others.

Perry Homes, DR Horton and David Weekley Homes – the big boys – sent their lobbyists before lawmakers to make the case in public: Enforcement of the law in this area was unfair to builders and would make home prices rise for all Texans. The “Leading Builders of America,” the trade group for those builders, made the same points contained in that anonymous memo. Steve Henry with the group testified that putting new regulations in place would “price many Texans out of the market” for a home. Henry also said it would lead to more lawsuits, deter the creation of small businesses and stifle job creation.

Yes, I guess it really is a pain when you have to follow the law like the rest of the companies who believe we are a nation of laws. It is time to stop the backroom deals that are making it almost impossible for legitimate construction companies to compete in a market where cheaters are allowed to prosper with impunity. It is time to stop the abuse of workers and the theft of their hard-earned wages. It is time to stop the magnet of an underground workforce of illegal aliens who are also abused, stolen from, and left for taxpayers to pick up the tab when they are injured on the job.

Please contact your Texas Legislator and Senator and tell them you want Texas to put an end to these unethical and often illegal business practices that are hurting Texas workers and taxpayers.

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