Texas Legislature Moving to Curtail Employee Misclassification and Fraud
by Bob Price on April 6, 2011 at 11:54 AM
Employee misclassification is theft and cheating. Misclassification is where an employer hires someone to work for them, but rather than honestly classify them an employee, they misclassify them as an independent contractor, avoiding tax witholdings, unemployment taxes, child support collection, workman's compensation benefits and other employee benefits. This is usually done to gain an unfair business advantage over a legitimate employer who follows the law and works ethically or to cheat workers from pay and benefits. Legislation addressing misclassification can reduce these problems while also serving as a disincentive to hire illegal aliens.
Last week, the Texas House Committee on Business and Industry began work on a bill (HB 2989) that will begin to address several areas of misclassification, wage theft and workplace fraud. Construction Citizen reports this bill, sponosored by Committee Chairman Joseph Deshotel (D, Port Arthur), speaks directly to the construction industry and attempts to define what an employee in the construction industry is in order to curtail rampant misclassification of employees as independent contractors.
Chairman Deshotel explained, "This bill is designed to do two things: to properly classify employees as employees and not independent contractors, where as [when classified as] independent contractors they’re not paying unemployment taxes or federal income taxes, and it also would help the public fund here in Texas."
In addition to gaining an unfair business advantage by using this practice, employers also cheat workers out of employee benefits, overtime and often their regular pay as well. Mr. Saul Vela, a former construction worker, testified before the committee that he worked for a concrete sub-contractor for over a year. During that time he was misclassified as an independent contractor and was denied much of his regular wages and overtime. He testified employers should be held accountable and that construction employers should treat their employees fairly.
The committee heard testimony from several groups supporting this legislation, including the Workers Defense Project, Southeast Texas Chapter of the National Electrical Contractors Association (NECA), the United Brotherhood of Carpenters and Millwrights Regional Council and Merek Brothers Systems.
Allen Grainey with NECA testified that misclassification causes the state to lose tax revenue and workers are left unprotected from abuses of employers.
Brendon Doyle of Merek Brothers Systems said, "If you pass this bill into law, you will begin to change the face of the construction industry in Texas, help create a sustainable construction workforce and help provide a safer working environment for the construction workers of Texas. Additionally, you will provide to those of your constituents in the industry, a brighter future as construction workers and a better life for their families."
No one spoke against the bill although two people registered against it but did not list an affiliation.
The bill remains pending in the committee at this time.
This unscrupulous business practice must be stopped. Employee misclassification is a tool many use to work illegal aliens while cheating them of their wages and gaining unfair advantages over employers who follow the law. It, however, does not just affect illegal workers. It also affects many other employees (US Citizens and legal immigrants) who are cheated every day out of their hard work.