Update on Misclassification in Texas Construction
by Bob Price on January 5, 2012 at 12:18 PM
On July 13, Construction Citizen shared a story first reported by Dallas/Fort Worth television station WFAA about misclassification of workers on a school construction project. Last week, the same WFAA reporter submitted an update to the story according to a new report on ConstructionCitizen.com.
These stories caught my attention and I followed up with a series of stories on TexasGOPVote about the topic of employee misclassification and wage theft.
Following the publicity on this topic, the Texas Workforce Commission (TWC) came into action and charged the subcontractor who was not paying taxes with $6,924.93 in unpaid taxes.
More importantly than this particular case is the Texas Workforce Commission is apparently taking a much more aggressive stand on employee misclassification. In a year-to-year comparison, the TWC has increased enforcement by over 500%!
This will affect employers directly because not only will they be hit with the state unemployment taxes, TWC reports information to the IRS. In the case noted above, the employer could be liable for as much at $161,000 in unpaid federal taxes.
Misclassification hurts us all in many ways. Unscrupulous businesses gain an unfair advantage over legitimate businesses. Unpaid taxes cause all of us to pay more in taxes to make up for their cheating. Children are denied child support which costs taxpayers in increased welfare payments. And, these companies serve as a magnet to illegal aliens who seek to hide under the radar.
I applaud the TWC for its efforts. They are doing what they can with the tools they have. Unfortunately, the Texas Legislature blocked good legislation last session that would have put more teeth in these laws. We will come back to that later!
Here is the updated WFAA story: