Construction Informer

Update – What’s Happened Since: Last March I wrote about new efforts on behalf of the states to enforce the proper classification of workers. This is especially relevant to construction since the term “independent contractor” is used as much as “contractor” in the business. The following is an example of one thing going on at that time.

So it’s not surprising that the independent contractor issue would come to the front. New Jersey enacted a law in July 2007 to provide options for litigation when companies classify workers as independent contractors even though they more closely fit the definition of employees. We all know this is a tactic employed by both companies and individuals to avoid paying taxes on wages and to avoid the responsibilities that go along with employer/employee relationships. New Jersey figures it lost out on $15.9 million to its unemployment and disability funds as the result of 25,000 workers being classified as independent contractors when in fact they most closely resemble employees.

Throughout 2008 the headlines also announced California, Michigan, New York, Illinois, Massachusetts, Minnesota, New Hampshire, Rhode Island, Kansas, and Pennsylvania were all pursuing their options in reigning in the misclassification of people as independent contractors. Even though today it is difficult to find a state that isn’t having financial problems, these most likely are the most publicized ones.

During the presidential campaign, both Clinton and Obama wooed the labor vote by voicing opposition to the practice. Today, some of the most recently passed economic stimulus package includes money for unemployment insurance. Part of those sums undoubtedly are needed to make up for the unemployment insurance taxes that weren’t paid by businesses that misclassify workers.