On Thursday in Seabrook, NH, the carpenter’s local 118 got busy drawing attention to large contractors cheating labor out of pay and benefits and the state out of revenue. Focusing on a drywall company known as Metro-Walls, the carpenters held what they call a “banner line” to inform passersby of this issue.
The carpenters made their intent clear to remain in front of the construction site as long as Metro-Walls continued operating in violation of the law.
“Missclassification is the biggest problem in the industry right now, its destroying the industry slow but sure. We definitely intend to fight this to the bitter end, we’re not going anywhere, as long as misclassification continues, we’ll be on the front lines.”
“The real victims here are the guys being misclassified and they don’t even know it.” said Johnnie Berry, organizer for Carpenter’s Local 118.
Missclassification of workers involves the practice of cheating works out of workman’s compensation, unemployment eligibility and any future social security benefits. Since the employer pays either all or a portion of the costs for these programs through payroll deductions, the incentive is high for unscrupulous employers to skirt payment of any of these, keep the employee entirely “off the books” and pay the employee cash instead, or “under the table” as commonly referred to.
We contacted Jim Craig, the Commissioner of Labor whose department handles the enforcement of labor law in New Hampshire. We asked to what extent its a problem in New Hampshire, “It hasn’t been qualified yet in New Hampshire, but I think there’s an enormous underground economy, I think its a national problem.”
We asked about why enforcement seems too slow for many, “You know the trouble with this is these guys move fast, ” explaining that in the construction business in particular a contractor may be on a project for a limited time and also the department handles many investigations that complicate their ability to allocate manpower on just this issue, “We also have to investigate many other labor issues.” he said adding, “We’ve come a long way — we have better enforcement, we have a couple inspectors working just on this issue now.”
We also asked Mr. Craig about the process wherein those found in violation often receive reduced fines and as such operate with labor fines as a cost of doing business, “We’re trying to change that and one way is with attorneys representing the department and we’re working on trying to change the definition of employee, making it more clear.”
As a result misclassification, employers unfairly compete for large contracts due to their reduced labor cost and also avoid responsibility for accidents or injuries on the job. These costs then fall to the public in lost work time, unpaid medical care and strains on local assistance programs to deal with basic unmet needs to workers and families.
Metro-Walls is one of many companies working on two shopping center expansion projects on Lafayette Road in Seabrook, NH and has a substantial history of labor law violations according to reports made by Local 118 of the New England Regional Carpenters, Manchester New Hampshire.
The Department of Professional Employees provides a detailed explanation of the most common types of misclassification on their website here.
More information can be found at the IRS website Independent Contractor (Self-Employed) or Contractor?