Tag Archives: labor law

Senator Warren Says Independent Contractors “Might” be a Problem

A report from The Hill shows Elizabeth Warren being cautious and careful after answering a question about the proliferation of independent contractors, otherwise known as “1099 employees” (an oxymoron if there ever was one) across the country.   As The Hill reports:

The topic came up during an on stage appearance at a conference produced by news organization Re/Code, when a BuzzFeed News reporter asked whether “1099” workers, named after the tax form they fill out as contractors, should instead be seen as more traditional workers for the many startups that rely on their labor.

Warren didn’t answer, but she did express concern about the way companies in general are using their contractors.

“I think there is evidence that increasingly employers use independent contractors not in ways that were originally intended but in ways that permit them to treat employment laws differently than they otherwise would be responsible for, and I think that’s a real problem,” she said. “And I think the Department of Labor is looking into this and I think they’re right to do that.”

It was not clear what Department of Labor investigation she was referring to, though the agency does run investigations into whether employers are misclassifying their employees as contractors.

The facts show though that Warren should have no hesitation to call out what has become a major economic problem across the country.  While Republicans claim that the social security system might fall short in the future what they fail to explain is the only way in which that could happen; through lack of current pay-ins to the system because workers and employers across the country have failed to pay into the system.

whatever 011

Picture of a NH UBC banner line conducted last year in Seabrook shaming a large tri-state drywall firm for their labor practices. See more at: Carpenters Get Hot on Cheating Contractors

Social security, workers compensation and payroll taxes all fall under protections given to the workers that employees and employers jointly pay into.  All of these programs act as insurance against lost time due to work injuries, lay off periods and a savings program to offer some means of subsistence when either one suffers disabling injury or is too old to work.  While the last two social security programs fall under different lines of qualification and management, the fact remains that their intention was to protect workers and the disabled from abject poverty.

Under federal labor law certain criteria exist to judge a worker as an independent contractor or as an employee. Unfortunately many workers do not know their rights and believe what unscrupulous employers tell them.  This isn’t anymore prevalent than in the construction trades where according to a study done by the National Employment Law Project, estimates place misclassification as high as 30% across the board in all employment.

In New Hampshire the issue is particularly contentious as labor leaders such as the United Brotherhood of Carpenter’s Joe Donahue struggles with the issue in the construction field as profiled in this 2014 report by New Hampshire Business Review.  In the report Donahue and others point to the confusion about employee classification due to conflicting and confusing regulations on the federal and state level.  Unfortunately the September 2014 summary of the New Hampshire Join Agency Task Force on Employee Misclassification Enforcement isn’t naming any significant increases in enforcement over years past.

In addition to construction other industries seem rife for misclassfication issues as well including hotel workers, IT workers, landscape and others that typically operate out of the public eye and under the supervision of smaller, employers that have sub-contractor relationships with larger, more public companies.

Tagged , , ,

Carpenters Get Hot on Cheating Contractors

whatever 011On 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.

One of many projects occurring on Lafayette Road.  Metro-Walls is contracted for hanging sheetrock.

One of many projects occurring on Lafayette Road, Seabrook, NH.  Metro-Walls holds the contract to hang sheetrock.

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?

Tagged , , , , , , , , , , , , , , , , ,