December 16, 2019
Sorting Out Worker Misclassification
The increase in gig workers has more companies testing the teeth of worker misclassification rules. They’re about to come under the gun in California, but some construction contractor practices may get a pass.
Tom Zind | Nov 18, 2019
It’s a match made in heaven — at least on paper: workers who increasingly long to be “free agents” and employers who salivate at the prospect of reducing the many costs that come with maintaining traditional employees. That’s the recipe for the possible growth of the “gig economy,” in which more workers move from being employees to independent contractors, ostensibly handing workers the freedom and flexibility many crave while freeing employers from some of the financial burdens of being, well, employers.
Some of the allure of gig work has been abating as workers complain of exploitation — such as Uber drivers — and employers rediscover the management advantages of having full-time, dedicated employees. But independent contractor arrangements continue to be a force in the evolving labor economy — nowhere more so perhaps than in the construction contractor sector, where the practice has a long history.
Broadly, though, it’s drawn the probing, wary eyes of legislators, regulators, and even prosecutors, who are lifting the hood to find loads of trouble in worker’s paradise: namely, that many workers are actually being taken advantage of by companies breaking labor laws, cheating on pay, not paying their fair share of taxes, and fostering an uneven playing field in their industries.
At issue is worker misclassification, describing when workers enter into labor arrangements that bear all the marks of a standard employer-employee relationship but are treated as off-payroll, independent, self-employed contractors. Doing so frees companies from paying the employer’s share of payroll taxes, unemployment and workmen’s compensation insurance premiums, and extending benefits such as health insurance and overtime pay.