Employers who pay workers under the table or misclassify them as contractors make up a big part of the construction and trades industry, according to a forum held at Quinsigamond Community College in Worcester, Massachusetts. Worker and business representatives met with representatives from several state agencies to discuss the Underground Economy and Employee Misclassification.
The economic reality of employers hiring subcontractors who then subcontract to others or resort to illegal hiring practices makes it difficult for construction businesses to compete in the residential market, according to David S. Klein, president of an architectural metal and roofing contractor in Worcester.
In this underground economy, some companies pay construction workers in cash so that they can save on taxes, workers’ compensation insurance, and health insurance.
A Harvard University study conducted in 2004 estimated that about 125,725 Massachusetts workers (including over 7,000 construction workers) were misclassified as independent contractors between 2001 and 2003. The study also estimated that employers could be denying the state up to $91 million in workers’ compensation payments.
Skirting of state hiring laws focus of forum, Worcester Telegram & Gazette, September 23, 2008
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