Press release from Emily Timm of the Workers Defense Project about the Texas Workforce Commission vote this Monday on proposed legislation to strengthen penalties for worker misclassification in Texas:
As unemployment coffers go empty, TWC votes down proposal to increase penalties for employers who misclassify workers
Dishonest Employers Cheat Texans out of $35 Million in Taxes
Austin, Texas—On Monday, in a 2 to 1 vote, the Texas Workforce Commission declined to support a recommendation for the coming legislative session that would strengthen state penalties for employers who misclassify their workers as independent contractors, thus encouraging businesses to abide by the law, and leveling the playing field for honest employers. In Texas, misclassification results in a loss of at least $35 million dollars to the starved unemployment insurance fund each year.
Employers misclassify their workers when they fail to withhold taxes, pay in cash, or provide their employees with a 1099 instead of the W-2 form required for employees. Misclassification results in billions of lost tax dollars to the federal and state government. In certain industries in Texas, such as construction, it is estimated that as many as 38% of workers are misclassified. Texas employers who break the law and undercut responsible businesses save an estimated 9% on payroll taxes including workers’ compensation, costing Texas taxpayers millions in unemployment insurance each year. Read more » about Misclassification Update in Texas