Nebraska legislature moves to halt misclassification of employees as "independent contractors"

There is a bill, LB 563, moving through the Nebraska Legislature that creates penalties for “Employers” who misclassify workers as “Independent Contractors” in order to avoid paying employment and income taxes. The bill applies to all employers, but specifically to contractors and some delivery services.

The Governor was lobbying to have the delivery services removed from the bill, but the Senators voted against that move. The bill is the result of the difficulty that contractors who are meeting the measure of the law and paying benefits and taxes for their workers made the case that they were at a major disadvantage in bidding on projects in this economy.

In a recent article in the Omaha World Herald, the Senator who introduced the bill said the practice was most prevalent in the drywall and carpentry trades, where unscrupulous contractors pay workers in cash rather than hire them as employees, with benefits.”

The Senator stated in his testimony that “law-abiding companies can be underbid by up to 30 percent for construction and dry walling jobs by those who skirt the law.” That is an issue prevalent in the industry in several parts of the country during these tough economic times when everyone is trying to hold down costs.

The article also states that independent contractors are not subject to e-verify standards and the Employers who engage them are avoiding e-verify and using undocumented workers on their jobsites.

The bill is in final reading this week and should hit the Governor’s desk soon.

Construction Citizen believes that the construction industry is only sustainable when everyone is paying benefits and taxes for their employees and when those employees have the requisite skills necessary to construct ever more complicated buildings safely and successfully.