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Texas to Take Steps Against Worker Misclassification But More Must Be Done

The Fort Worth Star-Telegram delved into the issue of worker misclassification this Sunday with an extensive piece about the steps that the Texas Legislature has put the state on track to implement next year. As we've reported, Gov. Rick Perry has signed a targeted crackdown on the misclassification of workers, which is also known as payroll fraud. But, as we've chronicled here, lawmakers took a pass on enacting a much broader bill that would have gone much further in addressing the problem.

The Star-Telegram's Yamil Berard tells the story of workers on a federally-funded housing project:

...as each Friday rolled around, the drywallers on the $31 million Buckeye Trail Commons project went home without one.

The men likely will never get paid.

The Florida-based general contractor on the project, Siltek Group Inc., contends it didn’t hire the workers and knew nothing about the subcontractor that had brought them to the job site. That subcontractor, known as “J&D Outdoor Creations,” was hired by yet another subcontractor at Buckeye Trail.

No paper trail exists to link the subcontractor to the federal job, said Soli Mercado-Spencer, an attorney for the Workers Defense Project, a construction workers’ rights group in Dallas that is attempting to get restitution for the five laborers.

“That’s the nature of construction work in Texas,” Mercado-Spencer said. “Because our guys are so low on the totem pole, there’s no paper trail that they even worked there.”

In her story, Berard points out that the largest associations representing contractors in North Texas endorsed the targeted misclassification crackdown, but she adds that there are those who argue much more needs to be done:

As many as 20 percent of construction companies engage in payroll fraud, and those companies that pay required taxes and worker’s compensation can be routinely underbid by 15 to 20 percent on federal jobs, some estimates show. That’s why the bill needs to be tougher, they say.

“Few [contractors] will get caught,” said John Hinson, division president for Marek Brothers Systems Inc., a drywall company in Coppell. “And for the few that might get caught, what’s a $200 fine going to deter?

“Violators are making a lot more than that by cheating the system,” Hinson said.

Check out the entire piece from the Star-Telegram here and let us know what you think in our comments section.


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