Reshaping the Construction Industry

While the Texas Legislature prepares to wade into the debate over the best way to deal with payroll fraud, some leaders at the local level say they're not waiting for Austin to take action.Doug Miller, a city councilman in the Fort Worth suburb of Keller says he's going to be in Austin quite a lot during this legislative session a bit to ask that lawmakers “do the right thing.”Miller, who is also a vice president of a construction company in Fort Worth, wrote on his blog “I have expressed my support for a bill that will deal with this situation with my state representatives.  I have also looked into having an ordinance in place in Keller that requires contractors that work for the city not have illegitimate contractors, and in the coming year, if this legislation doesn’t pass, I will push something through on the local level.”Miller said his plaster, masonry, and stucco firm, Bobby Lee and Company, has been underbid by cheaters by as much as 35 percent.In an interview with Construction Citizen, Miller said his main concern about the legislature is that “they won't do enough”.  He said the Texas Workforce Commission, which has endorsed legislation, needs to go back to the way it used to operate: audit companies for misclassification and penalize them by levying fines.  Twenty years ago, Miller's company was fined for misclassifcation.  “That stopped that for us.  We learned our lesson,” Miller said.

The employment figures for December 2012 released last Friday by the Bureau of Labor Statistics (BLS) stated that:“Nonfarm payroll employment rose by 155,000 in December, and the unemployment rate was unchanged at 7.8 percent.  Employment increased in health care, food services and drinking places, construction, and manufacturing.”Following a loss of 10,000 construction jobs in November, this is really good news.  According to the press release:“Construction added 30,000 jobs in December, led by employment increases in construction of buildings (+13,000) and in residential specialty trade contractors (+12,000).”It will be interesting to see what the impact of the Fiscal Cliff and the general uncertainty will have on hiring plans for the Spring.  With the latest round of construction starts and the loosening of some financing, it could be a strong spring season for our industry.

Key players in the construction industry in North Texas today are expected to decide whether they'll support efforts to crack down on the intentional misclassification of construction workers across the state.Members of the Government Affairs Committee of TEXO, the large trade association for builders in the Dallas/Fort Worth region, are meeting Monday talk about whether they'll take a formal stand against misclassification, also known as payroll fraud, and support legislation to deal with it.  The Texas Workforce Commission has endorsed the idea of rooting out payroll fraud on government contracts.  Lawmakers could decide to do even more than that, depending on what happens during the Texas Legislature's regular session starting this month.  Senator John Carona, R-Dallas, has told his staff at the Business and Commerce Committee to start the process of drafting legislation.

Builders around the state will be paying extra close attention to developments in Austin as the 83rd Texas Legislature gavels into session later this month.  One of the industry's top concerns is the growing problem of worker misclassfication, also known as payroll fraud.In the legislature's last session two years ago, a payroll fraud proposal from State Representative Joe Deshotel, D-Port Arthur, was unsuccessful, and labor leaders have been pushing for a solution for more than a decade only to consistently see their efforts fail.  But, the economic and political landscape has changed dramatically in just the last two years.The trend we've noticed in our reporting at Construction Citizen is that this is no longer seen as a liberal or progressive cause.  More and more conservative republicans are now pushing to deal with misclassification because they see it as a rule of law issue.