Nashville’s Underground Economy Exposed

Channel 4’s investigative news team from WSMV has been digging around on several issues surrounding the construction industry, specifically around the $585 million Music City Center in Nashville, Tennessee.  Recently they uncovered that one of the drywall subcontractors, Stallings Drywall from North Carolina, a sub for Bell, Clark and Roswell is cheating on this publically funded project by misclassifying the workers as independent contractors and not paying taxes, unemployment, workers’ comp or social security.

In the report, Dr. William Canak, a Middle Tennessee State University sociologist, talks about the statewide problem:  

“In construction, the problems arise when people are actually employees who are supervised and held responsible by supervisors or management to work certain hours at certain times and certain places, but they're classified and paid as independent contractors.”

Canak further explained that often a worker who was injured on the job will file a workers’ comp claim or apply for unemployment only to discover that the premiums for these services were never paid on their behalf by the employer.  He said that the unscrupulous employers are “free riders on the system” by not paying the payroll taxes which they owe and that they are “undermining the capacity for law abiders to compete.”

Even though the men hired by Stallings work 11-hour days, they are not paid any overtime and that leads to an interesting set of interviews when the Channel 4 I-Team goes undercover with a hidden camera and applies to work for Stallings on the project.

Holly McCall, spokesperson for the Music City Center spoke with the news team:

“Well, we've heard some allegations.  We're investigating and continuing to gather information.  I think you know we've got a track record of doing the right thing.  Channel 4 brought an issue to light similarly last fall with a subcontractor, and we took pretty swift action on that.”

But according to Channel 4 reporter Demetria Kalodimos, there are likely many other subcontractors hired who cheat the government and workers in this way, because up to now, Tennessee has never audited a construction site looking for this offence.  This may change as more citizens become aware of this practice and demand an end to it.

Watch the video news report: