Sparks Fly at the Capitol Over Misclassification Crackdown

Major Texas homebuilders came out against the state's moves toward cracking down on worker misclassification during a legislative hearing on Wednesday. The Leading Builders of America, which represents Perry Homes, David Weekley Homes, and others, argued that putting new regulations in place for the industry would lead to higher home prices and stifle job creation.

Steve Henry, speaking for the Leading Builders of America, the trade group that represents Perry and Weekley, said the crackdown on payroll fraud would not only lead to increased home prices, but it would also increase litigation, deter the creation of small businesses and stifle job creation. Andrew Turner, representing the same trade group, said it is a "confusion of an already confusing area of the law." He said the Workforce Commission already has the ability to deal with misclassification. “It’s not fair to single out this industry,” he said. He said that if the legislation were passed, more people would have to be paid as employees instead of independent subcontractors.

Committee Chairman John Davis, R-Houston, challenged the homebuilders on why they were unable to hire workers and pay them as employees. When builders argued that it’s common practice to hire someone, pay them for two weeks, then move on to the next project, Davis suggested they simply hire people and move them from project to project.

This new opposition from homebuilders - which has been simmering for some time and is now boiling over - did not seem to deter those in commercial construction who have been in support of the crackdown all along. Raymond Risk, President of the Texas Construction Association, told the committee that representatives for the homebuilders seemed to be unaware that the latest version of the legislation does not create any new regulations; it simply creates penalties for violating existing law. “The law is not changing in determining who is an employee or an independent contractor. That doesn't change at all," Risk said.

Andy Anderson, owner of Linden Steel in Dallas, told the committee about his ordeal in the Mansfield ISD, which we've highlighted on Construction Citizen and was featured on WFAA TV. He strongly urged the committee to vote to approve HB 1925. So did another North Texas businessman: Michael Beeter, CEO of BRI Roofing & Sheet Metal in Fort Worth, told the committee that he’s in a no-win situation because there are no penalties. "You have a choice to follow the law or not follow the law," he said. "The choice that we made as an employer is to have employees, and there's a major investment that takes place with having employees in the construction industry."

The bill was left pending in the committee.