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Worker Misclassification in Arizona: “Business Off the Books”

Efforts to crack down on worker misclassification in Texas took a step forward this year with the passage of a targeted crackdown on the practice that some have gone so far as to call “organized crime”.  But, as we've reported, there is much more to do as far as implementation of the law passed by the legislature and signed by Governor Rick Perry.  Many players in commercial construction are hopeful that when the legislature convenes again in 2015, a broader misclassification crackdown like the one pushed this year by Senator John Carona, R-Dallas, can become reality.

Meantime in Arizona, one man in particular has had enough and he's become an aggressive watchdog on what he and others are now calling “illegal labor”.  John Jackson has been called everything from a snitch to a hero for the way he's handling the people he sees as the bad guys in the equation.  Reporter Joe Dana with the Phoenix Arizona Nightly News has more on Jackson's story:

“The 51-year-old tile craftsman from Casa Grande began a crusade two years ago to expose unlicensed construction after Jackson says it became impossible for him to secure flooring contracts on new-home sites.  He said the going rate for tile work dropped to unrealistic levels because subcontractors were willing to take legal shortcuts to complete the work.

“‘The people that are willing to break the law are the ones who get the jobs,’ Jackson said.

“He has filed dozens of public complaints and invited 12 News to new-home construction sites where alleged unlicensed work was carried out, potentially done by untrained or undocumented workers.  Although not everyone agrees with Jackson’s methods, public officials acknowledge that in many cases, he appears to be right.

“Labor-law experts call the practice employee misclassification.  Others call it “the underground economy” and say the problem is worsening in the Arizona construction industry.

“‘We’ve seen misclassification quite a while.  However, we’ve seen trends lately that are very disturbing to us,” said Eric Murray, district director for the U.S. Department of Labor, Wage and Hour Division.

“Contractors who hire laborers off-the-books don’t pay taxes, employment insurance and liability insurance.  They save at least 30 percent on costs and therefore can bid for jobs at lower rates than subcontractors who play by the rules, labor experts say.

“‘The folks trying to abide by the law are at a significant, unfair competitive disadvantage,’ Murray said.”

Watch the 5-minute video of the Arizona news story and let us know what you think in the comments section below.

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