Texas Urged to Crack Down on Employers That Misclassify Workers

Map Of Texas State 3d ShapeFrom Texas Exes, Julian Aguilar writes about efforts in Texas strengthen laws that prohibit the misclassification of workers as independent contractors.  He reports that strengthening the laws could prevent thousands of undocumented immigrants from working in the state’s construction industry which, builders claim, would drive up the cost of homes for Texas home-buyers.  Julian writes:

“Workers’ rights groups in Texas are revamping their efforts to increase protections for low-income laborers by urging lawmakers to crack down on employers that intentionally misclassify their employees.

Misclassifying workers as independent contractors — rather than employees — allows employers to avoid paying payroll taxes, overtime and workers’ compensation. The practice also allows employers to skirt federal law that requires new hires to provide proof that they can work in the country legally.

About 35,000 Texas workers were misclassified between 2010 and 2012, according to the Texas Workforce Commission. That includes 4,300 in the construction industry and 4,100 in the health care and social assistance industries. Those workers’ employers should have paid about $2.4 million to the state’s unemployment insurance fund, according to a report by the Legislative Budget Board.

“Worker misclassification prevents employees that would otherwise qualify for workers’ compensation or other benefits from receiving those benefits,” said Maxie Gallardo, a policy analyst with the Workers Defense Project, an Austin-based advocacy group. “It basically strips them of their rights as employees.”

Critics of altering the laws in Texas have argued that doing so would drive up the cost of new homes because such sweeping changes would cause businesses to incur administrative costs that would be passed on to buyers.

Since 2008, 27 states and the District of Columbia have passed bills cracking down on worker misclassification, according to the budget board report. Independent contractors are considered self-employed and responsible for paying their own taxes. For employees, the employer is responsible for paying the payroll taxes and deducting them from a paycheck.  …”

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