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Worker classification in the construction industry: an update

It’s been awhile since we last wrote about the issue of worker classification in the construction industry in Texas.

It has long been known that the percentage of workers in the construction industry here who are improperly classified is very high. As we noted in our August 22 post last year, one study put it at 40 percent.

The issue does not only have consequences for payroll tax compliance. It also affects workers’ compensation eligibility and Fair Labor Standards Act compliance.

In this post, we will take note of the fact that both business and labor groups are arguing that Texas requires more regulation to clarify the applicable standards.

The Texas House Business and Industry Committee held a hearing on safety and worker payment issues in the construction industry in late April.

One of the issues, of course, is possible misclassification of employees.

Construction is hardly the only issue where this is an issue. As we noted in our March 12 post, the IRS has been encouraging employers to reclassify workers as employees through the Voluntary Classification Settlement Program (VCSP).

But it is true that the classification question has been particularly contentious in the Texas construction industry.

Safety is also a big concern there. Safety training lags and Texas law often allows employers to sidestep workers’ comp responsibilities by getting workers to sign a waiver.

It remains to be seen what will come out of the hearing. But one possibility is the creation of an accreditation system for companies and contractors that meet certain standards on safety training and compliance with wage-and-hour laws.

Source: In These Times, "In Texas, Construction Reform Has an Unlikely Champion," Amein Essif, May 13, 2014

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