Unethical construction contractors intentionally misclassify workers as independent contractors as a way to avoid taxes, insurance costs, and adherence to normal payroll procedures. Employers pay in cash "lump sums" and claim they will report workers' annual earningson IRS Form 1099. Once construction workers are misclassified as independent contractors, they are no longer covered under the National Labor Relations Act, the Davis-Bacon Act, the Occupational Safety and Health Act (OSHA) or any other law designed to protect "employees". The 1099 scheme allows companie to sidestep normal payroll procedures which allow the employer to evade federal law, therefore paying no Social Security or Medicare, workers' compensation, unemployment insurance, or overtime - all of which are required by law. Employers can profit from this scheme by grossly underbidding on projects to win more contracts. These "bad actors" can potentially save up to 30% or more on labor costs, which allows for undercutting of honest, law-abiding, tax-paying competitors and it supports an environment in which workers, who fit the legal definition of being an employee, are exploited.


Sharron Angle Avoids Paying Taxes on Campaign Staff Payroll
Senate Majority Leader Harry Reid has accused his Republican rival, Sharron Angle, of attempting to skirt tax law by paying her staff as independent contractors instead of employees subject to payroll taxes.

Since he filed to run, Angle has paid her staff as consultants and as such has made no payments to the Internal Revenue Service.
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State Senator Says LLC Status a Disadvantage for Construction Workers
A new way of classifying construction workers as part-owners of limited liability corporations appears to be abusive, Utah state Senator John Valentine, R-Orem, told a legislative interim committee recently.
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