A new study of wage theft in the construction industry in Massachusetts describes the practice as being at “epidemic levels.” The construction industry has been at the center this growing problem. If it can reach epidemic levels in a labor-friendly state like Massachusetts, it is likely that it will continue to grow as a problem in other states like New York.
The primary mechanism that is used by unscrupulous employers is the “independent contractor” misclassification. Construction contractors who handle trades, such as framing or dry wall, hire workers who are their employees for a job, but are classified for employment purposes as independent contractors.
This status relives the employer of many “problems,” most of which entail paying money or providing benefits. According to the report, this saves an employer as much as 30 percent of the cost of the employee.
Even worse, in many cases, the workers are simply never paid. Employers will often pay them once, and then make up excuses for weeks at a time. And these workers have no recourse, because a great many are undocumented workers, who risk being deported if found by immigration authorities.
Small contractors within the trades using these tactics damage all workers, driving down wages and benefits within the industry, as legitimate contractors are outbid by contractors who do not pay overtime, workers’ compensation, unemployment compensation and taxes.
This corrosive environment is fostered by large home building companies who claim ignorance and insulate themselves from any liability by layers of subcontractors. Everyone in the industry knows this behavior is prevalent, but there is an atmosphere of “plausible deniability,” where their lawyers can produce contracts with subcontractors who are “responsible” for the illegality, and when they are caught, evaporate like haze in the morning sun.
Recorder.com, “UMass Amherst research assesses wage theft in Massachusetts residential construction,” May 15, 2015