Dive Brief:
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Florida has become the 19th state to partner with the U.S. Department of Labor in an effort to shut down the illegal practice among some construction firms of misclassifying employees.
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The state Department of Revenue will share information with the federal agency about local firms that it deems to be reporting their employees as independent contractors so the company doesn't have to pay their unemployment or payroll taxes. The practice, which can save an employer 20% on labor, has cost the Florida government $400 million in lost tax revenue and the federal government billions of dollars, according to a September report by McClatchy Newspapers.
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Construction companies that misclassify employees often underpay them and deny them legal workplace protections, the report said.
Dive Insight:
Florida joins Louisiana and Alabama as the first Southeastern states to join the federal agency in its crackdown on misclassification, which will mean greater scrutiny of contractors doing business in the region.
Greater enforcement of worker classification laws could level the playing field for law-abiding contractors who compete for projects against companies that can lower their bids because they save on labor costs by intentionally misclassifying laborers.
