Recently in construction workers Category

For some Pennsylvania employers it may be time to pack up the old kit bag but minus the smile.

The Construction Industry Independent Contractor Act passed Monday by a landslide in a vote of 122-76.  This could mean severe punishment of those employers who misclassify workers to avoid paying their share of employer taxes.

Pennsylvania House of Representatives ignored lawmakers who lobbied heavily against imposing such severe penalties citing this extreme form of punishment would only worsen the ailing state's economy.  Should the bill become law, some governmental officials predict it may drive jobs to employer friendly states like North Carolina, Tennessee and Virginia. 

With union groups backing the measure and the state scrambling to fill empty tax coiffeurs, a passage of the bill into law is not unfathomable. The construction industry is not alone on the list of targeted industries.

The courier industry with the ever popular FedEx case rolling along at lightening speed, the infamous carnage of the software industry and other high-tech entities, I think we will see copy cat bills cropping up all over the country.  Heavy users of independent contractors waiting in line for their number to be up may find themselves at the front of the line.

Now I've seen it all! 

This article tells of an employer who falsely reported payments to independent contractors who never even worked for them!  It seems everyday we read or hear about how the government treats employers unjustly and how when they make a mistake and misclassify a worker as an IC, they are made to look like the bad guy.  Although most employers who make bad judgment calls when classifying workers rely solely on their best interpretation of the rules, this company clearly is not one of those mistaken employers.

Falsely reporting unpaid wages in any circumstance only leads to bigger issues with the government.  If this company is engaging in these types of practices, the audit door ordinarily closed is now flung wide open. It will become a free for all. Even if the contractor can't prove the client company falsely reported wages for him they are now on the radar as a possible revenue stream for the state and federal government.  In the end it won't be a matter of if they are audited but when!

Another update unfolds in the FedEx driver misclassification saga as shareholders take matters into their own hands and file suit against the FedEx board of directors. The plaintiff, Plumbers and Pipefitters Local 51 Pension Fund, alleges FedEx Ground unnecessarily exposed the company to damages through their questionable hiring practices.

The company was initially fined $319 million by the IRS for the 2002 tax year en lieu of classifying their delivery drivers as Independent Contractors while treating them as they were traditional W2 employees. However, after all is said and done, the company potentially may face liability and backtaxes totaling upwards of $2 billion dollars.

A spokesman for the company dismissed the union's lawsuit, calling it frivolous and without merit.  Yet, FedEx is currently fighting lawsuits in 30+ states as the result of this dangerous business model. FedEx still refuses to change how it engages these workers and continues to fight sinking more money into the tax dollar battle that has not enjoyed much success.

To date, stocks continue to sink as FedEx continues the battle and the IRS digs their heels in.