Texas State Representative Senfronia Thompson (D-Houston) filed a bill in the Texas House of Representatives to increase fines for employers who misclassify workers as independent contractors when they should rightfully be classified as employees. This technique is often used by companies to work illegal immigrants as independent contractors avoiding the I-9 employment documentation process.
The bill, HB434, was introduced by Ms. Thompson for the 2015 legislative session. It would create a first offense penalty of $100 per employee not properly reported according to a report by Scott Braddock. Subsequent violations would result in a penalty not to exceed $1,000 per misclassified worker for violations that occur after the initial reported violation.
Companies, particularly construction companies, frequently misclassify workers as independent contractors when they fail to meet the standards of being an independent contractor. When this happens, the cheating company gains an unfair competitive advantage over companies who properly classify their employees and hire only legal workers. These same or similar companies will also use this misclassification process to bypass I-9 employee documentation requirements and hire workers who are not legally eligible to work in this country. This creates a huge magnet for illegal immigrant workers.
“Companies that skirt the law in this way can fraudulently cut their labor costs by as much as about 30 percent,” Braddock wrote. “Firms that are playing by the rules are at a competitive disadvantage because they’re investing in the workforce while bandits make a mockery of the rule of law. This happens in other industries as well, but it is especially rampant in construction.”
Braddock wrote that misclassification is already against the law and this bill does not create new regulations on businesses. It simply increases the penalties to a level that would create a deterrent effect. “If there’s no price to be paid for breaking the law, many will simply ignore it,” Braddock wrote. “We should also note that there are many legitimate uses of subcontractors. The problem arises when that classification is abused with the intent of cheating the system.”
The editorial board of the Dallas Morning News agreed. “If you think this isn’t your problem, think again. Injured workers end up in hospital emergency rooms for treatment on the taxpayer dime or out of work with no place to turn for the medical treatment that would allow them to return to work. Guess who picks up the costs? You do, either in public assistance or in the loss of millions of dollars in unpaid payroll taxes skirted by companies intentionally misclassifying workers.”
During the 2013 legislative session, lawmakers took a step forward in this process by creating penalties for misclassification on projects involving tax dollars. Legislation to extend the penalties to other construction companies was blocked by powerful home builder lobbyists.
Braddock told Breitbart Texas he expects to see a similar bill filed in the Texas Senate. Other versions of this bill might also be filed by other Texas House members.
Bob Price is a senior political news contributor for Breitbart Texas and a member of the original Breitbart Texas team. Follow him on Twitter @BobPriceBBTX.
Texas House Democrat's Bill Could Impact Hiring of Illegal Immigrants
Thu, 11 Dec 2014 14:42:30 GMT