US: Tennessee State has launched a crackdown on construction companies classifying full-time workers as contractors in order to avoid taxes and insurance. A US$300,000 fine for misclassifying construction workers may be having a deterrent effect, according to officials with the Tennessee Department of Labour. The penalty was the largest to date in a state-wide crackdown on labelling full-time employees as contract workers.
TJ Drywall of Nashville was making US$2m/yr, but only paying 5% of what regulators say that they should have been in workers compensation and unemployment insurance premiums.
The Labour Department's Scott Yarbrough said that the practice remains rampant in the construction industry. "It upsets me when somebody who is following the rules, paying their insurance and paying their taxes like they're supposed to, is trying to compete with people who aren't."
After seeing the giant fine imposed, Yarbrough said that another business owner in Sumner County volunteered to reclassify his contract workers to avoid a fine. The money collected in fines for misclassifying employees will go toward hiring more investigators.
