Colorado Gov. John Hickenlooper, through an executive order, has created a task force that will investigate and find ways to combat the misclassification of construction industry employees as independent contractors, according to www.constructiondive.com.
The task force will try to improve how state and other agencies investigate and share information about alleged cases of misclassification. The hope is to make filing complaints easier; educate employers as to the difference between independent contractors and employees; and increase public awareness about the negative effects of misclassification.
Misclassifications can lead to payroll fraud including, nonpayment of payroll taxes, unemployment tax and workers' compensation insurance premiums.
According to the United Brotherhood of Carpenters, when companies misclassify employees as independent contractors it can give them a 30 percent bidding advantage over legitimate businesses because they don't pay the labor costs—taxes, insurance, benefits—that everyone must pay.
In Florida, a November 2017 Department of Financial Services investigation resulted in the arrest of contractor Carlos Contreras for underreporting the number of employees, payroll amounts and type of work performed to get out of paying about $1 million in workers' compensation premiums. Authorities allege Contreras paid $6.5 million in payroll between January and August 2017 while reporting on his workers' compensation insurance application he had an annual payroll of $274,000. If convicted, Contreras faces up to 60 years in prison.
The task force in Colorado will report to Hickenlooper annually about its efforts and make recommendations for changes.
