It's still before dawn in Austin, Texas. The sun won't be seen for hours, but parking lots and street corners throughout the city are alive with chatter as laborers, carpenters and even some electricians arrive early to queue up for jobs. Construction is booming in the metro area, and subcontractors are on the lookout for employees willing to work on the cheap. Spanish is the first language here. Most are immigrants from Mexico and Central America. Many are undocumented.
Dependent on the goodwill of the foreman for work, their average hourly wage often amounts to less than $10. They don't have an office or business cards, and often the only work items they own are a pair of steel-toed boots. The last thing they would call themselves are small businessmen. But according to tax forms filed by their employer (at least for those who don't just pay under the table), that is exactly what they are. And that means they are ineligible for unemployment benefits, minimum wage, overtime pay or Social Security. And they are not covered by the National Labor Relations Act and other workplace protections.
The practice is called "1099ing," after the IRS Form 1099 issued to contractors, and it's one of the biggest problems facing workers across the country. It's against the law, but in Texas, payroll fraud is becoming more and more the norm in the construction industry.