Ariz. Whistleblower Fights Worker Misclassification


October 15, 2013


The construction industry is making a strong comeback in Arizona, with the number of construction permits up in 2012. But the state actually lost construction jobs over the summer. The reason, says many industry observers: worker misclassification, which is a way for contractors to keep employees on the worksites but off the books.  


Misclassification occurs when a full-time employee is listed as an independent contractor by his or her employer.

As we reported in the May Electrical Worker:

Deliberate misclassification can save dishonest contractors upwards of 30 percent in payroll and other taxes, but for workers, taxpayers and honest employers, the practice amounts to millions in lost wages and revenue.

A recent analysis of the Texas construction industry by the Workers Defense Project — an Austin-based workers' rights group — found that more than 40 percent of Lone Star construction workers were misclassified as independent contractors.

The group says that rampant misclassification amounts to a hidden tax on employers who follow the law.

Misclassification cheats employees out wages and workplace rights, and makes them ineligible for Social Security, workers compensation, unemployment and many retirement benefits.

One Grand Canyon State tradesman has had enough. As reported by the Arizona Nightly News, John Jackson has made it his mission to expose payroll fraud.

The 51-year-old tile craftsman from Casa Grande began a crusade two years ago to expose unlicensed construction after Jackson says it became impossible for him to secure flooring contracts on new-home sites. He said the going rate for tile work dropped to unrealistic levels because subcontractors were willing to take illegal shortcuts to complete the work.

“The people that are willing to break the law are the ones who get the jobs,” Jackson said.

He has filed dozens of public complaints and invited 12 News to new-home construction sites where alleged unlicensed work was carried out, potentially done by untrained or undocumented workers. Although not everyone agrees with Jackson’s methods, public officials acknowledge that in many cases, he appears to be right.

Sadly the practice, which is particularly prevalent in so-called right-to-work states and other areas with low union density, is on the rise.

“‘We’ve seen misclassification quite a while,” Eric Murray, district director for the U.S. Department of Labor, Wage and Hour Division told Arizona Nightly News. “However, we’ve seen trends lately that are very disturbing to us.”

Watch Jackson’s story here.

And click here to find out more about combatting worker misclassification.