Texas State Representative Senfronia Thompson (D-Houston)filed a bill in the Texas House of Representatives to increase fines foremployers who misclassify workers as independent contractors when they shouldrightfully be classified as employees. This technique is often used bycompanies to work illegal immigrants as independent contractors avoiding theI-9 employment documentation process.
The bill, HB434, was introduced by Ms. Thompson for the 2015 legislative session. It wouldcreate a first offense penalty of $100 per employee not properly reportedaccording to a report by Scott Braddock. Subsequentviolations would result in a penalty not to exceed $1,000 per misclassified workerfor violations that occur after the initial reported violation.
Companies, particularly construction companies, frequentlymisclassify workers as independent contractors when they fail to meet thestandards of being an independent contractor. When this happens, the cheatingcompany gains an unfair competitive advantage over companies who properlyclassify their employees and hire only legal workers. These same or similar companieswill also use this misclassification process to bypass I-9 employeedocumentation requirements and hire workers who are not legally eligible towork in this country. This creates a huge magnet for illegal immigrant workers.
“Companies that skirt the law in this way can fraudulentlycut their labor costs by as much as about 30 percent,” Braddock wrote. “Firmsthat are playing by the rules are at a competitive disadvantage because they’reinvesting 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 inconstruction.”
Braddock wrote that misclassification is already against the lawand this bill does not create new regulations on businesses. It simplyincreases the penalties to a level that would create a deterrent effect. “Ifthere’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 ofsubcontractors. The problem arises when that classification is abused with theintent of cheating the system.”
The editorial board of the Dallas Morning News agreed.hospital emergency rooms for treatment on the taxpayer dime or out of work withno place to turn for the medical treatment that would allow them to return towork. Guess who picks up the costs? You do, either in public assistance or inthe loss of millions of dollars in unpaid payroll taxes skirted by companiesintentionally misclassifying workers.”
During the 2013 legislative session, lawmakers took a stepforward in this process by creating penalties for misclassification on projectsinvolving tax dollars. Legislation to extend the penalties to otherconstruction companies was blockedby powerful home builder lobbyists.
Braddock told Breitbart Texas he expects to see a similarbill filed in the Texas Senate. Other versions of this bill might also be filedby other Texas House members.
Bob Price is a senior political news contributor forBreitbart Texas and a member of the original Breitbart Texas team. Follow himon Twitter @BobPriceBBTX.