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The Damage Caused by Unreported Employment Part 1

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Unreported employment goes by many names: moonlighting, a ghost workforce, working off the books or under the table. No matter what you call it, contractors that don’t properly report their workers to the government can irreparably damage their community, workers, and themselves. In this two-part series, a Naples construction lawyer with Cotney Construction Law will be detailing the potential consequences of unreported employment.

Even if you believe a worker is an independent contractor, that might not be the case. Worker misclassification is a common mistake that can lead to an investigation from the Department of Labor (DOL). Partner with the Naples construction attorneys at Cotney Construction Law to ensure that you are neither overpaying or underpaying your employees.

It’s the Honest Companies That Have to Pay

It’s clear what the short-term incentives are for a construction company to use unreported employment. Such an underhanded tactic allows a company to outbid their competition and secure construction projects. When this happens, honest construction companies that pay their employees fair wages have to work that much harder and pay more in taxes than their illegitimate and cheating competitors. The lost tax revenue from unreported employment could have been fed back into the industry to fund public construction projects. Instead, it will line the pockets of deceitful companies that are attempting to avoid taxes and, as we’ll see in part two, workers’ compensation insurance.

It’s Catching up with Them

Unreported employment is prevalent across the construction industry, and it’s beginning to catch up with the companies that are committing it. The DOL’s Wage and Hour Division (WHD) is stepping up their investigations and cracking down on companies that are committing worker misclassification. While the short-term benefits of not reporting your employees may seem tempting, it can lead you to being forced to pay off tax liens, unpaid wages, and hefty penalties.

As we’ve mentioned, even honest businesses can accidentally commit worker misclassification. The independent contractor you’ve been paying in cash may actually be considered an employee after an investigation and DOL hearing. Don’t let an honest mistake bring down your entire business. Partner with the Naples construction lawyers at Cotney Construction Law to ensure that you are compliant with state and federal laws year round.

If you would like to learn more about unreported employment, please read part two.

If you would like to speak with a Naples construction attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.