When we pass by a construction site, we're likely to assume that the workers we see are employees.
That's not always technically accurate.
Some could be independent contractors.
Now, union officials charge that some businesses have been gaming the system by slapping the label of independent contractor on workers who in every way ought to be called employees.
The unions say the practice has cost workers and the state millions of dollars.
New Hampshire Public Radio's David Darman has more.
Joseph Donahue with the New England Carpenters Union says he sees it all the time.
just about every project we go on there are workers being misclassified as independent contractors when they should be classified as employees.
No one in state government or inside the construction trade can say how widespread the practice is in New Hampshire.
But a recent Harvard University study found that in Massachusetts, as many as 24 percent of employers in the construction trades misclassified their workers between 2001 and 2003.
Even if the workers used their employers' tools, worked when they were told to work and did everything else that typical employees do, they were treated as independents.
That misclassification was worth an estimated 150 million dollars a year to employers.
Joseph Donahue of the Carpenters Union says labeling someone an independent contractor rather than an employee eliminates a number of costs.
they don't have to pay workers compensation, they don't pay unemployment. they don't have to abide by minimum wage laws, they don't have to pay overtime and so on they don't pay the appropriate taxes and it is illegal in this state to misclassify your workers.
For many contractors in New Hampshire, misclassification is a sensitive subject.
It is common for general contractors to use subcontractors for plumbing, electrical work, and hanging drywall.
And much of the time, these subcontractors are legitimately classified that way, because they set their own schedules, work on more than one job, and bring their own tools.
Where things get complicated is in how they fulfill their obligations to the general contractor above them.
North Branch Construction in Henniker is a big general contractor that builds schools and office buildings.
Ken Holmes is president of the company.
He says on many projects, the firm has subcontractors who in turn hire smaller outfits to complete their work.
And he adds he has no way of knowing whether this lowest tier of subcontractors classifies its workers correctly.
its too far down the chain. we wouldn't know that and we're not we really can't ask for confidentiality and that type of thing. to ensure that ....as an equal opportunity employer, etc we're not allowed to ask to many questions...we can't go beyond the tier that we contract with. ...so we have a contract with our subcontractor, but we in turn can't go to the next level.
Some employers complain that this blind spot in overseeing subcontractors enables a few workers to straddle the line between who's an employee and who's an independent contractor.
They say these workers sign up as independents, but later change their tune when they're injured, so they can collect workers compensation.
Katherine Barger of New Hampshire's Department of Labor says about 20 of these cases reach her department each year.
But she says most of the time, there's a kind of collusion between the employers and workers that isn't challenged until something goes wrong.
often times somebody gets a job, and they're fine with it. the employer says to them, listen you can be an independent. I'll pay you more than if i have to classify you as an employee. and they consciously make that decision, not thinking of what they're giving up. and then when they get hurt, that's when it occurs to them that its something they should've been an employee. and that's often times when we see them. and that's when we look at the arrangement between the employee and the employer, look at the criteria, and are they an employee or are they a subcontractor?
The distinction of whether a worker is an independent contractor or employee has already been defined in New Hampshire law.
A bill that's already passed the Senate would tighten up the legal test of who qualifies as an independent, rather than as an employee.
Senator Margaret Hassan of Exeter is the prime sponsor of the measure now before a House committee.
part of the issue we're dealing with I think is honest confusion about whether the worker and the business owner can for themselves just pick a category, call it what they want because that's convenient for them at the time and one of the goals of this bill is to make clear that you can't do that, that the law defines what someone's classification is and that is because a general understanding and compliance with some basic rules, the safety net gets weakened for people.
The House Committee could vote on later today.
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