1099 Scam Exposes Abused Workforce in Construction

"Stan Marek, the president and CEO of the Marek Family of Companies, an interior contracting company that has offices across the state, recently testified before the Texas Workforce Commission in advance of the agency’s final preparations for its legislative agenda on what he said is a rampant problem within the construction industry.  Marek said employers purposely misclassify employees as subcontractors, or “1099” workers — so named because of the federal employment form they fill out — to avoid paying payroll taxes, workers' compensation and overtime, Marek said, but also to avoid knowing their workers’ legal status. ... "[P]eople are being misclassified and most are undocumented,” Marek said. “They aren’t getting workmen’s comp, [they are] getting paid less. They are denied all their rights.”  The practice also leads to undercutting business owners who play by the rules, industry leaders said, because employers who pay lower wages can offer more competitive bids for contracts.  Construction Citizen, an industry newsletter, reported that Michael White, with the Texas Construction Association, told commissioners that some TCA members have been underbid by about 25 percent by companies that misclassify their workers as independent contractors." - Julián Aguilar, Texas Tribune, Nov. 15, 2012.