Construction in Texas: Workers Underpaid, Contractors Skirting the Law

In this blockbuster 2-part report by NPR's Wade Goodwin, construction in Texas comes under the microscope.  Highlights:

April 10, 2013 - "Homebuilding and commercial construction may be an economic driver for the state, but it's also an industry riddled with hazards.  Years of illegal immigration have pushed wages down, and accidents and wage fraud are common.  Of the nearly 1 million workers laboring in construction here, approximately half are undocumented. ... The economic collapse of 2008 brought with it an onslaught of wage theft, according to the Austin-based Workers Defense Project.  At the end of the week, construction workers sometimes walk away with $4 or $5 an hour, sometimes less, sometimes nothing.  "Ninety percent of the people who come to our organization have come because they've been robbed of their wages," says Cristina Tzintzun, the Workers Defense Project executive director.  The organization has co-authored a report with the University of Texas, Austin, that examines working conditions in the Texas construction industry.  For more than a year, WDP staff and University of Texas faculty canvassed Texas construction sites, surveying hundreds of workers and gathering information about pay, benefits, working conditions and employment and residency status. ... If wage theft is a nasty cousin of slavery, Tzintzun says there's a deeper, more fundamental sickness affecting the Texas construction industry: the misclassification of construction workers as independent contractors instead of as employees.  "We found that 41 percent of construction workers, regardless of immigration status, were misclassified as subcontractors," she says.  It works like this: Pretend you're an interior contractor, drop by the Home Depot parking lot and pick up four Hispanic guys to install Sheetrock for $8 an hour.  By law, these men are your employees, even if just for the day.  But in Texas, as in many other states, it's popular to pretend they're each independent contractors — business owners. Which means you are not paying for their labor but for their business services.  With this arrangement, the contractor — you — don't have to pay Social Security taxes or payroll taxes or workers' compensation or overtime.  Instead, you pretend the undocumented Hispanic worker you've just paid in cash is going to pay all those state and federal taxes out of his $8 an hour himself.  "Our estimation is that there's $1.6 billion being lost in federal income taxes just from Texas alone," says the Workers Defense Project's Tzintzun.  The report estimates that $7 billion in wages from nearly 400,000 illegally classified construction workers is going unreported in Texas each year, resulting in billions of dollars in revenue lost owing to institutionalized statewide payroll fraud."

April 11, 2013 - "That's where the subcontractors — and "independent contractors" — come in.  "It's very common in our industry for hourly guys to do the framing, which is putting up the middle studs, and then hiring a sub-crew to come in and do the Sheetrock, and then hiring a different sub-crew to come in and do the taping and floating," Marek explains.  "And a different sub-crew to come in and do the grid for the ceiling.  And a different crew to put in the tile.  That's very common."  And that's how an estimated half-million undocumented, mostly Hispanic construction workers go to work each day in Texas. ... Trent, who asked that NPR not use his last name because the IRS might take an interest in his business, designs and builds landscapes in the Dallas-Fort Worth area.  "I don't pay anyone by the hour. In fact, I treat the guys that work on my crew as subcontractors — they are self-employed," he says.  This is a key distinction.  If Trent were to classify his workers as employees, he'd have to pay taxes, Social Security, unemployment and overtime.  But by saying his workers are actually independent contractors — in essence, business owners — he's off the hook.  Trent says his workers have been working with him for years.  He has between four and seven laborers per day on most projects.  And he knows most of them don't have papers.  "I would say 10 percent are documented," he says."