New Orleans-area construction sites inspected for misclassifying workers
Louisiana Workforce Commission and members of a statewide task force visited New Orleans-area construction sites Thursday to investigate tips that employers are misclassifying workers.
The sites were not identified in a news release. Unemployment insurance tax auditors and workers’ compensation authorities inspected them without prior notification. Results will take several weeks to finalize, according to LWC.
“Unannounced site inspections will continue until the unfair business practice of misclassifying workers stops,” LWC Secretary Ava Dejoie said in a statement.
Dejoie said that since last July, nearly 1,000 audits of companies have uncovered over 3,300 misclassified workers, resulting in over $11 million in unreported taxable wages and hundreds of thousands of dollars in unpaid unemployment taxes.
LWC also has received numerous referrals of labor broker activity in the past year, the news release said. Sixteen audits have been completed, uncovering more than 1,000 misclassified workers.
The practice is prevalent in the construction industry, the news release said, “where labor brokers and contractors routinely and deliberately classify their workers as independent contractors and add to their profit margin by failing to deduct withholdings or pay unemployment taxes, by not paying federally mandated overtime compensation and also not securing workers’ compensation coverage.”
Although labor brokers and contractors say the workers they use are independent contractors, not employees, “simply calling someone an independent contractor doesn’t make it so,” Dejoie said.
LWC’s fraud section referred numerous cases to the Attorney General’s office last year. Suspected injured worker fraud totaled more than $36,000. Suspected employer fraud totaled nearly $131,000, and over 100 employers were asked to provide proof of workers’ compensation coverage. Thirty-one hearings were held in workers’ compensation courts.
LWC said it has created an automated system to track and record compliance activities because of a rise in the number of companies without coverage.
Additionally, a statewide, multi-agency task force organized last year. The GAME ON task force includes the LWC, the Louisiana Department of Revenue, the U.S. Department of Labor’s Wage and Hour Division and the Internal Revenue Service.