A study released earlier this week looking into Tennessee construction worker wages found that one in five construction workers was either misclassified as an independent contractor or paid under the table since 2006. The study was presented to Tennessee committee on House Consumer and Employee Affairs this Wednesday.
The study was based on state and federal agency data and conducted by professors at Middle Tennessee State University and Tennessee Tech. It concluded that 38,680 Tennessee workers were misclassified or paid under the table, which impacted the state by a nearly $15M loss in unemployment taxes and $92M to workers’ compensation premiums. According to the study, those employers who don’t pay appropriate wages and associated employment costs poison the well for those honest employers who pay their premiums and follow federal and Tennessee employment law.
Misclassified and undocumented workers lose many of their rights. Occupational safety typically suffers by business not following regulations. Some have raised concerns that higher Tennessee workplace injury may result. Financial concerns exist for the illegally underpaid TN wage worker for proper workers compensation and real take-home pay. A true independent contractor owns his or her own tools, sets own hours, and negotiates pay. (For more from our Nashville, TN law firm on prevailing wage and construction worker classification.)
New legislation is underway to address misclassification, though after January’s session, we’ll see if Tennessee lawmakers will bend in their reluctance to ensure appropriate pay practices are met by subcontractors.
According to the Census Bureau, Tennessee employed 220,000 construction workers, but TN payroll has only 130,000 Tennessee construction workers on record.