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Texan employers may misclassify workers to avoid obligations

Workers in occupations like construction and other industries that are characterized by significant amounts of subcontracting may be at risk from employers who deny them their rights. These companies commonly engage in a process known as misclassification, where they treat employees as independent contractors who lack the rights and protections guaranteed to workers. According to the Department of Labor, companies that engage in such practices are breaking the law, but many employers continue to do so in order to avoid payroll taxes and shirk other important duties.

Two judgments from 2015 highlight this problem. A construction company that forced some workers to become owners of an LLC was able to sidestep hundreds of thousands of dollars' worth of payroll taxes as it built homes in Utah. When the state cracked down on the practice by demanding that the firm provide unemployment insurance and workers' compensation coverage for LLC members, the offending parties simply moved to Arizona and began doing business there. They were eventually caught, fined $100,000 and made to pay $600,000 in damages and back wages.

In addition to not paying into workers compensation' or unemployment insurance, companies that misclassify their workers place Social Security, Medicare and other aid initiatives under extra stress. They may also get away with falling short of minimum wage requirements or failing to pay overtime compensation.

Disreputable employers might go to great lengths to avoid having to dole out overtime pay or satisfy workers' compensation claims. Some employees who speak up for themselves find that their bosses unfairly retaliate against them with further abuses, such as wrongful termination, workplace harassment or abnormal work assignments. Having the assistance of an attorney may help victims of employment law violations make stronger cases and fight back against companies without jeopardizing their future careers.

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