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Report: Construction Contractors Cheating Workers, Taxpayers

Construction workers frequently are misclassified as independent contractors, according to a new report. (skeeze/pixabay)
Construction workers frequently are misclassified as independent contractors, according to a new report. (skeeze/pixabay)
January 14, 2019

HARRISBURG, Pa. – Unscrupulous contractors in southeast Pennsylvania routinely are violating labor laws and victimizing customers, including state and local government, according to a new report.

The report from the Keystone Research Center found many contractors in the regional Philadelphia construction industry are in a race to the bottom.

Stephen Herzenberg, author of the report, calls that "destructive competition" – cutting costs by misclassifying workers as independent contractors, cheating them out of overtime pay, investing little in worker skills and in some cases operating unsafely.

"When construction contractors and subcontractors compete by violating the law, wage theft, threatening workers' health and safety, in the end nobody else wins," he states.

The report says imposing stiffer penalties for labor law violations and directing more resources to enforcement agencies would help safeguard workers, law abiding contractors and taxpayers.

Herzenburg points out that effective enforcement can pay for itself by directing revenue from fines and penalties to enforcement agencies, and it can change the current landscape of the construction industry.

"It creates a situation where, instead of people violating the law becoming the rule, you get back to what you're supposed to have, which is most companies complying with the law," he explains.

The report cites a study that found the Philadelphia residential construction industry operates "informally" with no pretense of adhering to state or federal labor laws.

Herzenberg notes that the skilled construction trades are among the last pathways available for blue collar workers to move into the middle class, and reining in construction companies that break the law benefits everyone.

"In the end, that's not only good for our middle class, it's actually a better way to run your economy,” he stresses. “You end up with a more productive economy as a whole as well as a more productive construction industry."

Andrea Sears, Public News Service - PA