The Underground Economy
Updated 07/29/08 9:12AM

Employee misclassification is a growing problem in many industries and especially in the construction industry. It is part of this 'race to the bottom' that we Americans have been experiencing since all of these Free To Pillage America Trade Agreements have been signed.

Improperly classifying employees as 'independent contractors' in order to avoid paying them overtime and benefits is a blossoming tool for greedy and law-breaking contractors to use to underbid legitimate businesses by huge percentages. Anyone who knows of this going on or even suspects that it's going on ANYWHERE needs to contact either the union hall or the interagency task force on employee misclassification by calling 1-800-822-1122 or visiting the Michigan Department of Labor and Economic Growth website at www.michigan.gov/dleg then click on the Employee Misclassification Task Force link in the middle of the homepage.

This act of misclassification not only effects the employee and his/her family but also lowers the standards of all of the other tradesmen in the industry, because, in order for legitimate contractors to compete they have to lower the wages and benefits of their employees to try to underbid these illegal businesses. Not only that, these parasital businesses are able to underbid by not withholding state and federal taxes, not paying unemployment insurance, and not paying workers' comp. They are destroying the state and federal economy for their own greed(love of money). This has been going on for some time and because of it the state has had no money to enforce this and several other laws that shady businesses have been breaking for years. Fortunately the governor has put together this interagency task force and it will pay for itself by weeding out illegal employers which will lead to increased funding to all of the agencies involved.

Economic Reality Test-
Each state agency has its own test to determine if a worker is an independent contractor.The following questions are typical of those considered in classifying a worker;
- Does the employer incur liability if the relationship terminates at will?
- Is work performed an integral part of the employer's business?
- Does the worker depend upon the wages from that job for their living?
- Does the worker furnish equipment and materials?
- Does the worker hold himself or herself out to the public as able to perform the same tasks?
- Is the work customarily done by an independent contractor?
- Does the employer have "control" through the payment of wages, maintenance of discipline and the right to hire and fire the worker?

In Michigan, you must carry a masters and a contractors license to be an independent contractor(One man outfit). It is impossible for an apprentice or a journeyman to be an independent contractor.

If you see or hear of any of this going on please use the contacts listed above.

Reminder: If any journeyman electrician in West Michigan is making less than $39.39 total package per hour, you're not only putting the screws to yourself you are putting the screws to every electrician in this jurisdiction. Call us!

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