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Colorado Investigation Confronts Misclassification of Construction Industry Employees

Colorado Task Force Takes On Employer Abuse of Construction Industry Employee Classifications

What happens when Colorado determines that an unscrupulous contractor or subcontractor has willfully misclassified construction industry employees? Nothing good. The first offense may run as high as $5,000 per misclassified employee; subsequent abuse of construction industry employee classification can run as high as $25,000 per employee. Furthermore, according to the Colorado Department of Labor and Employment, second or subsequent abuses will also result in a two-year employer-block against contractor participation in:

  1. Acquiring job contracts with the State of Colorado
  2. AND receiving any funds typically granted by the State of Colorado (Colorado Department of Labor and Employment, "Misclassification").

In an industry that has enabled Colorado to add nearly 10,000 new jobs between April of 2017 and April of 2018, the risk of employee misclassification cannot be understated. Fines are costly. Losing opportunity to contract with the state may be company suicide. 

In Addressing The Excessive Misclassification of Construction Industry Employees, Colorado Governor John Hickenlooper Signs Executive Order

Due to recent issues in areas pertaining to payroll fraud and abusive employee misclassification, Colorado construction workers as a whole have missed out on approximately $750 million in annual income. But the problem sinks even deeper than that: Misclassification of construction workers also results in a reduction in tax revenue, which in turn manifests itself as significant drain on Colorado’s public resources. Whether paying employees under-the-table or just intentionally running them as 1099-subcontractors, the consequences remain the same:

  • Employees are paid less
  • Colorado loses tax revenue
  • AND when finally caught, the offending employers face serious consequences.

Taskforce Duties Address All Aspects of Colorado Misclassification of Construction Industry Employees

The Hickenlooper task force is designed to root out those guilty of misclassifying construction industry employees, but they are not limited to identifying guilty players in the issue of misclassification. This task force will also address the core consequences of such abuse of construction employee classification and they will seek out ways to reduce and control all related issues such as those involving nonpayment of:

  • Payroll taxes
  • Unemployment taxes
  • AND Worker’s compensation insurance premiums.

It’s about working with representatives from various Colorado labor groups, Colorado contractor associations and Colorado workers. The purpose: Bring about effective improvement in how construction information is shared, how complaints are filed, how employers are educated and how investigations are conducted and concluded. Everyone within the Colorado construction industry must be made aware of the negative effects of employee misclassification.

Avoid Accidental Incidents of Misclassification of Construction Industry Employees

In an age of digital documentation and tracking, those who remain handcuffed to hand written reports, spreadsheet analysis and delayed data feedback may get caught in various forms of government crossfire. On the left, you face massive document requirements concerning safety monitoring and auditing. On the right, you face a magnitude of quality-control specs. From above and below you must deal with workforce and asset allocation. And then somehow, you need to keep accurate, timely and reliable information on employee classification and payroll issues. Error at any point can result in a situation from which you cannot recover.

Take advantage of the Assignar workforce and allocation industry solution to the modern day demands in competitive construction project management.

Rick is a Growth Marketing Manager at Assignar.

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