The North Carolina Legislature is considering how the state government can stop construction companies from illegally misclassifying employees as independent contractors to avoid paying higher wages and payroll taxes.
Spurred by an investigative series about the practice nationwide by news company McClatchy, lawmakers said they will explore the issue in the state. Investigators there estimate misclassification by North Carolina construction companies—much of it deliberate—has cost state and federal tax coffers up to a half billion dollars.
Over two years, the state has reclassified almost 10,000 employees who were incorrectly deemed by their employers as independent contractors.
Misclassification might save employers some money, but Bill Rowe of the North Carolina Justice Center says the government isn’t its only victim. "There's a lot of victims here, generally being the people, the businesses that are doing the right thing and then folks that are working hard at a job that are then taken advantage of," he told The News and Observer.