By Douglas J. McCarron
General President
United Brotherhood of Carpenters

Within a couple of weeks, thousands of Carpenters Union members will stand up and demand an end to construction employer tax fraud and the flagrant abuse of construction workers.

By taking part in Tax Fraud Days of Action, April 12–18, members of UBC councils throughout the U.S. and Canada will again raise their voices against employers who are motivated by greed and guided by the fraud playbook.

The crooked business practices perpetrated by these bad-actor employers devastate workers who are trying to make a decent living for their families, harm legitimate contractors who are struggling to compete and steal tax revenue from federal, state and local treasuries.

I hear it from contractors and carpenters alike: they only want a level playing field and to be treated fairly.

Two earlier posts to this blog tell the story.

Praxis Aguilar suffered two serious injuries while employed by a shady labor broker at a high-rise residential site. He was told to get back to work immediately—and got no help to receive medical care. All this after a difficult and expensive journey from his home country in search of a better life for himself and his young son.

For flooring contractor Debra Stiles, the pain has come while trying to build her business in New Jersey. In her words:

“My estimator and I have spent quite a bit of time on our expansion efforts. Some of the projects we have bid on include restaurants, retail stores and business offices. Since we are a smaller company, we have been able to bid competitively over the years. But we are hitting a brick wall in the private commercial market. In most cases, we haven’t even been able to come close in our bids.”

It’s flat wrong when ordinary workers struggle this much to make a living, and when honest businesspeople are iced out of the market—all due to a towering greed that has perverted our industry.

And it hurts everyone, as taxpayers and members of our societies in the U.S. and Canada.

A national study  by the Century Foundation shows the toll that tax fraud takes. Using conservative estimates, the study found:

Up to 2.1 million construction workers, or 19 percent, are misclassified as independent contractors or paid off the books.

Workers suffer $1.9 billion in overtime wage theft.

Workers’ compensation insurers lose $5 billion to employer premium fraud.

State and federal tax losses amount to $10 billion a year.

Employers at every level are involved, from the smallest subcontractors and labor brokers to the largest developers and construction company owners. Those at the top levels often look the other way when their subcontractors or labor brokers fail to pay workers properly or otherwise cheat the system.

Tax Fraud Days of Action is our annual campaign to bring attention to the crisis, but we fight fraud every day of the year.

We need more states and provinces to pass laws making upper-tier contractors liable for wrongdoing by the subcontractors they hire. Nine states and the District of Columbia have these laws, and they are helping to make better law enforcement possible.

We need more city and county leaders, district attorneys and other officials to tighten enforcement at all levels, so lawbreakers can be brought to justice.

We need insurance commissioners and legislatures to reform the workers’ compensation system to modify the insurer practices that enable premium fraud. 

We need to make sure bankers are following the rules about reporting suspicious transactions of construction account holders.

And we need employers to abandon the fraud business model. Contractors can do this by insisting that their subcontractors abide by the law, demanding proof of compliance and asking potential subcontractors how they plan to pay their employees. They can make sure their jobsites operate safely.

Thank you for all you do to make our industry better. I hope you will join us during Tax Fraud Days of Action, April 12–18.