A $300,000 fine for misclassifying construction workers may be having a deterrent effect, according to officials with the Tennessee Department of Labor. The penalty was the largest to-date in a statewide crackdown on labeling full-time employees as contract workers.
TJ Drywall of Nashville was doing $2 million a year in business but only paying five percent of what regulators say they should have been in workers comp and unemployment insurance premiums.
The Labor Department’s Scott Yarbrough says the practice remains rampant in the construction industry.
“It upsets me when somebody who is following the rules – paying their insurance, paying their taxes like they’re supposed to. And they’re trying to compete with people who aren’t withholding any of that or paying for any of the benefits for somebody who is in fact an employee.”