The practice is so prevalent in the building trades in Utah that state Attorney General Mark Shurtleff is asking the Legislature for money to hire a special prosecutor and a tax-fraud investigator to build cases against construction companies. Lawmakers should grant his wish.
Offending business owners have been described as "unethical" individuals who take advantage of a loophole in the labor statutes, but that's a stretch. In reality, they're criminals who thumb their noses at the law. The practice is not fair to workers who are denied benefits, taxpayers who must make up for lost revenue and legitimate businesses that are forced to compete on an uneven playing field.
Violators employ a simple scheme that can save up to 30 percent on their labor costs. Instead of calling an employee an employee, they classify their workers as "independent contractors."
The difference is significant. Independent contractors set their own hours and perform a specific job for a set price using their own equipment without direct supervision. And they pay their own taxes as well as unemployment compensation and workers' compensation insurance premiums. Or at least they're supposed to.
Employees, by definition, are a different animal. They work as scheduled for an hourly wage with company equipment under the direct supervision of their employers, who are required by law to withhold taxes from their wages and contribute toward their unemployment and worker compensation benefits. That way, taxes get collected and employees get protected. Workers pay their fair share of income tax and enjoy a measure of financial protection from layoffs or injuries.
But it's not happening, due to intentional misclassifications that enable unscrupulous employers to shirk their responsibilities, and to the lack of resources that keeps the attorney general from enforcing the statutes.
Shurtleff is so confident of success that he claims the prosecutor and investigator, if hired, would "pay for themselves." It sounds like a bargain. The Legislature should honor his request.
