Skip to Main Content

Keeping you informed

How Construction Companies Can Reduce Growing Risks Tied to Contractor Classification

Construction Business Owner

  • March 11, 2024

Debbie Edney, Jenna McGee, and Amanda Williams wrote in Construction Business Owner about how "misclassification of workers has increasingly become a target of the U.S. Department of Labor, the National Labor Relations Board, and plaintiffs' attorneys who believe that many companies incorrectly use and identify employees as independent contractors."

"The construction industry, particularly in the South, has been flagged by the Department of Labor, and the former head of the department’s Wage and Hour Division has written that 'the problem has been long entrenched' in the construction industry," they continued. "Whether a regulator takes action or an independent contractor sues, claiming to be misclassified, these cases pose significant risks for companies. In late 2023, two national companies paid $55 million and $30 million to settle misclassification claims. In most cases, the settlement is just the start of the impact to the bottom line: fees and penalties — including criminal penalties — are possible, and reclassifying independent contractors as employees results in substantial increases in labor expenses going forward."

"From our experience litigating these kinds of disputes and advising clients on independent contractor agreements," they wrote, "construction companies can take several steps to limit or avoid these types of cases. They include ensuring the use of clear and up-to-date contracts, training employees at all levels of the company (top to bottom) on how to interact with independent contractors, and navigating potential joint employer issues that arise in the construction industry."

Click here to read the full article: Complying With the Department of Labor’s Independent Contractor Rules

Construction Business Owner is a leading publication serving the construction industry and has an audience of more than 40,000 readers.

You can subscribe to our latest articles and insights here.