May 2015: Government Affairs

Words: Dan Kamys

Our Voices Are Being Heard

Mike Sutter

Mike SutterI am more excited than usual for this year’s MCAA Legislative Fly-In on May 13-14. I have been going to the fly-ins for a number of years, and each year in our position papers, Misclassification of Employees as Independent Contractors is listed. I always make sure it is one of the first things I talk about to our elected officials. Misclassification is rampant in our market, and I have learned it is a problem across the country. Recently, there was an investigation of a large multi-state subcontractor in our market, and it was discovered they only had 16 employees and a couple thousand independent contractors. This subcontractor was obviously illegally misclassifying the employees and suffered severe fines and liquidated damages, and was required to pay back wages by the Wage and Hour Division. Dr. David Weil, the national administrator for the Wage and Hour Division of the Department of Labor, came to Phoenix for a speech on Misclassification of Employees. I was invited to be part of a small group to meet privately with him the day before his speech. I researched Dr. Weil and found out he recently wrote a book entitled “The Fissured Workplace.” I downloaded his book and soon learned that it is was all about the practice of misclassifying employees. The advantages for an employer to illegally misclassify employees as independent contractors are many. There are the savings for not paying payroll taxes, overtime, minimum wages, federal and state unemployment insurance, Medicare, Social Security, workers compensation, health insurance and retirement benefits. Obviously, independent contractors are not required to be processed through E-Verify, therefore allowing companies to hire illegal workers. These savings can easily add up to a 30 percent savings in labor when bidding against a contractor that is operating lawfully. There are also disadvantages to the employees that are misclassified such as depressed wages, lack of benefits and dangerous work environments without workers compensation insurance. Dr. Weil stated, “Once it starts in a part of an industry, it very quickly spreads.” Dr. Weil also said it is important to level the playing field for those contractors that are operating legally and have to compete for projects against those that are not. There are clear definitions of the differences between employees and independent contractors, and many of the independent contractors are clearly employees that have been misclassified. After our meeting with Dr. Weil, I approached him to thank him for coming to Phoenix to talk about this important topic. He asked me if I was with the MCAA, and I was shocked that he knew that as I was just invited as a small business owner. I said I was, and he then asked if we go to D.C. every year and talk about misclassification to our elected officials. I responded that it is the first thing I talk about in every meeting, and he said, “Your voices have been heard.” That was music to my ears as I was wondering if we were talking to deaf ears when in D.C. During our meeting with him and in his speech the next day, he let us know that he and his Wage and Hour Division investigators are focusing on this illegal activity and had a lot of ideas to combat the problem. This year during our MCAA Fly-In, I will be thanking our elected officials for listening to us. We are also setting up a meeting with Dr. Weil while we are there to discuss some ideas. Don’t give up if you talk to your representatives a couple times and don’t seem to get the results you were hoping for. Keep talking to them until “our voices are heard.”
Mike Sutter owns Sutter Masonry in El Mirage, Ariz., and serves as vice chairman of the MCAA. He can be reached at mike.sutter@suttermasonry.com.
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