In a field like construction, where many workers are contractors or are temporary workers, it can be easy for employers to stumble into employee misclassification issues that can lead to wage violations—resulting in legal action, penalties, and fines.

In Orange County, for instance, a concrete and asphalt recycler was recently subject to a stiff judgment: $149,000 in back wages and damages to 40 employees that had been misclassified as independent contractors, and not properly compensated for overtime work, according to the U.S. Department of Labor.

Perhaps some employers who misclassify their workers don’t realize the ramifications of their actions, which are an illegal attempt to avoid paying full workers compensation premiums, wages, taxes, and other expenses. Employee misclassification also denies workers other benefits, such as unemployment insurance and overtime compensation. It’s a disturbingly common practice, according to the Economic Policy Institute, which reports that 10-20 percent of businesses misclassify at least one employee as an independent contractor.

The employee-contractor conundrum isn’t the only misclassification challenge. Employers can also misclassify employees in high-risk positions as working in lower-risk positions. And there’s even worker classification issues pertinent to payroll records. In most trades, there are two workers compensation classifications for payroll reporting; employers pay lower premiums for workers whose hourly wages rise above a certain level. But qualification for those low-rate classes relies on verifiable, accurate payroll records.

Regarding the Orange County concrete and asphalt recycler, the director of the Wage and Hour Division’s San Diego District Office said that the case “highlights the disturbing trend of employers intentionally misclassifying employees as independent contractors,” according to a story in the Orange County Register.

The Register added that director Rodolfo Cortez concluded, “Employers cannot simply call someone a contractor and make it so.”

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