Iowa's Legislature to Target Employers: Again?
This past January I posted on an Iowa immigration bill that targeted employers. The bill sparked significant debate but was not passed.
Now in the wake of the raid at the AgriProcessors slaughterhouse and packing plant in Postville, Iowa, Iowa's legislative leaders are renewing promises to target employers.
This time legislative leaders will introduce legislation to prevent employers from hiring immigrant workers as independent contractors when they should be considered employees. It is also anticipated the legislature will renew efforts to create sanctions on employers that knowingly hire undocumented workers.
I have written on the issues relating to employees and independent contractors on several occasions. The issue of whether a worker is an employee or independent contractor is one of the most misunderstood (or should I say ignored) areas of the law. The proposed legislation is likely to crack down on the use of illegal immigrants serving as independent contractors in the construction industry.
In my experience a significant percentage of workers in the construction and other industries are misclassified as independent contractors rather than employees, not just illegal immigrants. For most companies I would argue it's more about saving on payroll taxes and workers' compensation insurance than hiring undocumented illegal immigrants.
As I have said in the past, the approach of misclassifying workers as independent contractors is not worth the risk. The safest course is to treat workers as employees if the workers' status as an independent contractor could reasonably be questioned.
If you have questions about whether to treat workers as employees or independent contractors be sure to consult with an employment lawyer.
Rush: You bring up some really excellent, common sense reasons not to hire people as independent contractors. May I also add a couple of subjective observations?
Usually independent contractors fall into two categories: those who are independent contractors because they've arrived at a place in their career that it meets personal income and time factors to be independent. In other words, they can make more money and have more time with their families. Illegal immigrants most certainly would never fall in that category.
The next category are people who have no job skills and no legal recourse if the sketchy-at-best terms of employment are not met. Of course, these jobs have no benefits either. Especially in a high-risk job like meat packing or tire building, you'd be pretty sadistic to not want your workers to be covered. Not having them covered sends the message: You are just a cog in a machine that can be replaced if you break. You are meaningless to the organization and are expendable.
Thanks for letting me rant, Rush.
That is interesting that you mention the construction industry is one of the most common industries to find misclassified workers. This is an industry where workers are often injured on the job and need the workers compensation and/or health benefits that being an employee entitles you to.
One misclassified IC marching down to an unemployment office or trying to claim workers comp can lead to a huge audit for the parent company/companies.