{"id":35202,"date":"2026-04-28T04:31:18","date_gmt":"2026-04-28T11:31:18","guid":{"rendered":"https:\/\/essential.construction\/news\/worker-misclassification-in-construction-leads-to-competitive-imbalance-report\/"},"modified":"2026-04-28T04:31:18","modified_gmt":"2026-04-28T11:31:18","slug":"worker-misclassification-in-construction-leads-to-competitive-imbalance-report","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/worker-misclassification-in-construction-leads-to-competitive-imbalance-report\/","title":{"rendered":"Worker misclassification in construction leads to competitive imbalance: report"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><br \/>\n        <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/img\/play.svg?313321260226\" alt=\"-\"><br \/>\n        Listen to the article<\/p>\n<p>            <span class=\"text-to-speech__button__audio-length\">5 min<\/span><\/p>\n<p>    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/text-to-speech.divecdn.com\/newspost\/818579\/2026-04-27_14.22.29\/worker-misclassification-construction-bidding-employees.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<p><span><span><span><span><span><span>A new report on <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.epi.org\/publication\/misclassifying-workers-as-independent-contractors-is-costly-for-workers-and-social-insurance-systems\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>worker misclassification<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> has singled out construction, both for the scale of the problem and the magnitude of its impact in the industry.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Misclassifying employees as independent contractors carries significant financial consequences for workers, as well as for state and federal systems that rely on payroll-based contributions, according to the report from the Washington, D.C.-based Economic Policy Institute, a nonprofit think tank focused on economic justice.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>While the issue spans multiple industries, construction stands out.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cConstruction has the highest median annual earnings of the occupations we are comparing, so that can explain why the dollar amounts they \u2018lose\u2019 from misclassification are higher,\u201d said Nina Mast, a policy analyst at the Economic Policy Institute and co-author of the report.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>That distinction is important. Higher wages in construction mean that when workers are misclassified, the financial losses, whether in unpaid overtime, lack of benefits or missed employer contributions, are larger. So, when compared to lower-wage industries, the stakes are simply higher.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><strong><span><span>Costs of misclassification for contractors<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>The impact extends beyond workers. For nonresidential contractors, misclassification can distort the competitive landscape.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWhen employers illegally misclassify their workers, they are able to substantially reduce their labor costs, which gives these unscrupulous employers an unfair advantage over law-abiding businesses,\u201d Mast said. \u201cThis behavior by unscrupulous firms puts pressure on law-abiding firms to break the law in order to lower their labor costs, leading to a race to the bottom on labor standards, which is where the construction industry finds itself.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>For contractors bidding on commercial and institutional projects, that \u201crace to the bottom\u201d can have real consequences.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Firms that properly classify workers and therefore pay payroll taxes, workers&#8217; compensation premiums and benefits correctly, often find themselves competing against companies that artificially suppress costs, according to Mast. The result can be distorted bidding processes, where the lowest bid is not necessarily the most compliant or responsible one.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The report also compares how construction stacks up to other industries. EPI estimates that misclassified construction workers lose roughly $20,000 annually in income and job benefits compared to what they would have earned as an employee. That\u2019s far higher than workers in lower-wage industries such as janitorial services or retail, where losses are closer to $6,000 to $8,000, and on par with other high-impact sectors like trucking.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Brian Turmail, vice president of association and industry image for The Associated General Contractors of America, stressed that proper worker classification is critical to maintaining fair competition across the industry.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Correctly classifying workers requires accounting for payroll taxes, workers\u2019 compensation, overtime and other compliance obligations \u2014 costs that not all firms take on, he said. At the same time, Turmail said that independent contractors can play a legitimate role when used appropriately.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWhen used and applied correctly, they can play an important role in construction, particularly on short-term or highly specialized projects,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>However, he added that the key challenge is distinguishing those arrangements from situations where workers are effectively tied to a single employer.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThat\u2019s why we have advocated for clear, consistent rules, making it easier for contractors to make good faith decisions about classification,\u201d Turmail said. \u201cContractors should also regularly review how workers are engaged and managed on jobsites.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><strong><span><span>Further exposure for contractors<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>A misclassified worker who gets injured may try to prove their misclassification to gain back benefits. For contractors, that creates additional risk exposure.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<section class=\"storylines-carousel-wrapper hide-small show-large\" id=\"desktop-carousel\"\/>\n<p><span><span><span><span><span><span>Disputes over classification can lead to audits, fines, back wages and potential legal action. In an industry already facing labor shortages and tight margins, those liabilities can quickly become significant.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Mast pointed to potential solutions, some of which are particularly relevant to nonresidential construction. One approach involves leveraging public procurement processes to enforce stronger labor standards.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201c<\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/pla-mandate-remains-omb-federal-contracting\/750679\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>Project labor agreements<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> can increase bidding competition, lower the cost to taxpayers, and ensure high-quality, skilled labor on construction projects,\u201d Mast said. \u201cSuch measures aim to level the playing field by ensuring that all bidders adhere to the same labor standards, reducing the incentive to cut costs through misclassification.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/worker-misclassification-construction-bidding-employees\/818579\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 5 min This audio is auto-generated. 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A &#8230; <a title=\"Worker misclassification in construction leads to competitive imbalance: report\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/worker-misclassification-in-construction-leads-to-competitive-imbalance-report\/\" aria-label=\"Read more about Worker misclassification in construction leads to competitive imbalance: report\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-35202","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/35202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=35202"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/35202\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=35202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=35202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=35202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}