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Workers’ Compensation Misclassification

This document explores the serious issue of workers' compensation misclassification within the construction sector, particularly in states like Missouri, Ohio, and West Virginia. It highlights statistical insights on wages, premium rates, and injury rates in Illinois, and provides examples of misclassification practices involving companies like Labor Ready. The economic impact of such misclassifications is alarming, revealing how they undermine legitimate contractors, distort job markets, and raise operational costs. The need for stricter enforcement and penalties against misclassification is emphasized for the sustainability of the construction workforce.

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Workers’ Compensation Misclassification

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  1. Workers’ CompensationMisclassification Laborers’ International Union of North America Construction Department

  2. Missouri Contractors’ Credit Premium Adjustment Program (Construction only)

  3. Illinois Workers’ Compensation Statistics • 7th highest in wages • 23rd highest in premium rates • 37th highest in injury rates Source: 2004 Annual Report

  4. The Labor Ready Story • Information was obtained from the monopolistic States of • Ohio • West Virginia • Washington

  5. Ohio • Labor Ready construction workforce misclassified as: • Retail store employees: 10.2% • Clerical office employees: 8.8%

  6. Washington • Labor Ready construction workforce misclassified as: • Office services employees: 47%

  7. West Virginia • Labor Ready construction workforce misclassified as: • Miscellaneous repair and maintenance (includes piano tuning, taxidermists, chain saw repair, lawn mower repair, firearm repair)

  8. West Virginia Piano Tuners or Construction Workers • Larry Richards dispatched by Labor Ready to 126 construction/landscaping projects • 99 times classified as a taxidermist/ piano tuner at $1.11 per $100 of payroll • Construction trades workers’ compensation rate is minimum $10 per $100 of payroll. Source: The Sunday Gazette-mail, Charleston, WV

  9. Economic Impact of Misclassification in Ohio

  10. Economic Impact of Misclassification in Washington

  11. Economic Impact of Misclassification in West Virginia *includes piano tuning, taxidermists, chain saw repair, lawn mower repair, firearm repair

  12. Misclassification Example • The Tenth Diamond Inc. and Astech Corp. are both owned by the same owner in Charleston, WV • Tenth Diamond, Inc. is classified as General Construction contractor paying $9 per $100 of payroll • Astech Corp. is classified as Asbestos Removal contractor paying $48 per 100 of payroll, but has no employees • Astech leased all employees from Tenth Diamond, Inc. • The State of WV claims that Astech/Tenth Diamond owes the state $800,000 in workers’ compensation premiums.

  13. NCCI Manual Premium Rates

  14. NCCI Manual Premium RatesEffects of Misclassification

  15. Conclusion • Workers’ Compensation Misclassification costs legitimate contractors, jobs. • States and insurance companies need more enforcement and penalties.

  16. Workers’ CompensationMisclassification Laborers’ International Union of North America Construction Department

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