SMACNA Submits Testimony, Issue Letter on Worker Misclassification at US House Hearing

Written hearing statement to the Subcommittee on Workforce Protections outlines the need to pass legislative and regulation to combat worker status fraud within the construction industry.

SMACNA submitted detailed and forceful testimony for an April 19th hearing of the Committee on Education and the Workforce, Subcommittee on Workforce Protections, reviewing efforts to enforce independent contractor rules at the state and federal levels and potential regulations expected this summer. The hearing, titled “Examining Biden’s War on Independent Contractors,” has a stated objective of examining the Department of Labor’s independent contractor rule, among other statutes. Still, the Construction Employers of America (CEA), NECA, TAUC, and SMACNA provided eye-opening statements that became a particular focus of the hearing.

In written testimony and a letter submitted to the committee, SMACNA outlined a decades-long effort to convince Congress and the state legislatures of the critical need for impactful regulations backed by aggressive enforcement to combat worker status fraud. SMACNA believes that legitimate contractors are handicapped by competitors using illicit business tactics such as reclassifying their employees as independent contractors. This enables them to avoid employer–employee withholding laws, simply to bid unfairly and illegally lower for projects.
In its testimony, SMACNA outlined the need to protect workers by ensuring they receive earned benefits and worker protections to protect the industry from an expedited “race to the bottom” that would reduce industry competitiveness and negatively impact project and workforce training quality.

In addition, SMACNA emphasized the need to protect taxpayers from firms that do not classify workers as employees to withhold significant payroll taxes, receiving what amounts to a bidding and profit subsidy at the expense of legitimate industry competitors bidding across the market sectors.
SMACNA emphasized to the subcommittee members and Committee Chairperson that the federal government should reform current laws and regulations to boost fair bidding competition. It was also suggested that Washington, DC, look for reform ideas like those enacted by bipartisan efforts in many state capitals, such as Illinois, Ohio, and Minnesota. These states forcefully addressed the widespread and growing practice of misclassifying employees, reversing the harm to worker retirement, economic security, and the taxpayer.

Please take a moment to review SMACNA’s letter to the committee, SMACNA’s testimony, and the Construction Employers of America (CEA)’s letter to the committee.