Emily Timm's blog

The Texas Workforce Commission (TWC) is considering interagency collaboration to step up enforcement of worker misclassification violations in Texas, a point they discussed in a meeting with construction industry leaders in December.

Misclassification occurs when employers wrongfully identify their employees as independent contractors by providing them with a 1099 form instead of the W-2 for employees or by paying wages in cash and failing to withhold taxes.  By misclassifying their workers, unscrupulous employers cut their costs by getting out of paying payroll taxes and fraudulently obtaining workers compensation policies for fewer workers than they actually employ.

When government agencies such as the TWC, the Texas Department of Insurance (TDI), the Texas Comptroller of Public Accounts and the Attorney General of Texas share information, they can improve enforcement efforts by identifying likely violations for more effective investigations.   Read more »

Press release from Emily Timm of the Workers Defense Project about the Texas Workforce Commission vote this Monday on proposed legislation to strengthen penalties for worker misclassification in Texas:

As unemployment coffers go empty, TWC votes down proposal to increase penalties for employers who misclassify workers

Dishonest Employers Cheat Texans out of $35 Million in Taxes

Austin, Texas—On Monday, in a 2 to 1 vote, the Texas Workforce Commission declined to support a recommendation for the coming legislative session that would strengthen state penalties for employers who misclassify their workers as independent contractors, thus encouraging businesses to abide by the law, and leveling the playing field for honest employers. In Texas, misclassification results in a loss of at least $35 million dollars to the starved unemployment insurance fund each year.

Employers misclassify their workers when they fail to withhold taxes, pay in cash, or provide their employees with a 1099 instead of the W-2 form required for employees. Misclassification results in billions of lost tax dollars to the federal and state government. In certain industries in Texas, such as construction, it is estimated that as many as 38% of workers are misclassified. Texas employers who break the law and undercut responsible businesses save an estimated 9% on payroll taxes including workers’ compensation, costing Texas taxpayers millions in unemployment insurance each year.  Read more »