The work we do at Construction Citizen to advance a socially responsible, sustainable and value added construction industry isn't just being noticed by those in the industry itself. Others, including professional services firms, have started to take note and some even are taking action.
I recently sat down with Tony Fierro, President of K & S Insurance Agency in Rockwall, Texas, to talk about why he's made the decision to “join the movement,” as he put it. Until Fierro made his commitment, all of our great sponsors had been contractors. Since K & S Insurance is the first non-contractor to join, Fierro felt it was important to explain why he made the decision and encourage others to do the same. Fierro said it comes down to ethics and the bottom line.
One of Fierro’s longtime clients, BRI Commercial Roofing President Mike Beeter, is a proud Construction Citizen sponsor. “He and I have had these types of conversations before,” Fierro said of Beeter. “It aligned with our company philosophy, and I just knew it was something that our company needed to be a part of.”
The problem of worker misclassification, which we’ve reported on extensively and is now thankfully getting more national attention, doesn’t just serve as a roadblock for ethical construction companies that are working to compete, Fierro said. It has ripple effects in the insurance industry as well. “You hear it over and over that the low bid on bid day...may not be the best long-term option for that project,” Fierro said. “We want to play fair and do things with integrity.”
As our readers know all too well, worker misclassification happens when companies intentionally pretend that their workers are independent subcontractors rather than employees. The IRS has guidelines for who can be paid as a subcontractor, and states like Texas have started to attempt to rein in the cheating in a targeted way, but much more needs to be done.
“Just like fair-playing contractors, we also are affected by those cheating the system and not paying workers' compensation premiums due to worker misclassification,” Fierro said, noting that contractors who cheat on their payroll taxes in this way are able to reduce their labor costs by as much as 30 percent.
“If it's a misclassified worker, there isn't any money going into the hopper to offset potential claims later,” he said. He said rates eventually go up to offset the losses suffered when people are injured and no money has been paid into the system to deal with those costs. That’s one reason the Texas Legislature is now looking at the possibility of mandatory workers’ compensation coverage for all jobs in Texas, or at least all jobs in the construction sector.
Watch the seven-minute video below to check out Fierro’s take on the issues, and let us know what you think in the comments.
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