Joshua Lawson of South Carolina started working as a construction worker after he dropped out of high school. Soon afterwards, he learned the hazards of having an employer misclassify him as an independent contractor, which caused his on-the-job injuries not to be covered by workers’ compensation. Lawson was hired by Gene Pack of B&J Builders as an employee for $10 an hour, but it was an informal agreement with no further discussion of Lawson’s scope of employment. Pack did not withhold any taxes from Lawson’s paycheck and when Lawson brought his 1099 IRS form to a tax preparer, Lawson was told he owed a year’s worth of taxes. Since the IRS considered Lawson an independent contractor he owed more in payroll taxes than he would have if he was an employee—about $3,000 in federal and state taxes.
Lawson needed the money and kept on working. Then one day, Lawson was standing on a ladder at a construction site when he heard a commotion above him. A bundle of two-by-fours were falling so Lawson grabbed the wood to shield the workers below him. Lawson badly injured his shoulder and was unable to lift his arm for weeks.
Lawson brought his doctor’s bill to his employer B&J Builders but was told that it was his responsibility since he is an independent contractor, not an employee. Lawson did not turn to an attorney because he didn’t think anyone could sympathize with his situation. Unable to find other work, Lawson went back to work for B&J Builders.
The following year, B&J Builders received federal tax credits to build an apartment complex and an additional $6 million in stimulus gap financing to speed up the project. B&J Builders submitted payroll forms with Lawson’s name along with thirty other employees. But on the forms, taxes were not withheld on any of the employees and this is a violation of federal requirements regarding workers designated as employees. In those instances, the Department of Labor and the IRS usually dictate who can be considered an employee or an independent contractor.
Lawson should have been considered an employee and not an independent contractor because he was told where to work each day, and was given his work hours and the tasks at hand. If an employer has substantial control over a worker then the worker is an employee; an independent contractor has more leeway and freedom on when, where and what to work on. The federal government considers the amount of control and financial gain the worker has in determining whether a worker is an employee or an independent contractor.
South Carolina’s Independent Construction Workers
Lawson is not alone. Here in South Carolina, a third of the construction companies working on the $10 million Village at River’s Edge housing project classified their workers as independent contractors. Classifying workers as independent contractors instead of employees saves companies tax and insurance money, but it puts workers at risk—especially those who work in jobs where physical injury is more likely.
In the last two years, at least 338 South Carolina companies have misclassified 2,189 workers as independent contractors and those companies received financial sanctions. It is wise for workers who think they may have been misclassified as independent contractors to seek the advice of an experienced workers compensation attorney. After all, workers—especially those engaged in physical labor—are putting their bodies and life on the line.
David Price is a Personal Injury, Civil Litigation, Collections, and Criminal Defense Attorney who practices in Greenville, SC. He graduated from the University of Georgia School of Law, and has been practicing law for 12 years. David Price believes in helping those who have been injured. Learn more about his experience by clicking here.