Unscrupulous contractors come in many forms, shapes and sizes. Here are just some of the types of violations and illegal acts they commit. They evade workers comp, unemployment insurance, and basic payroll taxes by knowingly misclassifying workers as “independent contractors,” paying in cash off the books, and running other scams. They cost taxpayers billions, hurt honest businesses, exploit workers, fail to adhere to industry safety standards, fail to pay prevailing wages set forth by law, and in some cases pay below minimum wage. Here's what you need to know.
Illegal Profits & Bid-Rigging
These Unscrupulous Contractors know their workers meet all legal definitions as “employees.” They just want illegal profits and illegally low costs that help them steal business from honest competitors.
Fraud as a Business Plan
The issue is not definitions. These Unscrupulous Contractors know they are cheating—they‘re just used to getting away with it.
No Paper Trail = More Fraud
Scammers either file no payrolls at all, file falsely, or pledge to send tax forms but don’t. With no records, it’s easy to hide fraud and other crimes
Rampant in Construction and Beyond
These scams are construction’s “dirty secret.” Even big contractors knowingly use law-breaking subs to cut bids and win work. Delivery and many other sectors suffer, too.
A Coast-to-Coast Epidemic
Payroll fraud occurs in all 50 states and Canada, on projects of every kind.
Billions in Lost Revenue
Every year, every level of government loses vast sums to payroll fraud in state and federal taxes, social security and medicare contributions, uncoverered workers comp and unemployment payouts, and more.
Taxpayers Take the Biggest Hit
Tax cheats force honest citizens to choose between higher taxes or cutting key programs like schools and public safety.
Corrupt Firms Control Construction
Fraud gives bidders up to 30% lower costs, so they undercut and ultimately steal markets from tax-paying, law-abiding contractors.
Honest Businesses Lose Business
Fraud forces workers comp, UI, and health care costs higher, so all honest employers pay more and become even less competitive.
Higher Insurance Costs
Hospitals must treat all job-based injuries, so workers’ comp and medical insurers have to raise rates on honest firms to make up for uncovered workers.
Crime and Racketeering
These schemes may involve carefully planned major crimes like tax evasion, mail and insurance fraud, grand theft, money laundering, conspiracy, and racketeering/RICO activity.
The Underground Economy
In many places, construction is now an all-cash business—cash that feeds other crimes.
Multi-Agency Enforcement Pays For Itself—and More.
Cracking down reaps big returns in revenue, fairness for honest employers, less pressure on health care, and respect for the law.
Improve and Enforce the Law.
Use task forces, stop-work orders, per-day/per-worker fines. Give agencies support to catch cheaters and recover revenue.
Back Leaders Who Fight Fraud.
Support officials and candidates who help honest businesses and who act against those who flout the law.
Prosecute w/ Asset Forfeiture
Along with fines, civil forfeiture helps to settle cases, and creates highly visible enforcement that literally pays for itself.
Join the Nonpartisan Crackdown
The U.S. Govt. Accountability Office, IRS, Treasury Inspector General, Dept. of Labor and many state agencies call unscrupulous contractors a serious problem and are taking action. The crackdown gives honest employers nothing to fear and much to be gained.
Stand up for honest employers and their employees.
Take a stand against Unscrupulous Contractors.
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