Legal: Grand Jury Says Pennsylvania Contractor Misclassified Workers

October 22, 2015

A Bethlehem, Pa. commercial framing and drywall contractor has been accused of breaking state law by listing employees as independent contractors to avoid paying taxes on more than $883,000 in off-the-books payments, according to a story in The Morning Call.

District Attorney John Morganelli plans to file charges against Salukas and White Contracting, Inc. in the next few days for violation of the state's Construction Workplace Misclassification Act, which went into effect in 2011. Morganelli was prompted by local trade groups to investigate. The practice is "rampant" according to a statement by Kevin Lott, who the story identifies as a "business agent" for the Lehigh Valley Carpenters Union. Lott is quoted as saying that the practice is "very unfair to businesses that play by the rules, who pay their taxes and workers' compensation."

A 2005 report by Bear Stearns (see "The Underground Labor Force Is Rising To The Surface") claims that misclassification and other illegal work practices cost the United States an estimated $35 billion annually in tax revenue.

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