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Payroll fraud, abuse bad for honest Texas employers and taxpayers

Texas is continuing to be a leader in recovering from the national recession with great strides in construction and growth. The state abounds with skilled workers of nearly every trade, particularly in the construction and energy industries. Unfortunately, when a region proves to lead in a particular field, related problems are bound to crop up. A recent study has highlighted problems with wage and hour disputes across the state of Texas, which hurt legitimate businesses and taxpayers.

The study from the Workers Defense Project and the Division of Diversity of Community Engagement at the University of Texas, Austin, entitled “Build a Better Texas: Construction Working Conditions in the Lone Star State,” has identified several violations that routinely turn up with the Texas construction industry. According to the paper, as many as 22 percent of construction workers aren’t paid for their work, and many work at least 40 hours a week yet still live in poverty. Misclassifying employees as independent subcontractors also happens far too often.

Incidents of payroll fraud alone in Texas have accounted for at least $54.5 million in lost unemployment insurance and other expenses. These acts by dishonest business owners make it difficult for not only taxpayers, but for honest employers who strive to create safe, fair working conditions for their employees, yet have a hard time competing with the cheaters who cut whichever corners they can get away with.

It’s possible that employees who have been burned by unscrupulous bosses may attempt to open employment litigation cases against honest employers through a miscommunication or other oversight. Business owners wishing to protect themselves have a duty to obey labor and civil rights laws — but they also have rights that can protect them from lawsuits. An attorney experienced in employer litigation matters can be a valuable resource.

Source: The Institute for Southern Studies, “Texas construction workers: 40 hours a week, living in poverty,” Jan. 28, 2013

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