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State looking into workers’ comp complaints Lawyer: Workers labeled independent contractors so that employers can cut costs By ASHLEY SMITH, Nashua Telegraph Staff asmith@nashuatelegraph.com When carpenter Celso Mena fell six feet from a piece of scaffolding on a Hinsdale construction site in July and nearly severed his left foot, the Nashua man couldn’t collect workers’ compensation money because he was classified as an independent contractor. But last week, the New Hampshire Department of Labor decided Mena should have been entitled to the full benefits of an employee, primarily because he was not allowed to come and go as he pleased. Now, the Panama native will be paid 60 percent of his salary until he recovers, as well as back pay. Mena’s case is just one example of a labor misclassification some say is rampant in New Hampshire. According to his lawyer and a labor union representative, the practice of fraudulently labeling employees as independent contractors to cut back on labor costs is widespread here, particularly in construction fields. Labor Commissioner George Copadis said Wednesday his department has received enough complaints about the practice that it is has teamed up with four other state agencies, including the attorney general’s office and the Department of Revenue, to look in to how big the problem really is. “What we’re trying to do is get the word out there that this classification issue is going to be addressed,” Copadis said. “That’s one of the areas that we’re seriously looking at.” Under New Hampshire state law, a person is presumed an employee unless he or she meets a list of all 12 requirements for independent contractor status. Independent contractors are typically paid more per hour than employees, but they’re cheaper to employ because they don’t have to be covered under expensive workers’ compensation policies. According to John Jackson, business representative for New Hampshire’s Carpenters Local 118, a construction company can save up to 30 percent of its labor costs by illegally classifying employees as independent contractors – enough to give it the edge over honest companies in bidding wars. When Mena was injured, he was helping build a public school in Hinsdale. The project’s general contractor was Hutter Construction, of New Ipswich, but Mena had been hired as an independent contractor by a Hudson-based drywall subcontractor called GNPB/Kal-Vin. A representative from GNPB could not be reached for comment Wednesday afternoon. Mena acknowledged to the labor board that he agreed to be employed as an independent contractor. He had also purchased an insurance policy that provided the documentation he needed to work on site in that capacity – although it turned out the policy was good only on paper because it excluded Mena from coverage as the owner of the business. But the labor board ruled that by law Mena should never have been classified an independent contractor because he had a supervisor on site and was required to report to the job at a certain time every day – both characteristics of an employee. At the time of the accident, there were only five criteria required for independent contractor status, but a stiffer state law took effect Jan. 1 of this year. Mena, 57, was not interviewed for this article because he speaks limited English, but his lawyer said it is unlikely he will ever work in the carpentry field again. Mena had surgery after the accident to reconstruct the bone in his foot, but hasn’t been able to walk without crutches since. The lawyer, Terrence Daley, of Manchester, whose firm specializes personal injury and workers’ compensation, said he comes across these types of misclassification cases all the time. “Frequent. It’s fairly frequent,” Daley said. “Ever since the recession back in the early ’90s, we’ve seen a real increase . . . workers’ compensation is very expensive insurance.” Daley said Mena’s total compensation has yet to be calculated, but he will continue to receive 60 percent of his wages as long as he remains on disability. According to Copadis, the labor commissioner, the five state agencies that are affected by labor misclassifications have started meeting regularly to discuss the problem and are conducting construction site inspections jointly. Those agencies also include the state Department of Employment Security and the state Insurance Department. When an employee is incorrectly labeled as an independent contractor, the state loses tax money and insurance companies don’t pay the claims they should, Copadis said. Jackson is hailing the ruling as a victory for the construction industry as a whole – and a warning to the contractors that fraudulently label employees as independent contractors. “That leaves workers vulnerable and puts honest companies at a competitive disadvantage,” Jackson said in a statement released this week. “It has put Celso and other injured workers in serious financial trouble.” Ashley Smith can be reached at 594-6446 or asmith@nashuatelegraph.com. This article is reprinted with permission of the Nashua Telegraph. |
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