The proper classification of workers by construction companies has been on the radar of the Department of Labor for both the US and Virginia governments for quite a while. While most of the misclassification is innocent and not done to create issues, there have been enough instances of purposeful misclassification of certain workers as independent contractors (thus avoiding workers comp and other payroll expenses) that innocent contractors have born the brunt of these issues through increased payroll costs over those that misclassify (in the form of necessarily higher bids, higher overhead, etc.).
As an additional deterrent to improper classification of workers, the Virginia Department of Labor and Industry has issued guidelines for what will occur in Virginia Department of Safety and Health (VOSH) cases.
Effective July 1, 2015, VOSH will take the following actions where it believes that misclassification has occurred:
- In the event that citations and penalties are proposed for the employer, penalty reductions for size and good faith will NOT be afforded to the employer
- In construction multi-employer worksite situations, each contractor (e.g., general contractors, prime subcontractors and lower tier subcontractors) will be asked to provide proof of their Department of Professional and Occupational Regulation (DPOR) contractor’s license AND for proof of the DPOR license for any of its’ subcontractors
- When it is determined that a construction employer has contracted with an unlicensed subcontractor, VOSH will make a written referral to DPOR for the contractor and its unlicensed subcontractor (DPOR sanctions for contracting with unlicensed subcontractors may include fines, probationary terms, suspension or license revocation)
- In cases where the contract value for the specific subcontractor’s job is less than $1,000.00, VOSH will make a written referral to the Virginia Employment Commission (VEC) and/or the Virginia Workers’ Compensation Commission (VWCC) for potential audits of the employer’s employment practices. There may be instances where referrals will be made for contract values over $1,000.00 as well.
For the full story on this straight from VOSH, check out this link.
In short, VOSH will not allow certain defenses and will coordinate with Virginia DPOR to assure that all subcontractors are properly licensed.
If you have questions on this or any other occupational safety issues, as always, contact your friendly neighborhood Virginia construction lawyer for help.
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