Agenda - Council Work Session - 07/28/2026

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HOME — FACTS — TABLES — VIDEOS — INFOGRAPHICS — AGENCIES — RESEARCH Sources Listed by Release Year Kelsay, Michael. (2023). Worker Misclassification and Wage Theft in the Construction Industry in Missouri. University of Missouri -Kansas City. Kev Finding: In 2020, 21% of workers in Missouri's construction industry were either misclassified as independent contractors or working "off -the -books" in cash -only arrangements. Misclassification and wage theft in the construction industry cost construction workers between $334 million and $465 million in lost wages and fringe benefits annually. Payroll fraud also costs Missouri $69 million in lost workers' compensation contributions, $28 million in lost unemployment insurance contributions, and $45 million in forgone state income tax revenue. Ormiston, Russell and Tom Juravich. ( ). Worker Misclassification and Wage Theft in Rhode Island. Allegheny College; University of Massachusetts -Amherst; Institute for Construction Employment Research (ICERES). Kev Finding: Rhode Island employers misclassified 4% of the state's workforce in 2019, representing more than 19,000 workers. In construction, 12% of construction employers are misclassifying workers, affecting 8% of the industry workforce. Payroll fraud costs taxpayers between $25 million and $54 million annually. Juravich, Tom; Russell Ormiston; and Dale Belman. (2021). The Social and Economic Costs of Illegal Misclassification, Wage Theft, and Tax Fraud in Residential Construction in Massachusetts. University of Massachusetts -Amherst; Allegheny College; Michigan State University; Institute for Construction Employment Research (ICERES). Kev Finding: Audits of employer payrolls from 2017 to 2019 indicate that more than one -in -six Massachusetts construction employers (17% to 18%) misclassify their workers as independent contractors. Utilizing a well -established empirical approach of indirectly estimating the full extent of misclassification, there were between 22,000 and 37,000 workers affected by wage and tax fraud in 2019, accounting for 9% to 16% of the industry's workforce. This was especially prevalent among building finishing contractors (e.g., drywall, finish carpentry, painting). This led to $41 million in lost unemployment insurance contributions $41 million in lost income taxes, and $78 million in lost workers' comp premiums in 2019. Construction Industry Tax Fraud. (2021). Construction Industry Insurance Fraud. StopTaxFraud.net. Kev Finding: This one -page fact sheet describes workers' compensation insurance premium fraud, notes that losses are estimated at $2 billion nationwide, and tells people how they can help. Construction Industry Tax Fraud. (2020). Construction Industry Poor Safety Standards. StopTaxFraud.net. Kev Finding: This one -page fact sheet notes that contractors who skirt workers' comp, wage, and tax laws often cut corners with safety and that tax fraud robs state and federal governments out of $8.4 billion per year. Construction Industry Tax Fraud. (2020). Construction Industry Wage Theft. StopTaxFraud.net. Kev Finding: This one -page fact sheet describes wage theft, notes that construction workers have $946 million a year stolen from them, and tells people how they can help. Ormiston, Russell; Dale Belman; and Mark Erlich. (2020). An Empirical Methodology to Estimate the Incidence and Costs of Payroll Fraud in the Construction Industry. Allegheny College; Michigan State University; Harvard University. Kev Finding: In the average month in 2017, between 12% and 21% of construction industry workers were misclassified as independent contractors or working strictly off -the -books. Over the peak summer months, this increased to between 13% and 22%. Due to payroll fraud, contractors illegally reduce labor costs by between $6.2 billion and $11.7 billion per year. State workers' compensations programs experienced a $1.7 billion shortfall due to misclassification. State unemployment insurance plans experienced a shortfall of up to $725 million. State income tax revenues are $552 million lower. As much as $4.3 billion owed to Social Security and Medicare and $1.3 billion in federal income taxes was never paid in 2017 due to payroll fraud. Under federal wage statutes, workers are entitled to time -and -a -half for hours worked over 40 hours per week and to premium pay for work over holidays. Employers who misclassify workers as independent contractors can avoid paying these additional wages, resulting in $811 million to $1 billion in unpaid overtime and premium wages. 3