A new study from the Economic Policy Institute (EPI) reveals that the misclassification of workers as independent contractors is costing both workers and taxpayers millions of dollars each year. The issue is especially prevalent in the construction industry, where employers often mislabel employees to sidestep labor protections and reduce costs.
How Worker Misclassification Harms Employees
Misclassified workers lose out on crucial employment protections and benefits, including:
- Minimum wage and overtime pay
- Unemployment and workers’ compensation benefits
- Paid sick leave and family leave
- The right to unionize
- Legal protection from workplace discrimination
EPI estimates that a typical construction worker misclassified as an independent contractor loses up to $19,526 per year in wages, benefits, and employer-paid taxes.
Employers Shift the Burden to Workers and Taxpayers
Misclassification doesn’t just hurt individual workers—it creates a ripple effect that impacts entire communities. Workers are forced to pay 100% of their Social Security and Medicare taxes, a burden typically shared with employers. Meanwhile, states lose revenue from unpaid unemployment insurance and workers’ comp premiums.
According to the National Employment Law Project, between 10% and 30% of employers misclassify at least some of their workforce. These bad actors often justify the practice by claiming that workers “prefer flexibility.” In reality, misclassified workers typically have little to no control over their schedules or job conditions.
West Virginia Building Trades Push for Reform
During the 2025 West Virginia Legislative session, the West Virginia Building and Construction Trades (WVBCT) advocated for a bill aimed at curbing the misclassification of workers. While the bill didn’t pass this session, WVBCT remains committed to fighting for legislation that protects honest workers and levels the playing field for responsible contractors.
