Unscrupulous contractors who are a part of the underground construction economy pose challenges to professional contractors who operate their businesses lawfully. These contractors, who also are referred to as part of the "informal" or "shadow" construction economy, refuse to play by the same rules as reputable contractors. As a result, lawful contractors are placed at a disadvantage in competitive bids and are losing job opportunities to employers that pay their employees under the table or intentionally misclassify them as independent contractors.
Not only does the underground construction economy affect state and federal coffers, but it also places great social burdens on underground workers. Thankfully, federal and state agencies have increased their efforts to combat the underground construction economy, which, in turn, will help restore fair competition.
The common problem
The underground construction economy is composed of workers who are not reported on employers' payrolls or intentionally misclassified as independent contractors. Although reputable employers can unintentionally misclassify workers as well, most enforcement efforts are directed at employers that engage in intentional misclassification schemes.