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Contract to Cheat

Workers don’t have protections. Companies don’t withhold taxes. Regulators don’t seem to care. McClatchy reporters spent a year unraveling the scheme, using little-noticed payroll records that show how widespread this practice has become and what it costs us.

KANSAS CITY, Mo. — When Uncle Sam doled out $4.5 million in stimulus money to fix up low-income housing in Kansas City, it should have been a win-win for everybody.

Residents would get new roofs and maybe a paint job, construction workers would get the relatively high wages required on federally funded projects, and the local economy would get a needed boost.

Many of those workers, however, appear to have been victimized by a common ruse.

Instead of listing roofers, carpenters and other workers on payroll records as employees — which many appeared to be — some companies on the project treated them as independent contractors.

As a result of that and other problems, some workers were underpaid by up to $20 an hour, according to federal records. That was money that employers could simply pocket, housing officials said.

mcclatchydc.com