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Published: November, 2009; Vol 6, Num 6

 

Behind the Numbers:

Is Dangerous Work Being Outsourced?

By Scott Schneider

Construction companies desire good safety records for various reasons. Of course, satisfaction comes from knowing that few of their employees are injured on the job, but more tangible rewards come in the form of a stronger position in bidding for new projects and lower workers’ compensation insurance rates.

Alternate description

LHSFNA Management
Co-Chairman
Noel C. Borck

Yet, as LHSFNA Management Co-Chairman Noel C. Borck points out, “Construction projects involve risks, and improving your company’s safety record requires a concerted effort. Unfortunately, however, some contractors employ short-cuts to improved safety records that do not actually involve improved safety performance.”

For instance, a company may have a difficult job making sure all its particularly hazardous jobs are done safely. One option is to subcontract out the hazardous portions of the work. One indication that subcontracting may mask hazardous work is fatality data which show that the construction workers with the highest risk of dying on the job are electrical power installers. They are often called in by the utility companies when outages occur and extra crews are needed to help restore power. Yet, major power companies are among the nation’s best safety performers. Appreciating the contradiction, Duke Power Company sponsored a 2006 ORC contractor summit on subcontracting where it acknowledged the problem of subcontractor fatalities and aggressively sought ways to address it.

One solution that came out of the Duke summit is to hold all subcontractors to a high standard by prequalifying them based on their own safety record and then closely monitoring their safety performance. Subs should be held to the same level of safety performance as the general contractor. However, while this correction may work well for large companies and worksites, it does not address the broad problem of smaller companies that are not subcontractors to a general contractor.

Among these companies, misclassification and independent contractor problems flourish. These companies can show dropping injury rates by shrinking the number of workers directly on their payrolls. As a result, the number of “independent” or “self-employed” contractors has risen dramatically in the past decade to over two million construction workers. “Self-employed” workers are not covered by OSHA and are not counted in injury statistics. They and the companies who hire them do not have to pay workers’ compensation or social security taxes. This lack of regulation and oversight makes it very attractive for employers to misclassify employees as independent contractors. A study in New England by CPWR showed that 14 percent of construction workers were misclassified. Given the trend, one has to ask whether (or how much of)the drop in injury rates in the BLS Survey of Occupational Injuries and Illnesses (SOII) over the last decade represents a real drop or merely a shifting of injury risk to the underground economy.

The expanded hiring of undocumented, immigrant workers in construction contributes to the growth of the underground economy. Hispanic immigrants make up a rising fraction of construction workers, particularly in the residential sector where enforcement is less common. They are often exploited because they are afraid to speak up about safety hazards, fearing loss of their job or perhaps deportation. Frequently, they are hired as independent contractors and paid poorly.

What can be done about this problem? One idea is coordinating safety enforcement with wage and hour enforcement. This approach is being used successfully in California and elsewhere. Where wage and hour violations (e.g., not paying employees, misclassifications) exist, safety problems are common as well. Agency inspectors should be cross-trained to make referrals to each other. This is likely to help significantly with immigrant workers in particular.

A second approach is to crack down on misclassification. This is being done in New Jersey and Massachusetts, for example. In Massachusetts, workers are now assumed to be employed by the contractor unless and until proven otherwise. The burden of proof is now on contractors to show that the independent contractors are not employees, for example, that the contractor has no direct supervision of the “independent.”

Teaching immigrant workers about their rights to a safe workplace and strengthening whistleblower protections will also help protect vulnerable workers. Immigrant workers need to understand that OSHA is not immigration and complaining to OSHA will not put them in jeopardy of deportation. The message should be clear that every worker in America is guaranteed a safe workplace, regardless of immigration status.

“Until the nation cracks down on the underground economy and deals with the outsourcing of dangerous work,” says Borck, “it will remain unclear whether improving BLS injury data represents real progress or merely the shifting of the most dangerous work onto the backs of others.”

In the meantime, LIUNA signatory contractors who want to improve their actual safety performance should contact the LIUNA local union and jointly submit a safety audit and consultation request to LHSFNA Executive Director Joe Fowler or Assistant Executive Director Lisa Sabitoni.