The Truth About Subcontractors
There is a small minority of building service contractors who illegally pay their workers as “independent contractors”. This mis-classification gives them a labor cost advantage over those building service contractors who have bona fide workers and the related payroll burden costs.
These labor burden costs can reach more than 20% of the cost of any contract. Therefore, we caution our prospective and current clients to be skeptical of any price that is “too good to be true”.
When building service contractors pay their workers as independent contractors:
- the Social Security Fund and Medicare Fund are deprived of funding.
- local communities, state and federal governments are robbed of tax revenue.
- the worker has no Social Security benefits accruing for retirement.
- the worker is not covered by Workers’ Compensation and/or Liability insurance policies.
- the client is unknowingly exposed to potential liability, which is much greater than any savings realized by using an “illegal sub-contractors” scheme.
- the worker may have more cash in-hand, however they have no benefits and no insurance.
At Red River Sanitors, Inc. we remain strongly committed to complying with all state and federal employment regulations. We require all applicants to complete an application and have a personal interview with a RRS manager or supervisor. All employees must complete the appropriate IRS tax forms, a U.S. Department of Immigration I-9 form, and provide the proper documentation.
All RRS associates are paid through our payroll department, which means that they pay their taxes and we pay our portion of their Social Security, Medicare taxes and worker’s compensation insurance.
All associates undergo a criminal background check before hiring, which is another way of verifying the identification information they provided. We go to these extents so that our clients will never experience an embarrassing “Wal-Mart” situation where undocumented illegal aliens are working in their facility.
