Yeah, I know that’s not a headline you’ve seen a whole bunch and you have good reason to be surprised. After all, our world isn’t the high-octane battlefield of cops and robbers. But if you’ve got a trained eye and you look closely enough, we have our own “ripped from the headlines” HR Tech stories to tell.
I need these stories, and not just for this blog. I grew up in a family of cousins where most of the men became policemen and most of the women became school teachers. Family get-togethers were filled with stories of blue line daring-do or comical classroom antics as each cousin tried to top the other in drama or hilarity. And then there was me – working in the corporate rat race. You know, unless you’re Scott Adams (one of my favs!), toiling away in cubicle-ville just doesn’t lend itself to good story telling. “So there I was sitting in my fabric-covered box…” isn’t a captivating lead-in, I must say.
But as I was reading the Sunday feature in my Kansas City Star on my 7:00 am flight to Phoenix (groan, grumble and gritting of teeth for sacrificing one more weekend to the vagaries of business travel), I found out the unlikely hero of the story to be our own bread and butter: HR Technology. (Yeah, I was a little surprised, too!)
The story was the product of a year-long investigation by the McClatchy newspaper chain, exposing the fraud stemming from 2009 federal stimulus money that was paid to employers who then misclassified their workers as independent contractors to avoid paying taxes and higher wages. Doesn’t this sound like it has all the elements of an interesting story? Billions of taxpayer dollars potentially lost. Overwhelmed or negligent government departments and officials. Life-threatening, on-the-job injuries and workers’ compensation avoidance. Yep, it’s all there – and not just because I’m a big HR dork. This is Hollywood level intrigue – or at least a made-for-TV movie.
So the gist of the situation is this: The federal government’s 2009 stimulus pushed money into communities for the redevelopment of low-income areas as a way to get citizens back working again. In the KC metro, that was $4.5 million, which was handed to developers or general contractors. Some of those employers then intentionally misclassified their workers as independent contractors – not as employees – and pocketed the extra wages, fringe benefits or workers’ compensation those workers were due. Federal jobs pay higher wages (called prevailing wages) by law. Employers also reliably collect taxes from their employees’ wages (99% effective according to the IRS), while independent contractors have to self-declare their earnings on 1099 tax forms – of which the IRS only sees somewhere between 19-44%. That’s a lot of tax money lost due to fraud and greed – estimated at $8.5 Billion (with a B!) nationwide.
So at the end of the article – after stories of intrepid investigative journalism – our heroes finally arrive. There are some vigilant unions policing their industry for rule-breakers, and there are some government officials who are promising to do a better job at oversight, but, in addition, there is HR Technology! Read with me…
“But things could be improving soon locally. This summer, Kansas City began using a new computer software program that makes it easier for the city’s contract compliance office to compare the payrolls contractors submit with prevailing wage rates.”
“…the city’s Human Relations Department said the system also allows city staff to spend more time on job sites to ensure that contractors are classifying workers properly.”
HR Technology = Hero