Nashville Drywall Firm To Pay State’s Largest Worker Misclassification Fine

Tennessee has launched a crackdown on construction companies classifying full-time workers as contractors in order to avoid taxes and insurance. Credit: Tim Dorr via Flickr

A $300,000 fine for misclassifying construction workers may be having a deterrent effect, according to officials with the Tennessee Department of Labor. The penalty was the largest to-date in a statewide crackdown on labeling full-time employees as contract workers.

TJ Drywall of Nashville was doing $2 million a year in business but only paying five percent of what regulators say they should have been in workers comp and unemployment insurance premiums.

The Labor Department’s Scott Yarbrough says the practice remains rampant in the construction industry.

“It upsets me when somebody who is following the rules – paying their insurance, paying their taxes like they’re supposed to. And they’re trying to compete with people who aren’t withholding any of that or paying for any of the benefits for somebody who is in fact an employee.”

After seeing the giant fine imposed last week, Yarbrough says another business owner in Sumner County volunteered to reclassify his contract workers to avoid the same fate. The money collected in fines for misclassifying employees will go toward hiring more investigators.