Posted On: August 3, 2004, 1:12 pm CDT

Posted By: Michael Speizman

This is a very common circumstance here in South Florida. 1st. It is much much cheaper to pay someone in cash vs. witholding taxes, paying taxes and WC. In the construction business it can be well over a 50% savings to the business owner. The employees either do not have the required paperwork to legally work, or jump at the chance to get paid in cash which means more money in thier pocket. I would not be surprised to find out that none of the injured/deceased workers will even qualify for social security benefits, since being paid in cash and not reporting the income will disqualify them from even that benefit.

Someone asked how can a company operate this way. This company used an employee leasing company or PEO to supply it with WC. If the company did not report workers to the PEO, the PEO will not provide those workers with WC. You should advise clients that accept PEO WC certs, to also get a copy of each weeks billing report and spot check againist the numbers and names of the people working. I have the feeling that this company had the owner, the secratary, and mabey a few 5606 supervisors on the PEO payroll. The GC in this case most likely looked the other way when they got a low bid for the work. A cross check againist the biling from the PEO would most likely have let the GC notice that for a company with 12 employees on its site, there were only 3 employees on the PEO invoice.

Personnally I think that until this liability becomes the ultimate burden of the property owner, the cost pressure to cheat will remain and things like this will continue. While not all cases involve death and dismemberment, even a broken arm, or a minor claim can cause great hardship to the uninsured worker. I hope the State uses the new WC law to charge and imprision the owner of the company, and that the property owner is forced to make the workers' whole, if the GC does not step up to do so.

Michael Speizman
PEO Experts, Inc.
5612397356