Organized Labor

The State of California is cracking down on roofing contractors who have been cheating workers’ compensation insurance. Under new legislation, Assembly Bill 881, roofing contractors will now be forced to carry workers’ comp insurance, even if they claim they don’t have any employees. The measure is aimed at rogue contractors who have been skirting the workers compensation law by underreporting the number of employees, misclassifying employees as independent contractors, or paying workers off the books.

The State of California is cracking down on roofing contractors who have been cheating workers’ compensation insurance. Under new legislation, Assembly Bill 881, roofing contractors will now be forced to carry workers’ comp insurance, even if they claim they don’t have any employees. The measure is aimed at rogue contractors who have been skirting the workers compensation law by underreporting the number of employees, misclassifying employees as independent contractors, or paying workers off the books.

“A lot of roofing companies were claiming to be inactive, but really they were part of the underground economy,’ said Steve Tucker, Business Manager of Roofers Local 40. “To state you have no employees is ridiculous. No one can roof by themselves. This is one tool for us to fight the underground economy.”

The Roofers Union throughout California has worked with management to get the bill passed. “This legislation will benefit union and non-union contractors,” said Tucker.

Workers’ comp rates for the roofing industry are some of the highest in the building trades. “There were a good percentage of licensed companies that weren’t carrying any comp insurance,” said John Beatty, chief executive of Hester Roofing, a Sacramento commercial and industrial roofing company. Some roofers have underreported their payrolls to insurers or claimed not to have any employees at all, he said. In some instances, a contractor would apply for coverage after a worker suffered an injury and then file a claim. These practices, Beatty said, wound up raising insurance costs for all roofing companies. “Hopefully this [new legislation] will result in fewer people being hurt and more employers paying the premiums.”

“The Roofers Union fought very hard for this legislation because so many crooked, non-union contractors would state they had no workers’ compensation insurance because they had no employees, when all the while they did have employees but were paying them in cash,” said Ellyn Moscowitz, a labor attorney who specializes the Building Trades. “This was bad for the roofer, when he got injured and there was no record of the roofer being an employee, he could not get workers’ compensation insurance. It was also bad for the law-abiding contractor who could not compete for work with these cheating contractors. It’s one more tool the union has to use to keep the industry honest and protect workers.”-

According to Brent Beasley, Business Manager of Roofers Local 220, in Southern California, cheating contractors were most prevalent in light commercial and residential markets. “By cheating the insurance companies, these contractors were able to dramatically decrease their labor costs and increase their profits. Hopefully this new legislation will stem the flow of contractors who are not operating legitimate businesses and who have not been paying workmans’s comp on their employees.”