SAVANNAH, Ga. – A Democratic legislator says construction and movie-production companies are tax frauds and insists that the Department of Labor needs more inspectors to police worker misclassification.
Sen. Lester Jackson, D-Savannah, said employers that classify workers as independent contractors who are in actuality employees are cheating the state out of unemployment taxes.
“It’s not just a Savannah issue. In Atlanta, you look at the construction workers, in Atlanta you can also look at the movie industry, that are all misclassifying workers,” he said. “…We think this is a misjustice to the state because it’s tax fraud.”
His comments came during a hearing Tuesday in his district by a subcommittee of the Senate Insurance and Labor Committee. The hearing on the topic of worker classification included testimony from more than a dozen owner-operator truck drivers who service the Port of Savannah, a labor union, a trade association and legal experts.
The industries he singled out are ones that other state officials are trying to expand. For example, the legislature has continued to sweeten the tax breaks available to the motion-picture industry to lure production companies, like Moon River Studios which is building what it predicts will be the country’s largest filming facility just outside of Savannah. And the Technical College System of Georgia is offering free instruction to students wanting to become truck drivers because of a worker shortage.
Labor unions eager to gain additional dues-paying members are pushing the issue of worker classification, especially in port cities where owner-operators make up the majority of drivers for independent trucking companies.
But industry recruiters say that the relative lack of union presence is a major reason employers consider bringing jobs to Georgia.
Alston Correll, an attorney in Atlanta with Dentons who represents employers, warned that the committee could wind up stalling job growth rather than helping workers.
“What we consistently hear from those companies is that one of the primary criteria for placing business is the prevailing regulatory environment,” he told the senators, adding that wasn’t just about taxes and environmental regulations. “…They are also looking at how the state is viewing employees, how are they viewing workers’ comp. I’m not here to advocate any particular position. What I would advocate the committee is caution and restraint.”
Jackson said the problem could be one of lax enforcement. When a Department of Labor attorney guessed there were more than 50 auditors for the 4 million workers and 220,000 employers, Jackson said that was too few to adequately cover the whole state.
The subcommittee has two more hearings before it makes its report at the end of the year on what legislative proposals, if any, it is recommending.
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