Professor Elam

Thursday Sept 8 2011

The lead article in today's WSJ, http://www.wsjcom, reports that the Labor Dept  is investigating pay practices at major home builders. Labor is demanding names, addresses, ss numbers, pay rates and hours over the last two years. Supposedly this is an investigation of pay practices. Labor is investigating Lennar, Pulte, DR Horton, and KB Home. 

In theory one Fed Agency does not share information with other agencies like the IRS. Do you believe that?

Yesterday in 3301 Class I mentioned the onerous burden of record keeping, here is such an example with the Labor Dept on a fishing expedition. What is really going on?

I suspect yes it is a wage and hour probe, a search for underage workers, but gee, do you suppose Labor will share these reports with the IRS to see if those names and social security numbers reported the money on their income tax returns?  Individuals in the house building field are notoriously itinerant moving from job to job, and often do not file or report. 

Another issue is whether someone is a bonified employeed, who gets a W 2, or a contractor who gets a 

Form 1099. I will explain more on this in class, it is an important subject. The IRS only recognizes one class as independent contractors, realtors. 

To be an ind contractor one has to determine one's own hours, the nature of the work, and use one's own tools. Often particularly small builders will claim that actual employees are ind contractors. The difference, with an ind contractor the employer does not have to match SS or pay FUTA or SUTA. 

At  a time when unemployment is going up, this is just one more reason to not hire any one for any reason, the fear of Federal Investigation.