Working Off the Books
For Joshua Cannon, dangling 50 to 100 feet in the air is a normal occurrence.
Hanging from a tree in Sussex County, Del., recently, Cannon could be seen dozens of feet up, with his chainsaw hanging from his side.
Cannon, who works for Complete Tree Care in Millsboro, knows very well how risky his job is.
According to Cannon, a couple of years ago he was working for another tree company when a scary situation developed.
“I was working for this guy one day and cut my knee wide-open with a chainsaw,” Cannon said.
In serious pain, he was brought to the hospital by his previous employer, where he received more than 140 stitches.
I was a liability. And I got discarded. And I got nothing for it. Joshua Cannon
“It was a horrific cut,” Cannon said. “And I had no type of insurance or nothing. And the (my boss) told me, ‘Just get up with me later. I’ll pay for it later.’ And that day never came.”
Cannon said he is one of many workers in the dangerous industry of tree maintenance who have had to learn the hard way what working “under the table” can mean. He said when he was injured, he did not receive workers’ compensation or unemployment benefits. For three weeks, he was sidelined and eventually lost his job with that company.
“I was a liability,” he said. “And I got discarded. And I got nothing for it.”
Now Cannon works for a company that he says operates on the books. However, he said he now faces a different problem. While he is thrilled to receive workers’ compensation and other insurance, he said his paycheck has dropped significantly compared to where he previously worked. A normal tree climber in the area can make approximately $25 or $30 per hour when working off the books, according to Cannon. However, he said for a legitimate operation, that number is closer to $15 or $20 per hour.
“It’s real tempting to work off the books,” Cannon said. “But you only need to get unlucky one time. And then there you are. And what are you going to do?”
The Business Side
Cannon’s story is one that Complete Tree Care owner Toby Schlick knows well. He said those companies bypassing state labor laws are not only paying their workers more, but they are also able to charge less for their work.
“They’re blowing us out of the water,” he said. “I can’t compete with them.”
Schlick said he pays $100,000 to $120,000 each year to stay legal. By far, the biggest difference is in worker’s compensation, where he said he has to pay out an additional 38 percent in money for his salaried workers. On top of that, he pays about 10 percent in Social Security and unemployment insurance.
“We’re really not making money,” he said. “We’re just making ends meet.”
Schlick said companies working off the books can sometimes charge as much as $1,000 less on a project. For that reason, he said many homeowners will turn to them for a project, rather than to those following the law.
“It hurts our bottom line,” Schlick said. “You see a lot of these other companies: they’re sporting new trucks, new equipment, nice toys — and we’re not. We’re patching up what we have.”
We're really not making money. We're just making ends meet. Toby Schlick, Owner of Complete Tree Care
Would Schlick consider switching to an “under the table” format in order to cut costs? He said he wouldn’t because the risks outweigh the potential benefits.
“If one of these guys got seriously hurt and sued me, I don’t think I would have a leg to stand on,” he said. “And I think I would lose everything that I’ve worked all my life to gain. And for me, it’s not worth it to take that chance.”
Dodging Hurts the Funds
Schlick said conducting business “off the books” goes far beyond tree maintenance and extends into several other industries.
“It’s not just tree crews,” Schlick said.
Schlick said when companies do not make payments into programs like workers’ compensation, it leads to shortfalls in the funding needed in order to cover claims. He said that as a result, the rates for these programs continue to increase for the companies that are buying in to the insurance.
“If everybody isn’t paying into it, of course there’s not going to be enough money in there,” Schlick said.
Schlick said he pays about $60,000 in workers’ compensation each year. Schlick claims he knows of several other comparable companies in eastern Sussex County that are “off the books,” which he said could mean the loss of hundreds of thousands of dollars to the state’s workers’ compensation fund.
Schlick estimated that in just his industry alone, “off the books” operations across Delaware could result in a loss of millions of dollars in revenue.
Officials with the Delaware Department of Labor’s Office of Workers’ Compensation say they cannot confirm which industries – if any – utilize “under the table” workers.
However, Stephanie Parker, administrator for the the Office of Workers’ Compensation, said her office is aware that some employers have been dodging payment for workers’ compensation. But Parker was unable to confirm exactly in which industries where this is happening.
“Our office is not currently keeping statistics on the types of industries of the businesses that we discover operating without workers’ compensation coverage,” Parker said.
According to Parker, when her office receives a complaint or information about a specific employer, that matter is investigated and “we take the steps available to us to both educate the employer of its responsibilities and to ensure that the employer does comply with state laws governing workers compensation.”
Parker said employers in Delaware arrange for workers’ compensation insurance coverage through private insurance companies. For that reason, the Office of Workers’ Compensation does not directly lose revenue.
However, Parker said the individual costs for one business rises when buying into a private insurance company, especially when fewer businesses buy into the pool.
Is Enforcement the Issue?
“It’s all about enforcement,” Pettyjohn said. “It’s all about making sure people are doing what they are supposed to do, and what they need to do by law.”
Pettyjohn said that the Department of Labor is understaffed, which makes it extremely challenging to enforce the state’s labor laws .
“The Department of Labor doesn’t have a whole lot of proactive enforcement,” he said. “Mostly because they don’t have the enforcement personnel to go out and ride the roads every single day looking for things.”
It's all about enforcement. It's all about making sure people are doing what they are supposed to do, and what they need to do by law. Delaware State Sen. Brian Pettyjohn
Pettyjohn said the Department of Labor is open to change, although he said for more proactive enforcement to occur, it would likely require an increase an funding for additional staffers.
“What I foresee is they might come back to the General Assembly asking for more funding for more positions,” Pettyjohn said. “And that’s something the joint-finance committee is going to have to take up when they start hearings on the Department of Labor and their budget.”
Cannon said that while his leg is all back to normal now, he has learned his lesson.
“You got to think about tomorrow, man,” he said. “Today, you’ll make that better money today. But what’s going to happen when it happens. Cause it’s not if, it’s when.”
About the Author
Evan Koslof joined WBOC in June 2013 as the station’s western Sussex County reporter. He has since jumped across the county to Milton, and is now serving as the Sussex County Bureau Chief. Before coming to WBOC, Evan spent four years in Washington, D.C., working for NBC National and NBC News 4. When not working, you can find Evan playing basketball, attending council meetings in Sussex County, or enjoying the great seafood in all of the Eastern Shore! He loves Punkin Chunkin, enjoys scrapple and has embraced the Delmarva lifestyle. Follow Evan on Twitter @ekoslof.