Masonry company owner Doug Burton, center left, checks on a work site in Raleigh on July 9, 2012. Burton plays by the rules: taxes, unemployment, workers comp. But, through the years, Burton lost his foothold in the commercial market in the Triangle. Two years ago, he discovered the problem: his competitors broke the law. They didn't pay taxes for their workers and saved 25 to 30 percent in labor costs. They were subbing their labor needs to a middleman who treated his workforce as independent contractors - or often as an invisible workforce, paying cash under the table. A single employee cost Burton nearly 20 percent or more to pay state and federal taxes, withholding and workers' compensation insurance.
Masonry company owner Doug Burton, center left, checks on a work site in Raleigh on July 9, 2012. Burton plays by the rules: taxes, unemployment, workers comp. But, through the years, Burton lost his foothold in the commercial market in the Triangle. Two years ago, he discovered the problem: his competitors broke the law. They didn't pay taxes for their workers and saved 25 to 30 percent in labor costs. They were subbing their labor needs to a middleman who treated his workforce as independent contractors - or often as an invisible workforce, paying cash under the table. A single employee cost Burton nearly 20 percent or more to pay state and federal taxes, withholding and workers' compensation insurance. Shawn Rocco srocco@newsobserver.com
Masonry company owner Doug Burton, center left, checks on a work site in Raleigh on July 9, 2012. Burton plays by the rules: taxes, unemployment, workers comp. But, through the years, Burton lost his foothold in the commercial market in the Triangle. Two years ago, he discovered the problem: his competitors broke the law. They didn't pay taxes for their workers and saved 25 to 30 percent in labor costs. They were subbing their labor needs to a middleman who treated his workforce as independent contractors - or often as an invisible workforce, paying cash under the table. A single employee cost Burton nearly 20 percent or more to pay state and federal taxes, withholding and workers' compensation insurance. Shawn Rocco srocco@newsobserver.com

Part 1: Cheating businesses make it tough for honest employers

August 19, 2012 12:00 AM