February 6, 2026
ON A DRIZZLY WINTER MORNING in 2005, Raul Aguilar balanced on the edge of a high-rise, a suction cup gripped to the pane of glass he was lowering into place. He was 19 years old and a recent immigrant from the Yucatán peninsula in Mexico. New to the work, he already felt the strain in his shoulders and the tug of glass that can catch the wind like a sail. Despite the sweat and skill the job requires, he had zero training. He got paid but had no pay stub to show employment insurance or pension deductions.
“When I finished high school, I had to get work right away,” said Aguilar. “A friend introduced me to a guy that had a glazing company. I was new in the country and didn’t know how things worked. As long I got a paycheque, I thought that was all I needed.”
Aguilar was one of thousands of construction workers in British Columbia caught in a legal sleight of hand known as “misclassification.” It’s when employers treat workers as independent businesses instead of employees, shifting the risks and costs away from the company and onto the worker. For some, it starts with an innocuous request: sign this independent subcontractor agreement, and don’t expect holiday pay or sick leave. For others, it’s an unspoken condition of getting hired at all.
“Back then I was living paycheque to paycheque. I didn’t feel like I had any other option,” said Aguilar. “I was new to the country, young, and uninformed.”
A Hidden Workforce
Aguilar’s story isn’t unusual. In fact, it’s part of a vast and largely hidden system that is not only alive and well today but has become the standard of doing business in B.C.’s construction industry. A 2022 study commissioned by the BC Building Trades estimated that thousands of construction workers in the province are misclassified as independent subcontractors.
The report’s findings are stark. Employers who misclassify workers gain a labour cost advantage of up to 20 per cent, enough to significantly underbid contracts away from legitimate companies that follow the rules. Governments lose too; the study calculated that misclassification siphons off more than $115 million in unpaid taxes and premiums every year, ballooning to over $300 million when it includes underreported income by legitimate self-employed operators.
These aren’t victimless shortcuts. They leave workers without safety nets, drain public coffers, and tilt the playing field against honest contractors. And while the numbers quantify the problem, the lived reality is best understood through people like Jake Wilson.1*
(1* Jake Wilson is a pseudonym. The individual interviewed requested to remain anonymous)
More Than Numbers
Wilson, a drywaller from Surrey, began his career as a unionized employee. But his employment changed when he began suffering from post-traumatic stress disorder after witnessing the deaths of multiple children in his volunteer work as a firefighter.
“I hit the alcohol and spiraled out of control,” said Wilson.
In a vulnerable state and not caring about his future, Wilson left his union and took jobs as an independent subcontractor when he needed money to feed his addiction. He didn’t have a GST number. He didn’t supply his own tools or set his own working hours. He was paid hourly. In short, Wilson didn’t fit the federal government’s legal definition of an independent operator. “I wasn’t really a subcontractor. I was just an employee that wasn’t on the books,” said Wilson.
It took time to heal, but with help, Wilson got into counselling and sobered up. He rejoined the union and is doing well today, but says he continues to see the use and abuse of vulnerable people in the trade.
Stories like Wilson’s show the human cost of what economists politely call the “underground economy.” The term conjures up images of shady cash jobs, but the reality in construction is more bureaucratic and insidious. It’s contracts that redefine workers, invoices that cover wages, and government forms that never get filed.
A Rigged Game for Contractors
For legitimate contractors, this underground system isn’t just unfair — it’s existential.
“Unscrupulous contractors are saving 20 per cent on their operating costs when labour is a big portion of the contract. It’s not the paint supplies,” said Dan Jajic, business manager of the International Union of Painters and Allied Trades District Council 38 (IUPAT DC 38). Workers’ compensation benefits, employment insurance, holiday pay, and taxes add up. And that 20 per cent is the difference between winning and losing a bid. Contractors who still play by the rules are being punished while contractors who break them are walking away with the work.
Jajic has spent years watching contractors undercut honest firms by gaming the classification system. He’s blunt about the stakes: “This is not a problem of a few contractors cheating, it’s the business model of British Columbia.”
In other words, this isn’t just a worker problem. It’s a market problem. An industry that isn’t held to account isn’t good for anyone — not the workers, not the honest contractors, not the public. That competitive distortion explains why some contractors quietly tolerate the system while others lobby for stronger enforcement. In a booming construction market like British Columbia, deadlines are tight, and margins are slim. The temptation to shave costs by reclassifying workers or hiring subcontractors who already are is strong.
This is the most evident in the finishing trades, where the rate of self-employment is 44.8 percent, the highest in construction. It’s implausible that almost half of the total workforce in these trades (drywallers, painters, wall and ceiling installers, etc.) are self-employed. What is far more likely is that contractors in these trades categorize a significant portion of their workforce as self-employed to avoid payroll costs.
The Public Pays
For the government and for taxpayers, the consequences are measured in lost revenue and rising risks. Employment insurance contributions and pension plan deductions vanish when workers are misclassified. That revenue hole has to be filled somehow, either through higher premiums for compliant employers or fewer services for the public.
The 2022 study estimated that the B.C. government loses up to $308 million annually from the combined effects of misclassification and underreporting. That’s money that could fund schools, hospitals, or infrastructure projects. Instead, it slips into the shadows.
“This is real. There are people who are collateral damage,” said Brynn Bourke, executive director of the BC Building Trades. The underground economy hurts every British Columbian. When taxes go unpaid, when WorkSafeBC premiums aren’t collected, the whole system suffers. Everyone ends up paying more and getting less.”
Bourke has been one of the loudest voices calling for a revival of the Joint Compliance Team — a multi-agency task force that operated as a pilot program in 2001. Back then, officers from Employment Standards, WorkSafeBC, Canada Revenue Agency, and Employment and Social Development Canada worked together, uncovering misclassification on nearly one in three sites they inspected.
“When these teams were checking, it effected the mindset of the industry that they believed if they are in non-compliance they could get caught. We haven’t had that sense of fear, that sense of urgency for 20 years,” said Bourke. “It wouldn’t take much to bring these teams back.”
According to Bourke, the pilot program cost around $500,000, which is a drop in the bucket compared to the hundreds of millions in lost taxes and premiums to the government. “The program pays for itself. The program more than pays for itself.”
Cracks in the Foundation
Despite its size, the underground economy often hides in plain sight. Workers file invoices instead of timecards. That invisibility corrodes not only individual security but also the collective future of the industry. Apprenticeships — the lifeblood of skilled trades — become less attractive when training obligations can be dodged through misclassification. Safety standards erode when employers aren’t liable for accidents. And a culture of corner-cutting takes root.
For many workers, especially newcomers to Canada, the system feels non-negotiable. Speak up, and the job offer vanishes. Accept, and at least there’s income, however precarious. For temporary foreign workers with no path to permanent residency, the situation is even more dire.
“They’re scared,” said Aguilar, who has noticed an influx of Hispanic temporary workers coming to Canada, particularly Colombians. “They’re the people that have been approaching me the most. They’re seriously scared even just talking to me because they’re afraid if the owner even gets a hint that they’re talking to the union, the owner has the power to just wait until their contract expires and they get sent back home.”
That fear is justified. Once a work permit expires, there is nothing unions can do to prevent temporary foreign workers from being sent back to their home country. The BC Building Trades conducted a report last year on the flaws within Canada’s immigration system and the Temporary Foreign Worker Program. The report revealed that almost no construction workers can enter the country through permanent immigration streams.
“We had all of these workers who were coming through with temporary worker permits, and double the national average were coming into B.C. through construction,” said Bourke. “It doesn’t have to be like this. We can treat everyone who works in construction in B.C. with dignity and respect. We can guarantee a minimum level of wages that are good wages, family-supporting wages that allow people to put food on the table. We can make sure that people coming from other countries to work in construction have a meaningful path to permanent residency.”
The irony is that this shadow system flourishes at the height of a construction boom. Tower cranes crowd Metro Vancouver’s skyline, billions are poured into infrastructure projects, and demand for skilled trades is higher than ever. Yet amid the prosperity, thousands of workers find themselves pushed outside the protections that prosperity is supposed to guarantee.
Toward a Fairer System
The solutions are neither simple nor cheap, but they are clear. Enforcement, as Bourke and Jajic both argue, is key. Procurement reform ensures that unions are part of verifying labour supply, and government contracts only go to firms with proven compliance records.
Provincial and federal coordination across ministry resources will help, too. Data-sharing between agencies can make evasion harder. But as with most underground economies, culture is as important as code. Until the risks outweigh the rewards, some contractors will keep cutting costs for as long as they can get away with it.
“The real way to effect change is to have people looking,” said Jajic. “I remember employers being audited by the CRA, WorkSafe, and Employment Standards back in the day. It had an impact. The Joint Compliance Teams aren’t going to touch every worker. But if there’s that fear that you could be tagged next, that’s how you affect behaviour. Education is great, but it’s not an effective way to address this problem. It has to be boots on the ground.”
From Misclassified to Organized
It was a pair of friendly and familiar boots that set Raul Aguilar on the path from misclassified worker to joining the union, earning his Red Seal, and becoming an organizer for IUPAT DC 38. Aguilar was installing glass in a high-rise when a union organizer walking the job site recognized him.
“He was a guy I went to high school with,” said Aguilar. “He asked me how much I was getting paid, if I had any benefits. He said I was being underpaid. He set up a meeting with the business rep with the glaziers’ union. He got me a job. That changed my life.”
Aguilar’s words cut through the spreadsheets and policy briefs. Behind every statistic, people are trying to build lives as they build the province. The underground economy may save some contractors on labour costs, but the real price is paid in human insecurity, public loss, and a construction industry weakened from within.
If a province as prosperous as British Columbia can’t protect the people who raise its towers and pave its roads, the question lingers: what kind of foundation is being laid for the future?
By Tatiana Tomljanovic