Tackling myths about cash pay in construction

The UBC's Tax Fraud Days of Action campaign runs from April 6–18, 2026

VAUGHAN, ON, April 6, 2026 /CNW/ - If it sounds too good to be true, then it probably is – that's the ugly truth about cash pay in the construction industry

Dispelling myths about the practice and finding solutions to the problem are key goals of Tax Fraud Days Action, an annual campaign by the United Brotherhood of Carpenters and Joiners of America (UBC or 'the Carpenters' Union') that targets illegal business practices in the construction industry. Tax Fraud Days of Action runs from April 6–18, 2026.

Cash pay is a huge lure for workers in the construction industry. While being paid in cash is sold as a benefit by unscrupulous contractors, it's actually a predatory practice that misinforms and takes advantage of workers.

For instance, workers paid in cash often don't realize they must now assume responsibility for what should be their employer's legal obligations. This includes contributions to Canada Pension Plan and employment insurance. They also may not understand that by agreeing to cash pay and being misclassified as an 'independent contractor' they are foregoing workers' compensation protections because they aren't on the official payroll.

Without this safety net and legal recourse, workers are left dangerously vulnerable. On jobsites where workers are being exploited, they may face excessive hours or a lack of safety training. They are sometimes laid off for refusing unsafe work. They may even feel compelled to work while injured to make ends meet.

"We see workers being taken advantage of everyday on a range of jobsites across the country," explains Jason Rowe, Vice President of the UBC Canadian District, noting that even government-funded capital projects are impacted by the problem. But the issue of tax fraud is most acute in the residential construction industry. "Unfortunately, much of residential construction in Canada is being carried out by workers being paid in cash."

According to Statistics Canada, residential construction accounts for roughly a full third of all underground economic activity nationally. In 2023, underground activity in Canada reached $72.4 billion, with residential construction accounting for nearly $23 billion in unreported activity. At its current rate of growth, residential construction could comprise 50 per cent of the underground economy within a decade.

The highly competitive nature of the construction industry incentivizes disreputable contractors to game the system to their advantage. For many of them, underhanded employment and payment practices are embedded directly into their business model. It creates a race to the bottom where workers are cheated and legitimate contractors become less competitive.

Joe Zamparo, owner of Arsenal Constructors Inc. based in Ontario, says the challenge of construction industry tax fraud for him is twofold:

"First, in a competitive bidding environment, I often can't compete with shady companies that aren't paying for workers' compensation – not to mention health and retirement benefits – for their workers. Second, their cash-pay sales pitch can sometimes make it difficult for companies that play by the rules to recruit qualified personnel."

General Contractor Liability legislation

To help address this problem, the Carpenters' Union is proposing the implementation of General Contractor Liability legislation to governments across Canada. The legislation would establish accountability for employment standards, payroll obligations, and tax remittances across subcontracting chains at the prime contractor level. This establishes accountability at the highest level of projects by making general contractors liable when their subcontractors fail to pay employee wages or make required remittances on their behalf.

General Contractor Liability legislation is already a well-established and effective policy approach in multiple U.S. jurisdictions, including California, Illinois and New York.

The Carpenters' Union is also calling for increased transparency in procurement processes on all government-funded projects. On these same projects, the union is also advocating for apprentice minimum requirements. This recommendation calls for governments to implement a minimum requirement that 10–15 per cent of total workforce hours on public construction projects be completed by registered apprentices.

"By implementing a combination of general contractor liability legislation, refinements to procurement processes, and creating space on public projects for registered apprentices, governments across Canada have the opportunity to champion the skilled trades and workforce development while rooting out our industry's bad actors," says Rowe.

For more information on the campaign, visit stoptaxfraud.ca.

SOURCE Carpenters' Regional Council

For interview requests, please contact: Vicki Gryspeerdt, Director of Communications, Carpenters' Regional Council, E: [email protected]