Over the past week, a year-long project conducted by the Herald’s fellow McClatchy newspapers exposed major fraud in the construction industry across the country. The comprehensive five-part series, “Contract to Cheat,” unmasked dishonest companies that categorized employees as independent contractors to evade state and federal tax laws.Taxpayers should be outraged by this scheme, known as “misclassification.” It robs treasuries of billions in tax revenue annually — money that could have been spent to benefit citizens.In Florida, a McClatchy analysis discovered almost $400 million lost in tax revenue annually from unscrupulous construction companies and cheated workers.The scheme is remarkably simple to execute and difficult for authorities to stop, a frustrating situation but moreso when federal regulators receive proof and rarely take action.The fraud is all on paper, so evidence exists. When employers fill out payroll forms, the space for tax withholding is left blank with a note: “1099” or “employees pay their own taxes.”By dropping workers from their payrolls and labeling them independent contractors, employers avoid income tax withholding, payroll taxes and unemployment taxes. Plus, bosses can cheat workers out of overtime pay.Worse for those so-called contractors, the employer is not obligated to secure workers compensation insurance. Injured employees are left to their own devices.The savings are huge — some 20 percent in labor costs. This allows crooked companies to slash costs and underbid honest competitors.Misclassification violates the federal law that states employers who control workers and direct their work must classify them as employees. In stark contrast, independent contractors negotiate compensation and bid on jobs.The fraud exploded with the 2009 stimulus as the federal government fast-tracked construction projects to put people to work and save the building industry. Washington is well aware that misclassification has had a major impact with dire consequences, but little is being done to counter the fraud. As “Contract to Cheat” shows, strong enforcement of labor law is critical for defrauded workers, honest companies and taxpayers. The federal government must reverse this tidal wave of cheating.The Department of Labor is increasing enforcement on private projects, but government contracts elude much scrutiny. This must change.In burrowing into federal payroll records, McClatchy found the fraud more rampant in Southern states with weak unions.In Florida, a mere 5.4 percent of all workers held union membership last year. And 20 percent of the state’s companies holding contracts for federally funded projects mistreat manual laborers by listing them as independent contractors.Florida is fighting back on one front — by making workers compensation fraud a felony and cracking down on employers. While the state audits companies suspected of misclassification, enforcement is less rigorous and should be stepped up.The worst impact of misclassification is the terrible toll on workers, especially the injured left without health coverage or unemployment benefits. Their life preserver has been stolen, and their families suffer greatly.The scam depresses wages, too, to the point that many construction trades now pay at around the federal poverty level. That puts pressure on employees to work longer hours and more days, without overtime pay.Honest employers and cheated workers must start screaming to compel governments to do their job and fully enforce regulations. “Contract to Cheat” exposed the rotten side of the construction industry, and those bad apples must pay for their harmful misdeeds.