They should not have reported anything on Form 1099-NEC.
The IRS resurrected Form 1099-NEC (Non-Employee Compensation) JUST FOR Contract/Self-Employed income.
They should not have issued one to you.
You can speak with the construction company. Chances are they pulled a list of everyone they paid more than 600 and issued them a 1099-NEC, thinking they are all sub-contactors.
If this was payment for damages, they MIGHT issue Form 1099-MISC, but probably shouldn't report it at all.
If it was an honest mistake, they should not have a problem sending a revised 1096 to the IRS showing that your 1099-NEC was canceled.
If they resist changing the reporting, you might contact an IRS Taxpayer Advocate. (Maybe let the construction company know that will be your next move).
The IRS Taxpayer Advocate can be a direct line between you and the IRS.
Taxpayer Advocate Service
You can leave it off your return, but you will no doubt get a letter from the IRS asking about it.
You can enter the Form 1099-NEC and select "This is not money earned as an employee or self-employed individual" which will bypass the Self-Employment tax but will still activate income tax.
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