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How to thank this veteran (and others): Support prevailing wage

Gilbert Charles, of Pinckney, is a U.S. Army veteran who served in the 1980s and moved to the skilled trades. His son, Matt, has followed in his father’s footsteps as a veteran and now as an apprentice learning how to become an electrician.

By Gilbert Charles

As we near Veterans Day, we will hear from many political leaders how grateful they are for our service. Some will express concern about veterans who return home and their opportunity to find a good job to support their families.

As a U.S. Army vet who served in the 1980s — and as the father of an Army veteran who served in Afghanistan — I always appreciate those thoughts. But I’m also concerned about efforts in the Legislature that would cut the pay of many Michigan veterans working in the construction industry.

I returned to Michigan after my service, and looked around for a good job, one that would let me build on my training, provide fairly for my family, offer decent health care benefits and a path to retirement. I found that job, training in an apprentice program and becoming a journeyman electrician as a member of IBEW Local 252. A portion of my paycheck each week goes to the apprenticeship program, to ensure those veterans and others who come after me get the training they need to do their job well and safely.

That turns out to have been a good investment. Now my son Matt is following in my footsteps. He’s in the Local 252 IBEW-NECA apprenticeship program, earning while he learns, at no cost to taxpayers. We know a lot of veterans in the industry. A recent report by the State of Michigan showed that about 9 percent of veterans are in the construction industry, compared with about 6 percent of state workers overall. And many were attracted to the fair pay and good training made possible by the state’s prevailing wage laws.

It’s exciting to see my son work in major, complex construction jobs at the University of Michigan — jobs that demand the skills I’ve gained over the years. But it’s not clear that good paying jobs in the skilled trades professions will be available to future vets.

A handful of politically powerful special interests want to cut the pay and benefits going to skilled trades workers by eliminating prevailing wage policies, even though research shows taxpayers won’t save a dime.

Prevailing wage policies say that taxpayer-supported jobs have to pay the going rate of pay in the region — usually the union-negotiated wage. Any company can bid, union or nonunion. But they have to pay a fair wage rate. It helps keep out-of-state companies from coming in with cheaper, less skilled workers to do the minimally acceptable job that meets minimum standards.

It’s in the state’s best interest to attract veterans such as Matt into the skilled trades, where there is a shortage of workers today. But without prevailing wage policies, the job will be a lot less attractive — in fact, many skilled-trades workers, including veterans, won’t enter the profession, or will go to another state. (Other Midwest states have prevailing wage policies, it’s mostly low-paying states in the South that don’t). Union apprenticeship programs will also disappear, and taxpayers will have to pay for those programs.

So this November, don’t just thank Matt and I for our service. We know you appreciate that. Take another step. Tell your lawmakers to support good jobs for veterans by supporting prevailing wage laws. That way Michigan veterans can return confident they will be able to get good training and support their families by taking jobs in the skilled trades

Agreement between U.S. Department of Labor, Oregon Bureau of Labor provides education, enforcement to protect workers from missclassification

Participants: U.S. Department of Labor’s Wage and Hour Division
Oregon Bureau of Labor and Industries

Partnership description: The division and bureau signed a three-year Memorandum of Understanding intended to protect employees’ rights by preventing their misclassification as independent contractors or other non-employee statuses. The two agencies will provide clear, accurate and easy-to-access outreach to employers, employees, and other stakeholders; share resources and enhance enforcement by conducting coordinated investigations and sharing information consistent with applicable law.

Background: The division is working with the IRS and 28 other states to combat employee misclassification and to ensure that workers get the wages, benefits, and protections to which they are entitled. Mislabeling employees as independent contractors can deny them of basic rights such as minimum wage, overtime and a host of other benefits. Misclassification also reduces federal and state tax revenues, and prevents contributions to state unemployment insurance and workers’ compensation funds.

More information on misclassification and the effort are available at http://www.dol.gov/misclassification/.

Quotes: “The Wage and Hour Division continues to attack this problem head on with a combination of a robust education and outreach campaign and a nationwide, data-driven, strategic enforcement across industries. Our goal is always to strive toward workplaces with decreased misclassification, increased compliance, and more workers receiving a fair day’s pay for a fair day’s work.”

David Weil, U.S. Department of Labor Wage and Hour Division Administrator

Quote: “When corporations misclassify their workforce, they make it much more difficult for workers facing wage theft, civil rights abuse or other unfair treatment on the job. This agreement will create a new tool to help protect the rights of Oregon workers cheated on the job.”

Brad Avakian, Oregon Bureau of Labor and Industries Commissioner

Source: WHD News Brief, 04/04/2016
Photo: Matt Brown

Colorado wage complaints surge amid claims of payroll fraud, abuse of workers

An earlier version of this article incorrectly stated that business groups oppose a measure that would make wage complaints public. In addition, Rep. Jessie Danielson’s home town was incorrectly identified. She is from Wheat Ridge.

John has been working in the U.S. as a drywall hanger in northern Colorado and other states for most of the past 12 years.

The tight construction market here has made it easy for him to get work for $10 or $14 or even $16 an hour. But wages are paid in cash, the hours are long, there are no breaks or overtime, and often pay is short.

For these reasons, John (who asked that his real name not be used to protect himself and his coworkers) is one of a handful of undocumented laborers who have reluctantly come forward, signing affidavits and filing complaints with the Colorado Division of Labor and Employment, detailing the job sites where they’ve worked, the labor brokers who’ve hired them, and instances in which overtime hasn’t been paid.

The problem has become so prevalent that unions representing construction workers have begun a campaign in Colorado and across the West to stop the practice.

In addition, the U.S. Department of Labor has launched a nationwide wage fraud investigation involving 22 states, including Colorado.

In Colorado’s over-heated job market, construction companies are desperate for workers and complaints of wage abuse and other workplace problems have surged 25 percent at the Colorado Department of Labor and Employment.

Though the fraud takes different forms in different states, in Colorado here’s how it often works, according to wage advocates and regulators.

A subcontractor hires a labor broker as an independent contractor, something that is legal here as long as the labor broker registers as a limited liability company (LLC) with the Colorado Secretary of State. This can be done in a matter of minutes online.

Once the labor broker registers as an LLC, it exempts the subcontractor from any liability for the labor broker’s workers, according to the Colorado Department of Labor.

In documents provided to the Daily Camera, the Denver-based Southwest Regional Council of Carpenters union identified 12 subcontractors in the metro area it believes routinely use labor brokers with LLC certificates to recruit undocumented workers and some two dozen independent labor brokers who bring laborers in from Nebraska, Texas, North Dakota, South Dakota, Nevada and Utah and move them from one construction site to another.

Several of the sites identified by the workers and the union are in Boulder County, including a public housing project for senior citizens in Longmont and a $91 million hotel project at the corner of 28th Street and Canyon Boulevard in Boulder.

General contractors and project owners say the rising complaints and labor protests are simply a ploy by unions to punish those contractors and owners who’ve selected non-union subcontractors.

Union leaders agree that the use of labor brokers makes it difficult for union contractors to compete.

But David Kersh, executive director of the Los Angeles-based Carpenters/Contractors Cooperation Committee who is leading the regional fight against wage fraud, said the issue goes beyond union/non-union friction.

“You’re talking about a lot of money in taxes that are not being paid,” Kersh said during a visit to meet with regulators last week in Colorado “These contractors are enabling that — millions and millions of dollars are going underground. At the same time, middle class workers and their families are being hurt.

“It’s ironic,” he said. “All of these construction unions are pro-development. We share an interest with the development community. But this is wrong.”

In an effort to bring public attention to the issue, the unions are distributing fliers around job sites, identifying subcontractors and labor brokers at the sites whom they believe are engaging in wage fraud, based on affidavits from workers and photos of cash payrolls.

According to interviews with two undocumented workers — one of whom worked on the Spring Creek Project last month — and a former construction superintendent whose former company uses labor brokers extensively, the use of undocumented workers and payroll fraud has exploded during this most recent construction boom.

General contractors and their subcontractors, desperate for help and largely off the hook legally for any wage fraud conducted by labor brokers, can easily look the other way, according to regulators.

John spent several weeks working on the Longmont Housing Authority’s Spring Creek project hanging drywall for Westminster’s United Builders Services (UBS). But he ultimately quit, he said, because one of the labor brokers who recruits workers for UBS failed to pay him several hundred dollars in wages, and deducted rent charges from his pay in violation of his original verbal agreement with the broker.

After getting into a fight with the broker, John said he was angry and shaken, and agreed to file an affidavit and complaint with the Colorado Department of Labor and Employment.

“The whole time I worked for UBS or their subcontractors, I never got breaks or was paid for overtime. I don’t think it’s fair that they abuse the people,” he said in his affidavit.

UBS did not respond to repeated requests for comment.

Boulder’s Daneuve Construction is the general contractor overseeing the Longmont Spring Creek project. But Daneuve Vice President David Garabed said he wasn’t aware of any wage issues.

And because it is a public project that requires workers to receive what are known as “prevailing wages,” Garabed said the wage fraud being alleged would be difficult if not impossible to pull off.

“We have to present certified payroll every week,” Garabed said, referring to paperwork that workers sign verifying they’ve been paid the prevailing wage. “I would be very surprised if anything like that were occurring.”

But the former UBS superintendent. who asked not to be identified because he fears retaliation from the labor brokers, told the Daily Camera that labor brokers are trained by subcontractors to fill out the prevailing wage forms themselves, forging workers’ names. The superintendent said he witnessed the training sessions.

Unless a general contractor walked out onto the job site, verified each worker’s identity and asked how much he or she was being paid, there would be no way to verify whether the workers were receiving the prevailing wage.

The cheapest guys in town

The superintendent quit working for UBS because of his concerns about the use of labor brokers. wage fraud and the difficulty subcontractors operating legally have competing against the low-cost labor brokers, he said.

A drywall hanger on a legal payroll makes roughly $28 an hour. Those working off-the-books are typically paid less than half of that.

Now working on his own, the superintendent said the use of cash pay makes it extremely difficult for companies that are paying for workers compensation and unemployment insurance, as well as safety equipment, as required by law, to compete.

“By the time we add in all of our costs and bid the job, we cannot win, thanks to these guys,” he said. “Every time one of these labor brokers bids a job, we end up being way over.”

“This is not a new problem,” he said. “But everybody avoids talking about it because, one way or another, these (undocumented workers) are cheap. Unfortunately, they are the cheapest guys in town. And everyone benefits.”

Gustavo Maldonado is a wage advocate with the carpenters’ union.

In the past year, Maldonado has delivered to various regulators numerous affidavits from workers, photos documenting cash payments, and long lists of elusive labor brokers who work with little more than a cell phone and a $40 business registration from the Colorado Secretary of State.

Maldonado said he has contacted the Colorado Department of Labor and Employment, the U.S. Department of Labor, the Department of Homeland Security and numerous Colorado lawmakers.

But he said he has seen no action, to date.

Cher Havind, a spokeswoman for the Colorado Department of Labor, said the agency cannot discuss specific labor complaints it is investigating. But the agency did conduct 2,365 audits last year across its workers compensation, unemployment and wage and hour divisions, with 40 percent of those, or 946 resulting in enforcement actions.

“Construction right now is like a cancer,” Maldonado said. “This cash pay is growing and growing. GCs (general contractors) know exactly what’s going on. But it’s as if nobody cares.”

Michael Gifford, executive director of the Colorado chapter of the Associated General Contractors, said he wasn’t aware of any abuse of undocumented workers or concerns about the use of cash pay. But he said a similar wave of protests in 2010 resulted in a state investigation and a report that found no evidence of the practice.

Deluged with complaints

At the Colorado Department of Labor and Employment, wage complaints are up 25 percent in the past year, driven in part by a new law making it easier for low-wage workers to get help from the state, by the overall labor shortage, and by workers such as John, who are coming forward out of frustration and fear.

Julie Yakes is manager for self-insurance and coverage enforcement for the Workers Compensation Division at Colorado’s labor department. She said tracking labor brokers and subcontractors who engage in wage fraud is difficult in Colorado because there is no effective regulation of the construction industry.

Little legal oversight, transparency

When workers are paid in cash illegally, three types of laws essentially are broken: Those requiring that workers compensation insurance premiums are paid, those requiring that unemployment insurance premiums are paid, and those requiring that breaks be given and overtime be paid.

But general contractors have no responsibility if a worker recruited by an independent labor broker isn’t paid properly or isn’t covered by insurance, according to Yakes. General contractors are liable only if a subcontractor with a direct contract with the general contractor failed to cover its own employees.

In addition, the state labor department is prohibited from making public any records of worker complaints against companies, providing little transparency about the state of the labor market and providing little incentive for so-called bad actors to stop the wage fraud.

Colorado Rep. Jessie Danielson, D-Wheat Ridge, has sponsored a bill this session that would make those wage complaints public once they’ve been resolved.

“The way the law is interpreted now, no one can access this information, even under the Colorado Open Records Act,” Danielsen said. “Most businesses are decent companies that treat their hard-working staffs well. But I am very concerned. I am seeing an increase in these cases across the state. What we need is more transparency so that we can deter this kind of behavior. Those companies that do proudly pay their workers are up against bad actors who make more money and cheat their own work forces. That is not good for business.”

Protests continue

In Boulder, a labor protest at the hotel site has been underway for three months now, fueled by union concerns that UBS, the same drywall contractor identified by John and others, has been selected for the project.

Millender-White, the general contractor overseeing the hotel development, did not respond to requests for comment for this article.

But earlier this year, Millender’s Adam Mack said his company has used UBS on numerous projects without incident. He said the labor protests were simply the result of a union seeking to roil the waters because his company has selected a non-union subcontractor.

While the protests continue, Boulder-based attorney Brandt Milstein said he and other labor attorneys are being overwhelmed with complaints about wage fraud among low-wage workers.

“My experience is that immigrant workers are fairly consistently exploited,” Milstein said. “It’s nothing new in Colorado. But the rates of wage theft among low-wage workers we’re seeing now is alarming.”

Source: Boulder County Business – Jerd Smith, Business Editor
Photo: Kira Horvath, Staff Photographer – Boulder County Business

Four Questions Interview with Matthew Capece

America is rife with complex plots by businesses to illegally dodge workers-comp premiums. The flourishing underground economy that exists in many urban centers adds more kindling to the fraud fire, especially in construction. FraudWire reached out to Matthew Capece, senior executive with the United Brotherhood of Carpenters, for his thoughts. He’s been a specialist in employer payroll fraud in construction since 1989.

Workers compensation insurers have long dealt with premium-avoidance schemes. Among the ploys are lowballing workforce size and payroll, and misclassifying employees as independent contractors. How prevalent are premium scams in construction trades, and are any variations unique to construction?

Workers-compensation premium scams involving construction projects are alarmingly commonplace. They regularly occur on residential projects. We even find them on large commercial sites, schools, hospitals, high-rise condos and government jobs like military bases. Fraud has become standard operating procedure in a number of states, including Colorado, Florida, Georgia and Tennessee. But it is happening all across the country.

The schemes vary in sophistication, but the growing practice is using subcontract labor brokers. For instance, interior-systems specialty subcontractors install metal studs, sheetrock and ceilings. They also provide supervision and, maybe, some hands-on labor.

The bulk of their labor comes from brokers. Yet the specialty subcontractor supervises and treats the labor brokers’ workers like their own employees. Labor brokers aren’t staffing companies; they are individuals who can muster a handful to hundreds of construction workers. They may have a business office, but much of the time they operate out of a residence. They can either be incorporated or be dba’s.

Labor brokers will misclassify employees as 1099 subcontractors, but most pay employees under the table in cash or with a check. Some labor brokers are uninsured and use fake certificates of insurance, but many have policies. The problem is they pay premiums on a fraction of their true payrolls. There is a case in Florida where an insurance broker issued 450 insurance certificates to a labor broker, claiming $43,000 in payroll for four workers. Sophisticated schemes like those in Florida involve insurance brokers, accountants, upper-tier contractors, shell companies and check-cashing stores.

These schemes work well for specialty subcontractors. They use the lower labor costs from the brokers to underbid law-abiding competitors, while brandishing the subcontract relationship with brokers and insurance certificate to shield against liability. That is how they drive full-premium-paying contractors out of business and take control of markets.

I am not as familiar with other industries as I am with construction. I do know that the labor-broker system grew from the agricultural industry. In general, the practice of subcontracting labor has been growing. Still, the various studies of fraudulent employment practices universally list construction as a leading abuser.

We know it’s hard to measure workers compensation fraud nationally. Still, do you have any sense of how big premium scheming is (including lost revenues), and how it compares to bogus work injury claims in overall size?

I haven’t found a national study on the degree of workers-compensation premium fraud in the construction industry, but there are state studies. In Tennessee, carriers lost $91.6 million in 2006 and in California they lost $264 million in 2011. We think those estimates are low. Consider the 2008 West Palm Beach, Florida Grand Jury report on illicit use of check-cashing stores. The report described how just 10 contractors moved $1 billion in cash pay through check cashers in less than three years. You can find these studies and reports on our informational website.

Claimant fraud is less costly than employer premium fraud. A California report, though, shows premium fraud losses to carriers are much greater than claimant fraud. Total fraud losses from cases with the Department of Insurance amounted to $8 million in the first six months of 2013. Of that, $6.7 million came from premium fraud and $1.3 million from false claims. Those numbers were not broken down by industry. It’s noteworthy that claimant fraudsters were more likely to get jailed than employers.

Carriers are losing a shocking amount of premiums. Still, despite the significant dollars lost, premium fraud doesn’t get the attention it should. If we could double the premium-fraud losses caught by California it would mean a yearly number of $13.4 million. That’s just 5 percent of the $264 million lost in the construction industry alone.

How are key states identifying premium schemes and strengthening laws or other enforcement tools to combat them?

A number of states are taking innovative actions against premium fraud. The California insurance department gives grants to county district attorneys to fund insurance fraud prosecutions.

Washington is a monopolistic state. It uses fraud-detection software that compares information in various databases to identify likely abusers for premium-fraud audits. Tennessee is a private-market state. It has just installed a similar system. The legislature funded the system and additional compliance investigators. They also added a law creating civil penalties for premium avoidance.

Florida has dedicated workers-compensation compliance prosecutors in select counties. They also have a new database that gets real-time information about checks cashed at check-cashing stores that they compare to proof-of-coverage information. Both Florida and Connecticut also have demonstrated that they aren’t afraid to use their stop-work-order authority.

States need robust tools for both civil and criminal enforcement. But they can’t just be used against labor brokers. Enforcement must reach all parties involved, including the specialty subcontractors and other upper-tier contractors involved in schemes. Labor brokers are abundant and easily replaced.

How can the anti-fraud community partner with your union to combat workers-comp premium scams?

Because we are a construction union, we know how the industry operates, and specific job-site conditions and cheating employers. We can share that information with carriers and enforcement agencies willing to act. We also welcome others to work with us to strengthen state and federal law- enforcement capabilities. They include union and non-union employers, carriers and community organizations.

But it can’t stop there. We each must examine our own practices that encourage, enable or fail to detect fraud. The construction industry must change course and stop awarding work to scofflaws. Insurance certificates need to be modified so insurers can track the number being issued, and insurance certificates should indicate the amount of payroll and work classifications. Also, insurers should re-evaluate their auditing procedures, and whether premiums truly capture the risk posed by contractors and subcontractors using the labor-broker system.

Also, educating stakeholders is a large part of what we do. For more information, follow us on Twitter @nixpayrollfraud and visit payrollfraud.net.

We are prepared to engage with fellow stakeholders. Action is needed. Contractors who pay their full premiums are being marginalized in significant markets. They face increasing pressure to join in illegal schemes or go out of business. Moreover, insurance carriers are losing millions in premiums daily.

Source: Fraud Wire
Photo: Fraud Wire

Allying with carpenters against workers-comp premium cheaters

Workers-comp premium scams by employers may steal more money than bogus work injury claims. At least that’s what many experts say. And the problem could be growing. This is especially true in urban centers with deep underground economies.

Firms in the dangerous construction trades are among the largest offenders. The Coalition met recently with a new and unexpected anti-fraud ally: the United Brotherhood of Carpenters. It’s the voice of organized labor in the building trades. Premium-avoidance schemes leave workers exposed without state-required benefits. Federal, state and local governments also lose untold millions in unpaid taxes.

Shady businesses lowball their workforce and payroll size — two important factors in setting comp premiums. The firms misclassify workers as subcontractors, then pay them in cash under the table. A dishonest employer illegally can duck hundreds of thousands of dollars in workers-comp premiums and taxes in a year.

Workers also are cheated out of workers-comp benefits, wages, overtime, unemployment benefits and Social Security. Honest employers lose business because cheaters use the illicit savings to underbid them for contracts. And, workers comp insurers lose premiums.

The Coalition’s recent meeting with the carpenters union revealed disturbing examples of premium-avoidance schemes: A building at the University of Connecticut … Florida hospital … construction at the Atlanta airport … and a building at the Walter Reed military hospital complex in suburban Washington, D.C.

The carpenters’ proposals for comp insurers show how partnerships can help move anti-fraud efforts forward more decisively:

  • Work together on best practices for conducting audits and investigations into premium-avoidance schemes;
  • Adopt procedures to red-flag suspected premium fraud; and
  • Cooperate with stakeholders on investigations.

Workers-comp insurers already do much of this, yet premium cons remain virulent. What’s needed is stepped-up alertness and action by all parties. This becomes a force-multiplier that identifies more schemes, and boosts the entire anti-fraud effort.

Fraud fighters and their allies must team up to educate state policymakers about stopping costly comp scams — premium avoidance and false injury claims. Fraud fighters can speed up progress by enlisting non-traditional allies such as the carpenters union. The more influential allies that join anti-fraud efforts, the stronger our efforts against comp scams will become.

Source: Fraud Wire
Graphic: Fraud Wire
Image: Bernard Pollack

Guilty plea by contractor, nearly $800K in restitution to cheated workers

NEW  YORK – Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters announced on Friday, March 18, 2016, the guilty pleas of Sergio Raymundo, 28, and his New Paltz-based construction company Lalo Drywall, Inc. 

Both defendants pleaded guilty in Manhattan Supreme Court and must pay $793,509.60 in restitution and $83,143.76 in unpaid unemployment contributions due to the New York State Department of Labor, Unemployment Insurance Division. 

Raymundo and Lalo Drywall, Inc. cheated eight workers at a Harlem housing project out of approximately $800,000.00 in wages during a 17-month period, and attempted to conceal the underpayments by signing false checks drawn on the company’s account indicating that employees on the job were paid properly under the law. However, those checks were never actually given to the workers.

“No matter how creative they become in their illegal schemes, dishonest contractors will be held accountable. This guilty plea demonstrates that my office will continue to take aggressive action against public works contractors who cheat their employees out of proper wages and who abuse taxpayer money” said Attorney General Schneiderman. “Workers must be paid for their labor, and my office is committed to ensuring that workers who are cheated out of wages are rightfully compensated.”

NYC Department of Investigation Commissioner Mark G. Peters said, “The pleas by these defendants, and the restitution being awarded to workers who were cheated out of nearly $800,000 in rightful pay, demonstrates that wage theft at public works projects is a serious crime with consequences. DOI will continue to pursue and expose employers who attempt to steal workers hard-earned wages. I thank the Attorney General and our partner agencies for their efforts in uncovering and prosecuting these crimes.”

Sergio Raymundo pleaded guilty to one count of Falsifying Business Records in the First Degree under New York State’s Penal Law, a class E felony, as well as to one count of Failure to Pay Wages under New York State’s Labor Law, an unclassified misdemeanor.

With his plea, Raymundo paid $350,000.00 to the Office of the Attorney General (OAG). representing restitution and unpaid unemployment contributions by Lalo Drywall, Inc. At sentencing, under the plea agreement, Raymundo must pay another $210,000.00 representing an additional amount of restitution and unpaid unemployment contributions.  The remaining $318,150.56 in restitution and unpaid unemployment contributions will be paid during Raymundo’ post-conviction sentence.

Lalo Drywall, Inc. pleaded guilty to one count of Falsifying Business Records in the First Degree, a class E felony, and will be sentenced to a conditional discharge.  Under the plea agreements, both Raymundo and Lalo Drywall, Inc. are also barred from bidding on or being awarded any public works contracts in New York State for the next 5 years.

This plea stemmed from the April 2015 arrests of five subcontractors as part of an ongoing focus by Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters on widespread allegations of wage theft at public works projects in New York City. One of the subcontractors was Lalo Drywall, Inc., which was investigated for underpayment schemes that took place between April 10, 2013 and August 27, 2014 at the New York City Department of Housing Preservation and Development’s (HPD) Sugar Hill Houses, a mixed-use, commercial and low-income residential project in Harlem, which was subject to prevailing wage requirements.  Federal and state prevailing wage laws seek to ensure that government contractors pay wages and benefits that are comparable to the local norms for a given trade, typically well above the state and federal minimum wage.

The case was investigated by Deputy Inspector General David Jordan and Assistant Inspector General Ondie Frederick under the supervision of Inspector General Jessica Heegan. The Department of Investigation’s effort to combat prevailing wage violations was overseen by Senior Associate Commissioner Michael Carroll and Associate Commissioner William Jorgenson.

Source: Hudson Valley News Network

Bill would make state investigations into wage theft a public record

COLORADO – A Rocky Mountain PBS News investigation has prompted proposed state legislation to improve transparency of information concerning employers’ wage violations.

House Bill 16-1347 would turn previously secret records on whether an employer had violated wage laws into public records. That means that the public would have access to such information as cases of employers who were found to have illegally withheld pay or underpaid their employees.

Rocky Mountain PBS News showed how some employers have made cheating workers a way of business and how state labor authorities and outdated laws have shielded the actions of bad actors from public view.

The existing 100-year-old law has been interpreted as requiring the investigative process to be kept secret, even when issues are resolved. Federal labor investigations, meanwhile, have an easily accessible mobile app.

House Bill 16-1347 makes one caveat: the state Department of Labor and Employment is prohibited from releasing trade secrets, which are deemed confidential. When someone requests information on wage violations, the bill mandates that the department must notify the employer, who then has ten days to respond with further information to show if a trade secret is at issue.

You can read the full text of the proposed legislation here.

Source: Rocky Mountain PBS News

Senator Brown proposes anti-wage theft legislation

CINCINNATI, OH – In the wake of Cincinnati becoming the first Ohio city to pass a wage theft ordinance, one of Ohio’s senators is trying to bring the momentum nationwide.

U.S. Sen. Sherrod Brown introduced the Wage Theft Prevention and Wage Recovery Act Wednesday. The legislation would give workers the right to receive full compensation for all of the work they perform, as well as the right to receive regular paystubs and final paychecks in a timely manner.

It would also provide workers with tools to recover stolen wages and make assistance available to enhance the enforcement of and compliance with wage and hour laws.

The bill was co-sponsored by U.S. Sen. Patty Murray, D-Wash.; U.S. Rep. Rosa DeLauro, D-Conn., introduced companion legislation in the House of Representatives.

Wage theft occurs when employers refuse to pay workers money that they are owed by withholding pay, tips or overtime.

“When bosses don’t pay their workers what they’re owed, it robs them of money they earned for their hard work and hurts businesses that play by the rules,” Brown said in a news release.

“We must create a system where employers who steal wages are held accountable and workers have the tools they need to recover their wages when they’ve been cheated.”

A 2009 study by the National Employment Law Project (NELP) of nearly 4,500 low-wage workers found that more than 60 percent had been shorted by their employer each week, equivalent to $2,634 per year in unpaid wages. Analysts applying this study to Cincinnati estimate that low-wage workers here lose $52 million per year to wage theft.

Low-wage and immigrant workers are victims of wage theft when they are paid less than the minimum wage, are shorted hours, forced to work off the clock, are not paid overtime or not paid at all. These are pervasive practices across many industries.

Despite complaints about wage theft, Ohio has cut the number of state wage investigators from 15 to five since 2008.  The closest investigator to Hamilton County is located in Dayton, Ohio.

In early February, Cincinnati became the first city in Ohio to pass an ordinance to improve enforcement of existing wage laws.

City Council voted 7-2 for the ordinance. Under the measure, if the city or another agency determines a company has committed wage theft, city officials would be able to have the money returned and the company would be barred from doing business with the city.

During a news conference call Wednesday, Brown was joined by Brennan Grayson, director of the Interfaith Workers Center in Cincinnati, who helped organize support for Cincinnati’s recently-passed wage theft ordinance.

“Sen. Brown’s bill is the type of change we need to begin making things right, to begin restoring dignity to wage earners,” Grayson said.

Under the Ohio Democrat’s proposal, workers would recoup the full compensation that employers have taken from them, create a civil penalty of $2,000 when employers violate minimum wage and overtime protections and  increase the time that employees have to bring a claim for owed wages.

The bill also would make it easier for employees to take collective action to recover their stolen wages and remove the current requirement that employees affirmatively “opt-in” to engage in a collective action under the Fair Labor Standards Act.

Last November, Brown introduced legislation to take action against employers that misclassify their workers to cheat them out of wages, benefits, and important workplace protections – one of the practices that contributes to wage theft. He has also introduced bills to raise the minimum wage, expand paid sick leave to all workers and support workers’ right to bargain with employers.

Source: Cincinnati.com

Residential construction industry built on ‘payroll fraud’ model

MINNEAPOLIS, Minn. – Jose Ramirez had never heard the term “wage theft,” but he knew he was being cheated when a roofing subcontractor refused to pay him.

“We finished a couple houses, roofing houses, and we tried to collect the money and the guy said, ‘I haven’t gotten paid by our boss,'” he recalls. “That was a big project. I mean, we were shingling one house, putting back shingles, moving to the next one, and eventually there was two of them where I did not get paid. I told the guy, ‘That’s it. I can’t keep working until you pay me those two houses.'”

“So they stop answering the phone, you start chasing them for the money, and then suddenly, they disappear . . . and there you go – you got two weeks without pay . . . So you have to figure out how you’re going to support your family.”

Today, Ramirez is one of the lucky ones. After seeing a billboard advertising the carpenters union, he called and signed up. He spent several years with a reputable contractor and just recently became an instructor in the training center operated by the North Central States Regional Council of Carpenters.

Looking back, Ramirez realizes that not getting paid to roof two houses was just the tip of the iceberg. He was being cheated every day on the job, forced to work long hours without overtime pay. Often, he never got a paystub to track whether or not he was being paid for all the hours he worked.

Fortunately, he did not get injured on the job. Even though construction employers are required to carry workers’ compensation insurance, untold numbers of injured workers have been fired, left to try to get medical help on their own.

“Back in the day, I didn’t know that you had those rights,” said Ramirez. “I have friends who still work the same way. Depending on the situation that they have, some people don’t think they have a choice but to work that way. People have to make a living.”

Tens of thousands of construction workers are victims of wage theft in Minnesota ever year, but no one knows the exact number. Some of the workers are undocumented and afraid to come forward. Many, regardless of their background or citizenship status, simply don’t know that they are being cheated.

Minnesota Department of Labor & Industry: An Evaluation of the Contractor Registration Pilot Project and the Misclassification of Workers in the Construction Industry

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Source: Workday Minnesota

Tennessee contractors avoid workers’ comp to win bids

NASHVILLE, Tenn. – The amount of growth in downtown Nashville requires a lot of labor, but not every worker is equally protected in case of injury.

The practice of winning low bids by avoiding workers’ compensation payments is called worker misclassification.

The Channel 4 I-Team has found the same thing uncovered nearly five years ago at the Music City Center is now happening right across the street.

WSMV Channel 4

In 2011, a drywall subcontractor with a large workforce was failing to deduct taxes of any kind or pay workers’ compensation or overtime.

Some contractors use worker misclassification to win competitive bids. They can undercut a rival by 20 percent or more by not paying into insurance pools.

“Everybody is hurt by employee misclassification, all of us,” said Scott Yarbrough with Workers Compensation Compliance. “If an employee is hurt, they don’t have a workers’ compensation policy to fall back on. The hospitals have to treat them as a charity case most of the time.”

When the I-Team investigated the Music City Center, the state had never audited a job site for compliance. They do now.

At an apartment complex in Bellevue, a subcontractor named Pablo Delgado was fined more than $87,000 for understating his payroll.

At another Bellevue complex, Aguilar Carpentry was caught misclassifying its workforce and was hit with almost $73,000 in fines.

Investigators also levied a $39,000 fine on a Vanderbilt dormitory project.

Government jobs aren’t immune. A Metro-funded project in north Nashville led to a $69,000 fine for a roofing subcontractor.

A worker at the new Westin Hotel across from the Music City Center spoke to the I-Team. He asked not to be identified.

“Yes, it’s very common. They’re still doing it,” the worker’s translator said.

The man showed us his paychecks with no tax deductions whatsoever. There was also no overtime pay, even though he works 50 hours a week.

The man said it’s done everywhere.

“He said that 95 percent of the jobs he has done, they don’t take taxes off the cash and they don’t pay time and a half overtime,” the translator said.

“It’s a huge risk for families,” Yarbrough said. “When an uninsured employee gets hurt, it starts an economic death spiral for them. They can’t pay their hospital bills. They lose their car, can’t get to work. They lose their job, lose your house.”

Many fines go unpaid. The offender has yet to pay a dime of the $87,000 fine mentioned early. Only $5,000 of the nearly $73,000 fine against Aguilar Carpentry has been collected. The subcontractor on the Vanderbilt dorm has paid less than half of what he owes. The roofer from the Metro-funded project has managed just $3,000 of the $69,000 he owes the state.

Offenders are given 24 months to pay.

“The main thing we want to see is people coming back into compliance,” Yarbrough said. “We don’t necessarily want to run them out of business. We want to give them an opportunity to pay over time.” The state just started cracking down on this in 2013.

Collections have increased from $85,000 statewide to $132,000 last year. As of Wednesday, there is still $325,000 owed by violators.

Experts said in the construction field alone, misclassification is shorting the state Medicare pool somewhere between $7 million and $42 million.

Source: WSMV News 4, Nashville, Tenn.