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Manchester drywaller jailed for under-the-table payroll scheme

MANCHESTER, N.H. – A city dry-wall contractor was sentenced to 18 months in federal prison and ordered to pay the Internal Revenue Service more than $780,000 for his role in an under-the-table payroll scheme.

Cruz E. Galvan, 39, who operated Four Star Drywall, was ordered to pay the IRS restitution totalling $786,553. Authorities said he had paid $100,000 of that amount several weeks before being sentenced Tuesday in U.S. District Court.

According to U.S. Attorney Emily Gray Rice, Galvan pleaded guilty to one count of federal employment tax evasion, admitting to a scheme to dodge payment of federal employment taxes on wages he paid to his employees.

During his plea hearing, Galvan admitted that from April 2010 until December 2012 he paid employees with vouchers instead of with checks. The employees were then instructed to present the vouchers to a local check-cashing business to which Galvan had previously provided funds with instructions to pay the vouchers in cash.

He acknowledged he did not report the wages he paid to the IRS, evading federal income tax withholding and Social Security, Medicare and federal unemployment taxes.

Immigration proceedings are underway to deport Galvan, who authorities say is in the country illegally, after he serves his sentence.

City police, the IRS, the U.S. Department of Homeland Security and the U.S. Department of Labor, Office of Inspector General, investigated the case, which was prosecuted by Assistant U.S. Attorney Bill Morse.

Source: Union Leader

Senator Brown Reintroduces Fair Playing Field Act

US Senator Brown (OH) appeared with Labor Secretary Tom Perez at a forum in Cleveland to meet with workers who have been victims of payroll fraud. They met with construction, package delivery and other workers who have been denied basic employment protections because they were misclassified as independent contractors or paid off the books.

“We should call this what it is: fraud,” said Sen. Brown. “This is unfair to workers, unfair to businesses that play by the rules, and it must stop.”

At the forum, Sen. Brown announced that he is reintroducing the Fair Playing Field Act. The bill seeks to amend the federal tax code. Previously, the Fair Playing Field Act was blocked in House and Senate committees.

Why should politics matter to you?

American workers have felt a slow decline in their wages since the early 1980s, meaning wage increases have been slightly lower than the cost of living increase. This means less money for groceries, clothing, your children and the everyday essential you may need for raising a family or saving for retirement.

Union wages for the construction industry are no different, except unions have contracts that include wage increase, healthcare and retirement plans. With ongoing training programs for apprentices and journeymen this allows the workers to be more skilled than the nonunion workers. Productivity levels are higher, accidents are lower, and attitudes on job sites are more positive than ever before because of the investments in training by the members and their union. These union contracts are agreements between Labor and Contractors. The more highly skilled workers usually result in better wages, better working conditions and better benefits for their family.

On the other hand, payroll fraud is spreading rampant through the construction industry. This is where unscrupulous nonunion contractors choose to hire hourly workers and pay them cash or as independent contractors (1099s) by not withholding the employee’s state or federal tax deductions, FICA withholdings and Medicare deductions, leaving this responsibility on the workers to pay.

Learn more about payroll fraud

Who are my legislators in Kentucky?

The Kentucky Legislative Research Commision provides a map to reveal the elected officials in your area. You can use the search by address at the top or select your location. By clicking on his/her bio page, you can find contact information including phone, email and mailing adress. We encourage everyone to reach out to your elected officials regarding issues of concern.

Prevailing Wage Controls Costs

A study of 3 states – including Kentucky – found no meaningful cost difference on school construction comparing states with and without prevailing wage.*

Why do the costs not go up with prevailing wage?

  • Labor only makes up 21% of total building construction costs in Kentucky. Reducing wages doesn’t produce any savings without paying workers illegally below minimum wage. However, productivity does drive the cost of construction. Skilled workers on prevailing wage jobs are 15% more productive than less-skilled workers.
  • Kentucky taxpayers get better project quality and self-sustaining jobs at no additional cost to the taxpayer. Lowering local standards for construction wages attracts a lower skilled, out-of-area workforce which results in large productivity losses, costly errors on the construction project, inefficient use of expensive materials and fewer jobs for Kentuckians.

*Kentucky’s Prevailing Wage Law, Phillips, P., 2014.

‘Hybrid’ police merit rules pass council

The council approved changes to Terre Haute’s “responsible bidder ordinance,” which proponents say would help ensure city public works projects use the best qualified workers and that contracts that bid are “using the same level playing field.”

The council first adopted a responsible bidder ordinance in 2010 Under the changes, bidders on city public works projects “shall provide evidence of participation in apprenticeship and training programs … which are approved by and registered with the U.S. Department of Labor’s Office of Apprenticeship, or its successor organization.”

The changes would apply to any general contractor bidding on a city public works project, as well as subcontractors, he said.

The tougher language also should help ensure local bidders are awarded the contracts, Joe Bolk, business manager for Laborers Local 204, said previously.

While the changes mean contractors would have to have registered apprenticeship programs, the changes don’t require that union labor be used, advocates say.

Read the full article

Who are my elected officials in Indiana?

The Indiana Secretary of State’s office provides a great website for you to check out your elected officials. You can enter address in top left corner, and narrow results on right hand side all the way to school district! With contact information provided, we encourage everyone to reach out to your elected officials regarding issues of concern.

Prevailing Wage Protects Kentucky’s Taxpayers

Construction workers in Kentucky contribute $20 million to state and local taxes. This allows policy makers to balance budgets and fund infrastructure and public safety without raising taxes on everyone else.

However, workers NOT paid prevailing wage are eligible for up to $8,000 in public assistance, which costs taxpayers for additional reliance on cash assistance, food stamps and unpaid visits to the emergency room. Taxpayers don’t save without prevailing wage, they SUBSIDIZE low-wage jobs.

Prevailing wage is the wage paid to skilled construction workers on publicly funded projects estimated to cost more than $250,000. The wages are set by Kentucky’s Labor Cabinet based on what construction workers in the area make on private sector projects. This forces big government to abide by local private sector economies.

[i]  Kentucky’s Prevailing Wage Law, an Economic Impact Analysis, Peter Philips, Ph.D., 2014.
[ii]  Economic Policy Brief, Working Partnerships USA, 2011.

Prevailing Wage Drives Kentucky’s Economic Development

Every dollar spent on a prevailing wage project generates $1.50 in economic activity – that’s money spent at local businesses such as restaurants, shops and grocery stores – spurring additional job creation that keeps local businesses and economies strong.

In fact, the economic activity generated by prevailing wage projects supports 2,643 non-construction jobs in Kentucky!

Prevailing wage is the wage paid to skilled construction workers on publicly funded projects estimated to cost more than $250,000. The wages are set by Kentucky’s Labor Cabinet based on what construction workers in the area make on private sector projects. This forces big government to abide by local private sector economies.