AG Healey Assesses More Than $326,000 in Restitution and Penalties Against Construction Companies in First Quarter of 2016

Posted by National Alliance for Fair Contracting on

Part of an Ongoing Effort by the AG’s Office to Address Wage Theft in the Industry

MAURA HEALEY, ATTORNEY GENERAL

For Immediate Release – April 27, 2016

BOSTON – As part of an ongoing effort to address wage theft in the construction industry, Attorney General Maura Healey has issued 29 civil citations against construction companies from January 2016 through March 2016, an increase from the previous two quarters. Restitution for employees of the various employers totaled nearly $260,000 and the companies were fined a total of more than $68,000.

“Wage theft is a real issue in Massachusetts, including in the construction industry where dishonest companies continue to cheat their employees,” AG Healey said. “Our office is working to level the playing field so that workers are paid fairly and contractors who follow the rules are not at a disadvantage.”

Violations in these cases included the failure to pay proper wages, failure to pay overtime, retaliation and failure to furnish records for inspection. For work performed on public construction projects in the state, the violations included the failure to pay the prevailing wage, failure to submit true and accurate certified payroll records, and failure to register and pay apprentices appropriately.

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IRS Hiring Additional Agents, Providing Additional Resources for Misclassification Enforcement

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by Scott Braddock
Wed, 05/25/2016 – 7:53am

The recent announcement by the IRS Commissioner that the agency is moving forward with hiring hundreds of additional agents has sparked a debate about exactly how those new resources should be utilized. Some leaders in the construction industry have told Construction Citizen that if the government has more people on hand to enforce the law, proper classification of workers should be a priority.

Misclassification is the practice of designating an employee as a “1099 worker” or an independent contractor when that person, by law, should be compensated as an employee.

Unscrupulous employers do it as a way of sidestepping payroll taxes, unemployment taxes, and workers’ compensation insurance. Even though there are many legitimate uses of contract labor, abuse of the classification gives cheating companies an ability to submit lower bids for projects, undercutting ethical contractors who follow the letter of the law.

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Sacramento contractor makes $385,000 settlement over wages

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BY DALE KASLER
MAY 19, 2016 9:29 AM

A Sacramento electrical contractor agreed to pay $385,000 in back pay to settle an investigation into its alleged failure to pay prevailing wages, the federal government announced Thursday.

Harold E. Nutter & Son Inc. will pay 58 workers a total of $385,000 and has agreed to comply with prevailing wages laws on future contracts, the U.S. Department of Labor said.

The department said Nutter failed to pay prevailing wages on seven federally funded construction projects, six in California and one in Washington state. Because the contracts were federally funded, the Davis-Bacon Act required all contractors and subcontractors to pay so-called prevailing wages, a threshold determined by the department on a community-by-community basis.

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Owners of Concord firm charged with wage theft, tax fraud (CA)

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By Nate Gartrell
POSTED: 04/29/2016 12:01:28 PM PDT
MARTINEZ — A Concord construction firm is facing 11 felony charges after a 10-month investigation produced evidence that its owners were withholding wages from employees and failing to pay them workers’ compensation insurance, according to the Contra Costa County District Attorney’s Office.

Nathan and Sarah Moore, owners of NRM Renovations Inc., were charged with grand theft of labor, workers’ compensation insurance fraud, and a litany of other counts all related to labor code and insurance law violations, a DA news release says.

The company is accused of owing more than $30,000 in back wages to several employees, around $250,000 in workers’ compensation premiums to insurance companies and back taxes for more than $1 million in wages. They’re also charged with an aggravated white-collar crime enhancement, which could add jail time to their sentence if they’re convicted.

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A.G. Schneiderman Announces Conviction Of Contractor Who Will Pay Nearly $800,000 To Workers For Wage Theft

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MAY 20, 2016
BY CHRISTOPHER BOYLE

(Long Island, NY) Attorney General Eric T. Schneiderman today announced that New Paltz-based construction company Lalo Drywall, Inc. and its owner Sergio Raymundo, 28, were sentenced in Manhattan Supreme Court after a conviction related to wage theft for underpaying workers at a mixed-use, commercial, and low-income residential project in Harlem.

Raymundo and Lalo Drywall, Inc. admitted to cheating eight workers at a Harlem housing project out of approximately $800,000 in wages during a 17-month period. The defendants 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.

“Wage theft is a crime – one that frequently involves companies exploiting low and middle income workers for their own gain,” said Attorney General Schneiderman. “My office will continue to aggressively prosecute those who commit wage theft and ensure that workers received the compensation they have earned.”

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Court Orders Payment of Government Contract Retirement Plan Contributions

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The DOL alleged that James Brunk and Brunk Industries Inc. failed to collect prevailing wage employer contributions for the employees’ 401(k) plan provided by government contracts for work performed by defendant’s employees.

By Rebecca Moore
April 22, 2016

The Department of Labor (DOL) has secured a consent judgment to restore of $95,000 to the 401(k) plan sponsored by Brunk Industries Inc. in Oakdale, California.

Based on an investigation by the DOL’s Employee Benefits Security Administration (EBSA), the DOL filed a complaint alleging that James Brunk and Brunk Industries Inc. failed to collect prevailing wage employer contributions for the employees’ 401(k) plan. These contributions were provided by government contracts for work performed by defendant’s employees under prevailing wage laws.

Instead, the defendants retained and comingled the contributions with company assets and used the funds for non-Plan purposes, in violation of the Employees Retirement Income Security Act (ERISA).

The U.S. District Court for the Eastern District of California approved a consent judgment and order requiring the defendants to restore $95,109 to the 401(k) plan. In addition, the judgment removes Brunk as the plan’s fiduciary and appoints Lefoldt & Company as the independent fiduciary responsible for winding up the plan, including the distribution of its assets to participants. Brunk will pay $4,890 of the costs for this independent fiduciary, and also may be assessed a 20% civil penalty on the amount restored to the plan. The court order also permanently enjoins Brunk from serving as a fiduciary of, or service provider to, any ERISA-covered employee benefit plan in future.

(Read Court Order Here)