Iowa MPOs Should Opt-Out of “Federal-Aid SWAP” Program (IA)

Posted by National Alliance for Fair Contracting on

PUBLISHED NOV 27, 2018 AT 3:38 PM

In 2017, the Iowa General Assembly passed legislation that authorized the Iowa Department of Transportation to create a “Federal-Aid SWAP” program (Iowa DOT, 2018). This legislation essentially eliminated federal requirements on public infrastructure projects, including the historically bipartisan Federal Davis-Bacon Act which creates a level playing field for all federal construction contractors by ensuring that public expenditures maintain and reflect local area standards for wages and benefits. Under Iowa’s “Federal-Aid SWAP” program, federal dollars that were designated for local construction projects are now retained through the state and fail to include Davis-Bacon Act standards. Local metro planning organizations in Iowa should opt-out of participating in the program.

The main purpose of the Davis-Bacon Act is to support middle-class American families by protecting local standards for compensation and craftsmanship in the competitive public bidding process. Federal construction bidding is not like the private sector. Government procurement agents are required to select the lowest bidder. In the low-bid model used on federally-funded construction projects, contractors aim to lower their bid however possible, including by lowering wages and by reducing apprenticeship training. The Davis-Bacon Act levels the playing field, allowing local contractors and local workers a fair shot at these government projects and incentivizing competition based on core competencies in construction (Duncan et al., 2017).

The Davis-Bacon Act boosts local economies and provides great value to taxpayers. The Davis-Bacon Act protects work for local contractors and construction workers, supports training programs, and provides pathways into the middle class for all blue-collar workers– keeping them off government assistance programs. Local metro planning organizations in Iowa should opt-out of participating in the “Federal-Aid SWAP” program and instead choose to maintain Davis-Bacon Act standards on taxpayer-funded construction projects.

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AG: Leominster construction firm ordered to pay nearly $840,000 for violating labor laws (MA)

Posted by National Alliance for Fair Contracting on

By Peter Jasinski
UPDATED: 10/31/2018 02:40:51 PM EDT

BOSTON — A Leominster construction company has been ordered to pay $837,341 in restitution and penalties for making illegal deductions from worker paychecks following the second investigation in less than three years of allegations the company was violating labor laws.

Massachusetts Attorney General Maura Healey announced Wednesday that Force Corporation and its managers, Juliano Fernandes, Anderson Dos Santos, and Claudio Cicero Da Silva have been issued two civil citations for failing to make timely payment of wages and failure to furnish payroll records to the AG’s office.

“Force Corporation and its managers cheated their construction workers out of hundreds of thousands of dollars,” said Healey in a written statement. “To build this case, our team documented the use of dozens of illegal tricks used by employers to steal from workers.”

This most recent investigation began after state officials received several complaints from the New England Regional Council of Carpenters.

The AG’s investigation revealed that Force Corporation has been regularly taking illegal deductions from employees weekly wages to pay for tools, safety equipment, and advances in what Healey referred to as a “textbook example of wage theft.”

The investigation also showed that Force unlawfully required employees to purchase their own tools through a company owned by Fernandes, one of Force’s managers.

…

The company was found in willful violation of federal labor laws and ordered to pay nearly $2.4 million back wages and damages to 478 employees in 2016 and $262,000 in fines for violating the federal Fair Labor Standards Act.
According to an investigation by the Wage and Hour Division of the U.S. Department of Labor, Force Corporation created a separate company, AB Construction Group of Framingham, as a way to provide Force with employers but classify them as independent contractors. This misclassification led to the company failing to pay employees overtime and keep accurate time and payroll records.

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Singleton Bill to Help Strengthen Prevailing Wage Clears Committee (NJ)

Posted by National Alliance for Fair Contracting on

December 11, 2018, 11:05 am

TRENTON – Legislation sponsored by Senator Troy Singleton which would allow the issuing of stop-work orders for failure to pay the prevailing wage cleared the Senate Budget and Appropriations Committee.

“Before all else, we must protect the rights of the men and women who are working hard each and every day to earn a decent and fair living,” said Senator Singleton (D-Burlington). “New Jersey has set a high standard for how we treat our workers, and if you contract with the State on public works projects, you must be prepared to abide by that standard.”

The bill, S-2557, would permit the Commissioner of the Department of Labor and Workforce Development to issue a stop-work order against an employer upon determining that an employer has paid a worker less than the prevailing wage. The stop-work order would apply to every site where the violation continues to occur. It could only be lifted by the commissioner if the Department finds the employer has agreed to pay future wages at the required rate, return any back-wages owed to workers and pay any penalty assessed by the Department. The commissioner may require the employer to file periodic reports for two years certifying its compliance with the prevailing wage law as a condition of lifting the order.

Under the bill, the commissioner would be allowed to investigate the wage records of an employer in the construction industry upon the complaint of an employee for failure to pay required wages and contributions. The commissioner would be permitted to issue subpoenas in connection with the investigation and fine individuals who willfully hinder it.

If an employer does not stop business despite being issued a stop-work order, the commissioner would be permitted to assess a civil penalty of $5,000 per day.

The bill was released from committee by a vote of 11-0, and next heads to the full Senate for further consideration.

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3 ‘Buffalo Billion’ defendants sentenced to federal prison (NY)

Posted by National Alliance for Fair Contracting on

AUTHOR – Kim Slowey
PUBLISHED – Dec. 10, 2018

Dive Brief:

Three defendants were sentenced to federal prison last week in the “Buffalo Billion” corruption scandal. Syracuse, New York-based developers Joseph Gerardi and Steven Aiello, as well as former Buffalo general contractor Louis Ciminelli, were convicted of fraud and other charges earlier this year for their roles in a bid-rigging scheme that netted their companies hundreds of millions of dollars.

U.S. District Court Judge Valerie Caproni sentenced all three in separate hearings, handing each one a $500,000 fine plus jail time. Caproni ordered Aiello to serve three years, Gerardi to serve 30 months and Ciminelli to serve 28 months. Ciminelli has up to one year to pursue an appeal before reporting to prison. Gerardi and Aiello also remain free, but Caproni has yet to decide how long they ultimately will be able to postpone incarceration, pending appeals.

Prosecutors said Aiello’s and Gerardi’s company, Cor Development, netted $100 million in state construction work for a $14.4 million film soundstage in Syracuse and a $90 million LED lighting factory in Dewitt, New York, as part of a bid-rigging scheme. As LPCiminelli’s former chief, authorities accused Ciminelli of paying a bribe to a former aide of New York Gov. Andrew Cuomo in order to score a $750 million contract to build a SolarCity plant in Buffalo.

Dive Insight:

Not long after Ciminelli was charged in the bid-rigging case, LPCiminelli reportedly lost $4 billion in contracts and was forced to lay off 10% of its staff after losing an estimated 14 projects. The company also sold off much of its equipment and tools and repositioned itself as a program manager and developer.

Two other former LPCiminelli executives were also indicted in the case, but prosecutors decided there wasn’t enough evidence against former company president Michael Laipple and dismissed the charges in June. Kevin Schuler pleaded guilty to fraud and conspiracy for his part in the scheme and testified against Ciminelli and others.

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Two New York firms implicated in minority contractor fraud (NY)

Posted by National Alliance for Fair Contracting on

By Kim Slowey
Oct. 17, 2018

Dive Brief:

Bell Mechanical and Kaplan Schmidt Electric have been named in an alleged minority contractor scheme in Rochester, New York, that resulted in the arrest of Orville Dixon, head of Journee Construction, earlier this year, according to the Democrat and Chronicle. The two local contractors were named after an analysis of Rochester City School District contracts and complaints by the FBI and U.S. attorney general.

Bell and Kaplan Schmidt allegedly needed to hire a certain percentage of minority- or women-owned subcontractors to meet the requirements of the school district’s modernization program. Instead, the two supposedly used Dixon, who is African-American, and Journee as a “pass-through” to make it appear as if Journee was doing the work. Bell allegedly created a fake purchase order in 2013 that showed it bought $600,000 worth of HVAC equipment from Journee and put Bell’s workers on Journee’s payroll to make it appear that Journee was staffing the project. Kaplan Schmidt also supposedly falsely claimed it purchased material from Journee and allegedly agreed to pay Dixon’s company 2.5% of the subcontract amount.
In 2016, contractors working for the Rochester school district were fined a total of $825,000 to settle claims of fraud related to minority contracting. Those companies were Concord Electric Corp. (fined $350,000), Hewitt Young Electric ($160,000), Michael A. Ferrauilo Plumbing and Heating ($90,000), Manning Squires Hennig ($200,000) and Mark Cerrone Inc. ($25,000).

Dive Insight:

There are a growing number instances of minority contractor fraud in the U.S., possibly a result of more state and local government agencies adopting or increasing minority- or woman-owned business requirements. Sometimes there may not be enough qualified minority firms available for the job, but in some cases, contractors just want to expedite construction and are willing to risk the potential fallout.

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Albany contractor pleads guilty to $800K fraud scheme (NY)

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2 local men accused of exploiting, defrauding minority-owned businesses

Staff report
Friday, October 12, 2018

ALBANY – One of two local men accused of exploiting and defrauding minority-owned businesses in an $800,000 scheme has pleaded guilty and agreed to pay back his victims, Attorney General Barbara Underwood announced Friday.

After pleading guilty to felony grand larceny and scheme to defraud in Schenectady and Albany county courts this week, Michael Martin, 47, of Latham, is expected to receive a sentence of 3 1/2 to 12 years in state prison, Underwood said. He has also agreed to pay back the roughly $800,000 he stole from minority-owned businesses, employees and an insurance company.

Martin and his business partner, 52-year-old Scott Henzel of Albany, were arrested in July following a joint investigation by the Attorney General’s Office, state Inspector General’s Office and the state Labor Department. According to investigators, Martin was the crime’s mastermind.

“The defendant’s elaborate scheme defrauded minority-owned businesses and his own employees – all to game the system for his own benefit. Now he’s facing the consequences,” Underwood said. “My office will continue to prosecute fraudsters that take advantage of New York businesses, workers and taxpayers.”

As part of his plea, Martin admitted that he served as president and owner of Eastern Building & Restoration, a general contractor headquartered in Albany, from 2004 to 2014. Henzel, he said, served as controller.

In those roles, he said, they offered two minority business enterprises – Lorice Enterprises and Precision Environmental Solutions – a chance to partner with Eastern to learn how to successfully run and bid on construction projects. In reality, the pair took over the two businesses, Martin said, managing all day-to-day business activities, including staffing of laborers and bidding decisions, as well as all banking activity and financial decisions.

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Turner Construction, Bloomberg LP execs face bribery, bid-rigging charges (NY)

Posted by National Alliance for Fair Contracting on

AUTHOR – Kim Slowey
PUBLISHED – Dec. 12, 2018

Dive Brief:

Manhattan District Attorney Cyrus Vance announced Tuesday the indictments of former Bloomberg LP and Turner Construction Co. executives, as well as subcontractors and vendors, on charges of conspiracy, bribery, bid-rigging and other offenses after they allegedly tried to steal approximately $15 million from Bloomberg during a major renovation of the financial media giant’s New York City offices.

Charges against 14 individuals and three corporations include conspiracy, grand larceny, money laundering and commercial bribery. Those indicted include Bloomberg’s former head of global construction, Anthony Guzzone, and former construction manager, Michael Campana. Also charged in the matter are Turner’s former vice president and account executive, Ronald Olson, and former project superintendent, Vito Nigro. Vance’s office said the four allegedly conspired to inflate subcontractor bids, create bogus work orders and change orders and misappropriate unused subcontractor allowances. Subcontractors Litespeed Electric Inc., Cooling Guard Mechanical Corp. and Hugh O’Kane Electric Inc. and associated individuals were charged with allegedly furthering the conspiracy by paying bribes, participating in bid-rigging, falsifying business records and laundering criminal proceeds.

Vance said “inside information” about the Bloomberg project was given to subcontractors in order to help them win contracts for the job. The defendants, he said, inflated their budgets with fake invoices and purchase orders and even filed phony applications for women-owned business status. Subcontractors allegedly gave the former Bloomberg and Turner executives cash and other incentives like vacations and free home renovations in exchange for their lucrative contracts. “Today’s indictments and guilty pleas,” Vance said, “demonstrate that if you are engaging in organized crime that blocks fair competition in Manhattan, our prosecutors will find you, turn over every stone, and shut you down.”

Dive Insight:

“Turner applauds the hard work by the District Attorney’s staff in bringing this case and appreciates the District Attorney recognizing Turner for its assistance in the investigation,” Turner spokesman and attorney Thomas J. Curran of Peckar & Abramson told Construction Dive. “Of course, Turner rejects the conduct alleged against two former employees as an absolute betrayal of Turner’s core values of integrity, which are followed by the 9,000 Turner employees who work hard, honestly and well every day.”

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TENNESSEE DRYWALL WORKERS WIN UNPAID OVERTIME IN DOL SETTLEMENT (TN)

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EMPLOYEES MISCLASSIFIED AS INDEPENDENT CONTRACTORS SHORTED ON WAGES, WORKERS COMPENSATION, SAFE WORKPLACES

November 21, 2018, 1:15PM. By Anne Wallace

Hermitage, TN – On October 19, 2018, the U.S. Department of Labor announced that Tennessee contractor, Vasquez Drywall, had agreed to pay $103,300 in back wages to workers misclassified as independent contractors and a $2,424 civil penalty. Employment misclassification is rampant in the construction industry in Tennessee and throughout the country. The practice deprives employees of overtime pay, workers compensation insurance and basic workplace safety protections. Undocumented construction workers are particularly at risk because they are unlikely to bring lawsuits or seek other enforcement action to preserve their rights.

VASQUEZ DRYWALL — PART OF A BIGGER PROBLEM

DOL Wage and Hour Division investigators found that Vazquez Drywall violated the Fair Labor Standards Act’s (FLSA) overtime requirements by inaccurately classifying employees as independent contractors and paying them piece rates or flat salaries regardless of whether they worked more than 40 hours a week. The Division also found the employer failed to keep accurate payroll records for these workers. “Even if employees are paid piece rates, or on salaries,” noted Wage and Hour Division District Director Nettie Lewis, “they are typically still due overtime when they work more than 40 hours in a week.”

Since the wage order and fine were the products of a settlement, the details of what actually occurred and how many workers were affected remain unclear. What is clear, however, is that underpayment is a chronic problem in the Tennessee construction industry.

In June 2018, workers brought a federal lawsuit against two subcontractors involved in the construction of a new J.W. Marriott in downtown Nashville. The lawsuit claims that Mr. Drywall and First Class Interiors violated the FLSA by failing to pay workers the federal minimum wage or overtime pay for hours in excess of the normal 40-hour work week. It alleges that the company “willfully filed fraudulent information returns [with the IRS] classifying the plaintiffs as independent contractors rather than employees.”

In 2013 the Nashville Post reported that “[b]ased on estimates the [Tennessee Department of Labor and Workforce Development] provided, there are between 21,990 and 36,680 misclassified and unreported construction industry workers in Tennessee. Misclassified and unreported workers are estimated to range from 11 percent to 22 percent of all workers in the construction industry statewide.”

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Wage violations, false payrolls mean Bonney Lake firm banned from bidding on public construction projects (WA)

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Nov. 27, 2018

Tumwater – A Bonney Lake construction firm and its owner are permanently banned from bidding or working on public projects in Washington as the result of a recent settlement with the state Department of Labor & Industries (L&I) over wage violations and false reporting of payroll records.

I&C Northwest and owner Jim Lingnaw also agreed to pay more than $200,000 in back wages and penalties for the violations. The company did pipe insulation work on 14 schools and a warehouse across Western Washington in 2015 and 2016. The firm will repay $153,000 in wages to nine employees, each of whom worked on several of the projects.

L&I cited the company last year for the unpaid wages and for false reporting of payroll records. Under the settlement, reached recently, Lingnaw agreed to pay $1,000 a month in penalties for the next four years and is barred from being involved with his son’s companies should they work on public projects.

“The citations are based on I&C’s repeated wage violations despite L&I’s efforts to educate the company on following the prevailing wage law,” said Jim Christensen, Prevailing Wage Program manager for L&I. “We’ve been investigating the company since 2014.”

The schools I&C worked on include one high school, four middle schools, and nine elementary schools. The schools are in Bellevue, Clover Park, Mercer Island, North Thurston, Tacoma, Tahoma, Tumwater, Seattle, and Snoqualmie Valley school districts. The company also performed work on a warehouse for the Central Kitsap School District.

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Alaska governor signs comp reform bill (AK)

Posted by National Alliance for Fair Contracting on

Louise Esola
8/28/2018 – 1:03:00 PM

Alaska Gov. Bill Walker on Friday signed into law a bill that aims to reduce administrative costs in the workers compensation system and provide a clear definition of independent contractor, thus helping to combat worker misclassification.

H.B. 79 also creates an interim legislative workers compensation working group tasked with reviewing the workers compensation system.

“Injured workers and employers will both benefit from these changes to Alaska’s workers compensation system,” Gov. Walker said in a press statement. “We are cutting costs while making workers compensation work more efficiently.”

Labor Commissioner Heidi Drygas said worker misclassification is a growing problem in the state. “Providing a clear definition of independent contractor will help businesses be successful and in compliance, and will help workers clearly understand what constitutes independent contractor status,” she said in the statement.

The Alaska Truckers Association, the Alaska chapter of the National Federation of Independent Businesses, Painters Local 1959, and the Alaska Homebuilders Association all testified in support of the bipartisan legislation, according to the statement issued by the governor’s office.

(See Article)