City of Industry construction firm fined nearly $12 million for wage theft (CA)

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The violations impacted more than 1,000 workers at projects in Los Angeles and Orange counties

By KEVIN SMITH PUBLISHED: February 11, 2019 at 5:11 pm

A City of Industry construction firm has been fined nearly $12 million in what state regulators are calling the biggest wage theft violation ever by a private company in California.

The state Labor Commissioner’s Office announced Monday, Feb. 11 that it cited RDV Construction Inc. for violations that left more than a thousand workers waiting weeks or months to be paid, only to receive a portion of what they were owed.

The company hired crews to provide framing, drywall and other trade work for hotels, apartments and mixed-use buildings around Southern California.

A litany of violations

Investigators determined that between 2014 and 2017, RDV employed more than 1,000 workers at 35 construction sites scattered primarily throughout Los Angeles and Orange counties and typically worked its crews nine hours a day without proper rest breaks or overtime pay.

The company “habitually and illegally” withheld up to 25 percent of the wages workers earned, investigators said, and during a 21-month period, they were paid with checks that bounced due to insufficient funds.
RDV projects have included the Crown Apartments complex in West Hollywood and Boardwalk by Windsor, an upscale apartment community in Huntington Beach, among others.

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“Dodging labor laws and stealing wages hurts workers and creates unfair conditions for law-abiding employers,” California Labor Secretary Julie A. Su said in a statement. “Stealing earned wages from workers’ pockets is illegal in California and this case shows that employers who steal from their workers will end up paying for it in the end.”

The citations total $11,943,054 payable to workers in unpaid wages and premiums…

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San Jose to consider proposal to help employees receive pay they deserve (CA)

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Construction workers on the Silvery Towers project downtown were held in squalid conditions

By EMILY DERUY
PUBLISHED: January 31, 2019 at 6:00 am

Months after it surfaced that workers on a high rise in downtown San Jose were held in captivity and forced to work without pay, the City Council is expected to consider stronger wage protections to prevent companies from refusing to pay employees what they deserve.

In a memo to the city’s Rules and Open Government Committee, several members of the San Jose City Council – Raul Peralez, Chappie Jones, Magdalena Carrasco and Sergio Jimenez – suggested broadening the city’s current wage theft protections to cover construction workers on both public and private projects. They also said developers proposing construction projects involving more than 5,000 square feet of floor area should have to disclose wage theft violations by their contractors and subcontractors. If companies are found to have unpaid wage theft claims, the council members argued, they should be disqualified until the claims are paid.

In July, the U.S. Labor Department announced that more than a dozen immigrants working on the Silvery Towers project at the corner of N. San Pedro and W. St. James streets were held in squalid conditions in a Hayward house and forced to work on projects across the Bay Area.

The changes, the council members wrote, “will ensure that another Silvery Towers does not occur again and that the city is not blindsided by another atrocity.”

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Construction workers and labor groups urged the council to make broadening its wage theft policy a priority. However, business groups warned doing so could create demanding new regulations for developers and hamper the city’s aim of adding thousands of new affordable homes in the next few years.

“It is the ethical and quite honestly the honorable thing to do,” said Steve Flores, with the group Santa Clara County Residents for Responsible Development, adding that the update would close “gaping loopholes” that leave construction workers fending for themselves.

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Department of Labor v. Department of Revenue Services: Employee, Independent Contractor, or Both (CT)

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February 7, 2019

For years now, the Connecticut Department of Revenue Services (DRS), the Connecticut Department of Labor (DOL) and the Internal Revenue Service (IRS) have been targeting Connecticut employers for worker misclassification audits. When a misclassification is discovered, these government entities can share information about employers who have misclassified employees as independent contractors. Thus, when one of these government entities finds a misclassification during an audit, audits from the other governmental entities are likely to arise.

When a misclassification is discovered, the employer will be subjected to various federal and state taxes, penalties and interest charges. A misclassification occurs when an employee is incorrectly treated as an independent contractor. As a result, the worker does not have income taxes or payroll taxes withheld from his/her pay and is not issued a Form W-2. Businesses aren’t the only employers targeted for such audits. Charitable organizations, public school systems, cities, towns, and even State departments are subject to audit.

The IRS and the DRS have historically used a 20-factor test to determine if a worker is an employee or independent contractor. The factors are used to determine if the service recipient has the right to control the service provider, not only as to the result to be accomplished, but also as to the details and means by which that result is accomplished. If such control is found, the worker is deemed to be an employee. The 20 factors are used to determine if the service recipient has behavior, financial, or relationship control of the worker. We refer to this as the “IRS Control Test”. The DRS uses the IRS Control Test.However, the DOL, uses a stricter three-part test for determining if a worker is an independent contractor referred to as the “ABC Test.”

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This results in the absurd situation in which a worker is treated as an independent contractor for income and payroll tax purposes and as an employee for DOL purposes, such as unemployment insurance, workers compensation, fringe benefits and labor and employment laws.

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Department of Labor begins new pre-apprenticeship program (DE)

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By Submitted News
Posted Feb 26, 2019 at 5:30 PM

Delaware Department of Labor, Division of Employment and Training, Office of Apprenticeship and Training developed a new registered pre-apprenticeship program to complement its existing registered apprenticeship programs.

The office will approve the program providers and will post a list of qualified pre-apprenticeship programs on its website.

Pre-apprenticeship programs are ideal for individuals who lack experience or education but want to build a solid foundation to start a successful career. As Delaware’s unemployment rate drops, disadvantaged and underrepresented populations will be at a greater risk of being left behind. Pre-apprenticeship opportunities will allow these populations to gain the needed hard and soft skills for a successful career.

Pre-apprenticeship programs refer to a program or set of strategies designed to prepare individuals to enter and succeed in a registered apprenticeship program. Pre-apprenticeship programs are designed to create a qualified pipeline of individuals ready to become registered apprentices; expand registered apprentices to include underrepresented participants such as nontraditional gender or race/ethnicity, disadvantaged populations or low-skilled workers; and recognize credit for related education or training.

Registered apprenticeship is an effective “earn while you learn” model with a long history of providing career ladders and pathways to the middle class, particularly for the building and construction industry but increasingly in other industries as well. In calendar year 2018, the average starting wage for an apprentice was $14.70 per hour, or $29,400 per year, with wages upon completion averaging at $24 per hour, or $48,000 per year. These results demonstrate the advantages a registered apprenticeship offers in providing a significant wage gain and a clear career path for entry-level workers.

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Hunter: Iowans lose $600 million to wage theft each year (IA)

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Rep. Bruce Hunter, House District 34
Published 12:16 p.m. CT Feb. 15, 2019

The news is not good.Currently women in the state of Iowa make 79 cents for every dollar a man makes. We rank 31st in the U.S. when it comes to the gender wage gap, and the statistics are even worse for women who are African American, Latina, Asian American and Native American.

According to a recent study, 266,000 people lose $600 million per year in the state of Iowa due to wage theft issues. Iowa loses approximately $120 million in unpaid sales, income and payroll taxes annually. One in six construction workers is a victim of wage theft.

At the end of 2013, an Iowa Workforce Development misclassification unit found that over 380 employers had misclassified over 5,000 workers by claiming they were independent contractors instead of employees. Because of this over $90 million in wages had not been reported.

Wage theft is almost always connected to misclassification cases due to lost overtime and unpaid wages. In addition, those 5,000 workers lost out on unemployment and workers’ compensation benefits.

I am currently sponsoring a number of bills dealing with wage inequities in Iowa. The first, HF 89, deals with wage disparities between men and women and minorities and nonminorities. HF 24 concerns job misclassifications to avoid paying unemployment and workers’ compensation benefits. I have also introduced a bill, which does not yet have a bill number, which deals with wage theft.

None of these bills will ever receive a subcommittee hearing.

And if some miracle should happen and all of these bills would become law, I’m not sure it would matter.

(See Article)

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Gary homeless project contractors cited for pay violations (IL)

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By Carole Carlson
February 18, 2019

The U.S. Department of Labor ordered four contractors, who built the $9.5 million Village of Hope federal housing project in Gary, to pay workers $255,474 for failing to pay prevailing wages and fringe benefits. 
The labor department announced the ruling last week.

The wage law violations impacted 53 former and current employees, according to a release from the labor department.

“Government contractors receive detailed agreements that include prevailing wage and fringe benefits rates, required to be paid by all contractors working on a federally funded project.

Prime contractors must assure that their subcontractors adhere to these rules as well,” said Wage and Hour Division District Director Patricia Lewis, in Indianapolis.The project’s prime contractor TWG Construction LLC, based in Indianapolis – has paid $82,477 to 20 employees.

TWG Construction LLC sub-contracted with a temporary staffing company, which failed to pay cleaning service crews in accordance with federal law.
The labor department’s investigation found temporary employees were misclassified and not paid the required prevailing wage rates.

Also, 8 Aces Construction Inc., Lansing, Ill., has paid $69,022 to 19 employees. Investigators found the company failed to pay finishers, painters and carpenters prevailing wage rate. The employer also failed to pay required fringe benefits to employees.

Due to the repeat and “willful nature” of these violations, the labor department said 8 Aces Construction Inc. and owner Jose “Tony” Ochoa have been declared ineligible to bid on federal contracts for a period of three years. A 2017 investigation found 8 Aces owed back wages totaling $99,313 to 95 employees.

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“Lifting Up Illinois Working Families Act” Increases Minimum Wage to $15 Per Hour (And Penalties for Non-Compliance) (IL)

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By Carole Carlson
February 18, 2019

Illinois Governor J.B. Pritzker signed the Lifting Up Illinois Working Families Act into law on February 19, 2019. The Act gradually increases the minimum wage to $15 per hour over the next six years. Illinois is now the fifth state (after California, New Jersey, New York, and Massachusetts) to raise the minimum wage to $15 per hour. While the Act is receiving a lot of press for the minimum wage increase, it makes other changes to Illinois law about which Illinois employers must also be aware.
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Penalties Increase for Underpayment and Recordkeeping Violations

In addition to the minimum wage increases, the Act increases certain penalties for recordkeeping violations and underpayment of wages. Employers who fail to keep payroll records as required by the IMWL are now subject to a new penalty of $100 per impacted employee. This penalty arguably will accrue each day that the violation continues under the IMWL’s existing provisions.

The Act also increases employers’ exposure in the event of underpayment of wages. An employee who is able to show underpayment of wages is entitled to recover three times the amount of the underpayment. Previously, the law limited recovery to the amount of the underpayment. For each month that the amount of the underpayment remains unpaid, a prevailing employee can recover damages in the amount of 5% of the underpayment. Prior to the Act, employees could recover 2% as damages.

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Payroll tax fraud believed to be spreading throughout Indiana’s construction industry (IN)

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By: Drew Gardner
Posted: Feb 25, 2019 10:34 PM EST


SOUTH BEND, Ind. — The construction industry across Indiana is facing something many contractors call a growing problem — payroll tax fraud.
Some contractors are believed to be misclassifying workers, which robs them of many of the regular benefits employees receive and robs the state and federal government of hundreds of millions in tax dollars.

As you drive through Michiana it’s easy to see things are pretty good in the construction industry right now. There are new developments around almost every corner, but in recent years contractors like Tim Larson of La Porte-based Larson-Danielson construction noticed something seemed ‘off’ in some of the bids they were seeing.

” When we bid for a job we know how much is labor, how much is material and we found other contractors bidding at prices we couldn’t quite perceive how they were getting there, because we knew how much they were spending on material and we figured they had to be spending a lot less on labor than we were,” said Larson.

That’s because some contractors are believed to be participating in worker misclassification.

Worker misclassification is the practice of labeling workers as independent contractors instead of employees.

The IRS has a 20 point checklist to determine whether a worker is an employee or an independent contractor.

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Lawmakers debate bill to allow Idahoans to get unpaid, underpaid wages back (ID)

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by KLEW News Staff
Tuesday, February 26th 2019

BOISE, ID – A bill allowing working Idahoans to recoup up to one year of under-paid wages is trying to become law.

Currently, Idaho only allows workers to get six-months of unpaid or underpaid wages through a process with the State Department of Labor.
It is one of the lowest look-back periods in the nation. Supporters of working Idahoans say it’s about fairness.

The Department of Labor said that most workers notice wage theft in one of two time periods; either the Monday after payday or when they do their taxes.

The bill being debated Monday maintains protections for Idaho employers while injecting fairness into the system.

“What this does is level the playing field and makes sure that someone who’s legitimately had wages stolen from them, can claim those wages up to a full year when they realize that their wages were taken from them, when they go to do their taxes,” said Rep. Mat Erpelding.

The Idaho Department of Labor processed more than 900 wage theft claims last year from workers representing virtually every line of work including construction, service workers, healthcare employees and retail workers.

(See Article)

U.S. DEPARTMENT OF LABOR INVESTIGATIONS FIND FEDERAL CONTRACTORS OWE $255,474 TO EMPLOYEES WORKING ON INDIANA HOUSING PROJECT (IN)

Posted by National Alliance for Fair Contracting on

One Contractor Debarred as a Result of Investigation

Agency: Wage and Hour Division
Date: February 14, 2019
Release Number: 19-56-CHI

GARY, IN – After a U.S. Department of Labor’s Wage and Hour Division investigation, four contractors working on the federal Housing and Urban Development (HUD) Village of Hope housing project in Gary, Indiana, will pay 53 current and former employees a total of $255,474 for violating the Davis-Bacon and Related Acts (DBRA).

WHD investigators determined the contractors failed to pay the correct prevailing wages and fringe benefits.

The project’s prime contractor TWG Construction LLC – based in Indianapolis, Indiana – has paid $82,477 to 20 employees. TWG Construction LLC sub-contracted with a temporary staffing company that failed to pay cleaning service crews in accordance with DBRA requirements. The temporary employees were misclassified and not paid the required prevailing wage rates.

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“Government contractors receive detailed agreements that include prevailing wage and fringe benefits rates, required to be paid by all contractors working on a federally funded project. Prime contractors must assure that their subcontractors adhere to these rules as well,” said Wage and Hour Division District Director Patricia Lewis, in Indianapolis. “Violations can easily be avoided, and we encourage all employers to come to us for confidential assistance to understand their responsibilities under the law.”

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