Michigan Legislature Considers Package of Bills Addressing Wage Theft, Independent Contractors, and Noncompetes (MI)

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The National Law Review
Friday, September 6, 2019

On August 29, 2019, legislators from the Michigan House of Representatives announced an ambitious package of 12 bills aimed at creating new criminal and civil penalties to combat employers that fail to properly pay wages and overtime pay. The legislation would also establish enhanced protections and penalties under Michigan’s whistleblower statute and create new civil remedies against employers for overzealous enforcement of noncompete agreements and for misclassifying employees as independent contractors.

Background

The bills’ highly publicized announcement, which was coordinated with local labor union leaders to occur just before the Labor Day holiday, aligns with Michigan Attorney General Dana Nessel’s Payroll Fraud Enforcement initiative. Nessel introduced the initiative in April 2019 when she created a payroll fraud hotline for reporting suspected violations of existing payroll and wage theft laws in effect in Michigan.

The new legislation would make employee-friendly modifications to several Michigan statutes, including the Payment of Wages and Fringe Benefits Act (PWFBA), the Whistleblowers’ Protection Act (WPA), the Michigan Antitrust Reform Act (MARA), and the Improved Workforce Opportunity Wage Act (IWOWA), and would amend the Michigan Code of Criminal Procedure to create a new felony offense for employers that commit a second or subsequent violation of certain provisions of the PWFBA.

Summary Analysis of the Bills

Below is a summary of the initial drafts of the ten House bills in the package that would have the most significant effect on private employers. It is important to note, however, that these are initial drafts of proposed legislation and are a long way from being enacted into law, especially given the current composition of the Michigan Legislature. However, the intense interest from the attorney general’s office and any changes in the makeup of the House and Senate could give the bills momentum.

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Final Thoughts

As Jimmy Stewart taught us all in his 1939 film Mr. Smith Goes to Washington, bills introduced on the legislative floor have a long way to go before they become law. To be sure, the potential for civil fines ranging from $5,000 to $10,000 per violation, mandatory assessment of attorneys and lost wages, and the possibility of felony criminal penalties make the legislative package something that will garner a lot of attention. Moreover, given the intense interest from the attorney general’s office and Michigan labor leaders, it is unlikely that the bills will die without significant debate and perhaps some provisions being passed into law.

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Clean energy jobs are big in Minnesota. But they often go to people from out of state (MN)

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By Walker Orenstein | 08/16/2019

The fastest growing jobs in the country are solar panel installers and wind turbine service technicians, a fact that clean energy advocates use as evidence of a growing sector and the economic upside of transitioning away from fossil fuels.

But in Minnesota, the rise of clean energy isn’t always resulting in new jobs for Minnesotans – at least when it comes to building wind projects. A report released Thursday by the Minnesota and North Dakota chapter of the Laborers’ International Union of North America says wind developers heavily rely on traveling workers, often from other states, even though there’s been an uptick in local hiring for the construction jobs this year.

Lucas Franco, the LIUNA branch’s research manager, says workers from states like Texas, Utah and California are often cheaper and can make up the bulk of a project in Minnesota. In-state residents or workers living within 150 miles of a major wind farm in Pipestone County accounted for 32 percent of construction hours worked, for example. Preliminary research done by LIUNA also suggests solar developers often lean on out-of-state workers for construction, Franco said.

“It’s a big concern for us, particularly in the context of this moment, of our energy infrastructure transition that we’re in,” he said. “A lot of clean energy advocates are trying to build popular support for new wind and solar projects, and I think that’s hard to do when folks in the conventional energy sector are losing their work and not necessarily finding work building wind farms or solar farms.”

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Roseville adds labor standards to subsidies after union criticizes developer’s use of subcontractors (MN)

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By J.D. DUGGAN
PUBLISHED: September 20, 2019 at 6:58 pm

Roseville has begun adding labor standards to development tax break deals after union officials raised concerns about how developers are using subcontractors.

Earlier this week, prompted by a dispute over a $29.4 million Fairview Avenue apartment building, the city required developers to obey all environmental, labor, health and zoning laws and restrictions, as well as to pay all contractors, subcontractors and laborers before requesting a Certificate of Completion. If a developer is found guilty of wage theft, the city can withhold payments.

“How are we going to make sure people are treated fairly and paid fairly and not given these promises?” said Roseville City Council member Wayne Groff. “I don’t know how much this will affect this exact development.”

The requirements will become standard language in all future agreements where the Roseville Economic Development Authority provides financial assistance.

Roseville’s move comes after members of the North Central States Regional Council of Carpenters told members of the Roseville Economic Development Authority at a meeting that some developers use subcontractors who allegedly break labor laws such as using child labor, stealing wages and exploiting workers.

DEVELOPER IN THE CROSSHAIRS

Minneapolis-based Reuter Walton is planning an apartment building in the 2700 block of Fairview Avenue in Roseville. A $3.5 million tax increment financing deal would be part of the package.

As the project neared its final approval stages, members of the carpenters union jammed an Economic Development Authority meeting and objected to Reuter Walton’s use of subcontractors. One of those past subcontractors – Ricardo Batres – was charged with labor trafficking, theft by swindle and insurance fraud.

The union has taken its criticisms to other cities where Reuter Walton is considering projects, including St. Paul, where an apartment complex was approved last month.

“Reuter Walton continues to profit off of these (subcontractors) that are engaging these violations repeatedly,” said Richard Kolodziejski, spokesperson for the carpenters union.

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Construction wages cut in half by new prevailing wage rules (MO)

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By KTTN News | 08/29/2019

According to Jeff Phillips, Communications and Outreach Manager of the Laborers International Union of North America in St. Joseph, construction workers in many rural Missouri counties are working for less this Labor Day holiday.

Missouri’s new prevailing wage law has cut wages for construction workers in many counties, sometimes by more than half. The new formula that calculates the wage for public works projects was approved by Missouri lawmakers last year and went into effect on July 1st.

One of the counties hardest hit was Grundy County in northwest Missouri. The new prevailing wage for construction laborers on building projects is $19.81 an hour, as compared to $39.56 an hour in 2018. Heavy highway laborers this year will earn $19.81 an hour, down from $40.63. The higher wage often included benefits like health insurance and pensions. The new wage applies to all construction crafts in Grundy County.

“This is not a union problem. It hits everyone who works construction, union, and non-union, across all trades,” said Jason Estes, Business Manager of Laborers Local 579 in St. Joseph. “These pay cuts are hitting many of our rural counties hardest, where construction wages are the best jobs available in these communities. These are the people and places who need these family-wage jobs most.”

The new law calculates the wage based on public works projects with more than 1,000 hours worked, and a project cost of more than $75,000. The wages are broken down into two categories: Building, which includes projects like schools, and state and local government facilities; and Heavy Highway, which includes any local, county, state or federal road or bridge.

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Page wants prevailing wage for county projects (MO)

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October 2, 2019 1:27 pm

St. Louis County Executive Sam Page announced last week that he will request that the County Council enact an ordinance requiring contractors to pay a prevailing wage on projects where St. Louis County extends tax incentives.

Page said he planned to request the ordinance last Friday, when the council agenda is released.

Prevailing wage refers to the rate of pay contractors must offer employees when doing business with a public agency. Prevailing wages are established by Missouri’s Department of Labor and Industrial Relations for each trade and occupation.

“In St. Louis County, our work force deserves to earn competitive wages for their work,” Page said in a news release. “Requiring contractors to pay a prevailing wage will prevent companies from low-balling proposals at the expense of their workers.”

Although prevailing wage requirements may increase the hourly labor cost of a project, such requirements may actually help keep the total project cost down by promoting better training, work efficiency and productivity and retention of highly skilled workers, according to the release.

Page also contended that prevailing wage policies help boost the local economy by promoting the use of local contractors and residents for projects, which promotes more money earned and spent in the local economy.

“These prevailing wage requirements, coupled with the county’s minority- and women-owned business enterprises policies, will help promote economic development and protect the interests of working families in St. Louis County,” said Page in the release.

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Ending payday pilferage (NJ)

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New Jersey strengthens its wage-theft laws

By: Daniel J. Munoz
August 19, 2019 12:01 am

Less than a day after Acting Gov. Sheila Oliver signed a measure ramping up penalties for violations of the state’s wage theft law, state regulators announced they hit an employer with a $20,000 fine for allegedly engaging in that very practice. …

Janice Fine, an associate professor who heads the Center for Innovation in Worker Organization at the Rutgers School of Management and Labor Relations, said that such a quick turnaround will shock employers engaged in the same practices and that they need to start paying workers what they are actually owed.

“If you name and shame it works,” Fine said.

Wage theft happens when an employer does not pay workers what they are owed; it can happen in service industries, blue collar sectors and office environments, Fine said. Theft can take a variety of forms: refusing to pay workers at all or refusing to pay for hours worked; refusing to pay standard hourly or overtime minimum wage rates, or refusing to pay for time out of regular shifts or “off the clock.” Employees might be given checks that bounce, have illegal deductions taken from their paycheck or deductions for meals and other breaks they did not actually receive.

At least $2 billion in stolen wages were recovered nationwide between 2015 and 2016, according to a 2017 study by the Economic Policy Institute.

The newly enacted New Jersey measure increases fines for wage theft to between $500 and $1,000 and provides for prison sentences of between 10 and 90 days for a first offense. Fines would climb to between $1,000 and $2,000 for a second offense, and imprisonment for up to 100 days. Habitual offenders could face up to five years in prison and fines of $15,000.

To force the hands of employers found guilty of wage theft, the state labor commissioner can revoke an employer’s license – effectively shutting down the business – until the correct wages are paid.

Employees can seek recovery of up to six years of stolen wages, or up to 200 percent of their stolen wages – capped at $50,000 – if business owners are found to have retaliated against workers for reporting the thefts. Proponents of the anti-retaliatory measures argue they are necessary to prevent employers from forcing workers to keep quiet about wage theft.

“Today we want to send a message to employers, the bad employers, that in New Jersey we are not going to tolerate the exploitation of any worker,” Oliver said at an Aug. 6 bill-signing ceremony in Elizabeth.

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N.J. contractor gets prison for cheating undocumented workers out of $155K at dorm project in Camden (NJ)

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By Joe Brandt
Posted Sep 12, 2019

Past violations should have stopped Albert Chwedczuk from getting any public money – and therefore, from working on a student housing facility for Cooper Medical School.

He was barred from working on public contracts after past violations of the state Prevailing Wage Act with companies Ren Construction and Real Construction. But he created a new company that soon earned a $400,000 subcontract for masonry work at a Cooper dorm on South Broadway in Camden.

During that work, from 2015 to 2016, Chwedczuk did not pay prevailing wage to his employees, many of whom were undocumented immigrants, the state Attorney General’s office and Department of Labor and Workforce Development said in a news statement.

They estimated that he cheated employees out of about $155,166 in wages once obtaining the contract. He paid most employees a fraction of the prevailing wage they were owed, and others were not paid at all. Chwedczuk also sent falsified payrolls to the project’s general contractor each week.

He also told employees to lie to an investigator from the state labor department about the wages they were receiving, the statement says.

“When contractors receive taxpayer dollars for a public project, they promise to pay prevailing wages to employees for all their hard work,” Attorney General Gurbir Grewal said in the statement. “But this employer cheated his workers and hoarded public funds for his own enrichment. This case is a message to all employers that we will not tolerate contractors underpaying their workers and lying about it.”

“Contractors working on public projects in New Jersey must pay their workers every penny they are entitled to under the law,” Labor Commissioner Robert Asaro-Angelo said.

Chwedczuk pleaded guilty on March 27 to a second-degree charge of false contract payment.

On Sept. 6, Camden County Superior Court Judge Mark Chase sentenced Chwedczuk, 45, of Toms River, to three years in state prison.

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10 laborers getting $170K in back pay after state finds company short-changed them on construction job (NJ)

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By: Kevin Shea, for NJ.com
August 9, 2019

Ten construction workers will split a $170,000 settlement with a company the state says underpaid them while working on a construction job at a Trenton senior living community.

The company, Tri County Real Estate Maintenance Co., of Carneys Point, is also paying $30,000 in administrative fees and penalties, the state Department of Labor and Workforce Development announced Friday.

The project at the Trent Center East and West apartments on Greenwood Avenue in Trenton received tax credit incentive funding, through the State Economic Redevelopment and Growth program, and was subject to New Jersey’s prevailing wage laws.

A state Labor Department investigation, sent to the agency by the U.S. Department of Labor, found Tri County underpaid the laborers.

In this case, laborers stated they were paid between $15 and $30 per hour, but the prevailing wage rate was $55.37 per hour for a laborer, the state said.

The state’s Prevailing Wage Act provides level wages for workers on public works projects – to protect workers and prevent unfair labor competition. The rates vary by county and trade, the state says.

“Public contracting is not a right – it is a privilege,” Labor Commissioner Robert Asaro-Angelo said in a statement. “We want all employers to know that our department takes the state’s prevailing wage laws seriously, and we will continue to investigate these matters to protect our taxpayers’ investments.”

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NJ Department of Labor Adopts Regulations on Suspension and Revocation of Employer Licenses (NJ)

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National Law Review
Friday, October 18, 2019

Continuing New Jersey’s efforts to eliminate and to hold employers accountable for employee misclassification, the state’s Department of Labor and Workforce Development (NJDOL) recently adopted Regulations implementing a 2010 law (“Law”) that empowers the NJDOL Commissioner (“Commissioner”) under certain circumstances to direct the suspension or revocation of one or more licenses held by an employer who has failed to maintain and report required State wage, benefits and tax records or who has failed to pay wages, benefits, taxes or other contributions required by State law. The Regulations specifically empower the Commissioner to direct the suspension and revocation of State-issued occupational and professional licenses, such as for physicians, dentists and other licensed healthcare professionals, where such individuals have management responsibilities sufficient to be deemed an “employer.” Incorporating the definition of employer contained in Article 1 of New Jersey’s “Wages” law N.J.S.A. 34:11-4.1(a), the Regulation states, “the officers of a corporation and any agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation.”

By way of summary, under the Law, upon the Commissioner’s finding that an employer has failed to maintain and report all required documentation regarding wages, benefits and taxes and has failed to pay the wages, benefits, taxes or other contributions due – for even a single employee – an employer will face a NJDOL audit within 12 months. Such taxes and contributions owed to the State include for example, employment taxes, and unemployment and temporary disability contributions.

If the NJDOL audit reveals further violation, the Commissioner may direct other New Jersey agencies to suspend or revoke State-issued licenses held by the offending employer. In addition, the employer will be subject to another audit within 12 months. If the Commissioner finds, after hearing, that the employer has continued in its failure to comply with the Law, the Commissioner is empowered to direct permanent revocation of the employer’s State-issued licenses.

Since taking office in 2018, New Jersey under Gov. Phil Murphy has taken action targeting employee misclassification, including the establishment of a Task Force on Employee Misclassification (“Task Force”) (see Task Force Act Now Advisory) and a sweeping “Wage Theft” law (see Wage Theft Act Now Advisory), which added substantial penalties for failure to pay wages and benefits to employees, including workers who were incorrectly classified as exempt or independent contractors. The Regulations, further highlight the Murphy Administration’s focus on this issue by adding another potential element of personal liability for such violations for New Jersey’s licensed professionals who are deemed employers.

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Ironworkers, Welders Recoup $6M in Wages (NY)

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Some 500 ironworkers and welders will receive $6 million in wages and overtime pay improperly withheld by a Queens company. Matthew Chartrand, business manager for Ironworkers Local 361, said the settlement under which AGL Industries has begun paying the workers meant that ‘one of the bad players in the construction field is being brought to justice.’

By: RICHARD KHAVKINE / Aug 19, 2019

A Maspeth, Queens, steel-fabrication company copped to cheating hundreds workers out of overtime pay and wages, and agreed to pay out more than $6 million owed to welders and ironworkers, according to its plea deal with the state Department of Labor following a joint investigation with the Manhattan District Attorney’s office.

AGL Industries pleaded guilty to third-degree grand larceny and began paying 499 workers the money owed them with a $1.5-million allocation Aug. 13, Manhattan DA Cyrus Vance Jr.’s office said.

‘Bad Player’

The balance will be paid over five years in what is the largest single wage recovery in the DOL’s history.

The company also admitted to reporting fraudulent financial information and will settle through a $260,855 payment to the state’s Unemployment Insurance fund, the DA’s office said. A company official, Dominick Lofaso, also pleaded guilty to a class D felony for grand larceny.

Welders and ironworkers had complained to company officials about underpayment but were essentially told “tough,” according to the DA’s office. They then took their grievances to Ironworkers Local 361, in Ozone Park, and the DA’s office in February 2018. A subsequent joint investigation by the DA’s Construction Fraud Task Force and the DOL revealed that the company withheld overtime and other wages from workers during a roughly four-year period starting in November 2013.

Matthew Chartrand, business manager Local 361, hailed the settlement, saying “one of the bad players in the construction field is being brought to justice. Thanks to all-this is a great job for the benefit of workers!”

The DA’s office said the settlement represented a “monumental victory for construction workers,” adding that exploitation of construction workers is widespread despite that trade’s “treacherous” working conditions.

‘Landmark Conviction’

In the statement, DA Vance said the “landmark conviction” would restore “rightful earnings” to the ironworkers and welders. He said the Construction Fraud Task Force has returned about $7.4 million to workers since its creation.

“We are committed to fighting wage theft, which impacts employees across all industries, but is especially common in the construction industry,” he said the statement. He urged workers who believe they have been cheated out of earnings to contact the task force by text message at (646) 712-0298. Messages can be submitted anonymously.

The DOL last year paid about 35,000 workers nearly $35 million it had collected from companies that engaged in wage theft and public-works violations. The department has returned nearly $300 million in stolen wages to 280,000 workers since 2011.

“Wage theft and fraud have no place in New York, and unscrupulous companies who break the law will be held accountable,” Department of Labor Commissioner Roberta Reardon said in the statement from the DA’s office.

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