Illinois lawmakers move to make general contractors responsible for lost wages of others on the job. (IL)

Posted by National Alliance for Fair Contracting on

By Cole Lauterbach
Illinois News Network
Mar 21, 2019

General contractors in Illinois may be on the hook for the wages of their subcontractors’ unpaid employees if state lawmakers successfully pass a law requiring just that.

Under state Rep. Jennifer Gong-Gershowitz’ legislation, a contractor who hires others to do a job could be forced by the Illinois Department of Labor to be responsible for unpaid wages to workers that the subcontractor failed to pay.

“House Bill 2838 provides for primary contractor responsibility for wage and benefit theft in the construction industry to stop worker exploitation and bring tax dollars back to the state currently being lost by lawbreakers,” she said.

Rep. Tom Weber, a contractor himself, said the change would put builders on the hook for other businesses’ actions.

“As a contractor who hired someone and paid them to do a job and then when they don’t pay their employees, how on Earth is that my responsibility?” he asked.

Kevin O’Gorman with the Chicago Regional Council of Carpenters told Weber that the new law would make him more careful about who he does business with.

“It would be a good thing for your portion of the industry to make sure that the people are getting paid,” he said. “We’re trying to get you to be reasonable and hire qualified and responsible contractors.”

The bill now awaits a vote on the House floor.

The state of California has a similar law. General contractors there have been sued by the state and forced to pay sizable settlements on behalf of contractors they pay to do jobs.

(See Article)

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Wage Theft Is a Real National Emergency

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Michael Felsen and M. Patricia Smith
March 5, 2019

As President Trump scrambles to convince us that not having a wall is suddenly a “national emergency,” progressive lawmakers and advocates have pointed out that the most dire emergencies facing the U.S. are the imaginary and real crises manufactured by Trump himself.

One case in point is wage theft, or more specifically, the endemic cheating of workers in low-wage industries out of their pay. This ubiquitous, under-the-radar problem has only gotten worse in response to the Trump administration’s harsh immigration policies and talking points crafted in response to problems that do not exist.

It’s no secret that traditionally low-wage industries in the United States-including agriculture, construction, manufacturing, and service industries-have long relied heavily on immigrants, many of whom lack immigration status or work authorization. In November 2018, the Pew Research Center reported that in 2016, there were 10.7 million undocumented workers in the U.S., of whom 7.8 million (or 4.8 percent of the labor force) were working or looking for work. And the vast majority (two-thirds) of undocumented adults had lived in the U.S. for more than a decade. 

Meanwhile, immigrant workers pay billions of dollars in taxes. California State Controller Betty Yee estimates that immigrants without work authorization contributed more than $180 billion to that state’s economy in 2017 alone. Federal and state laws that are designed to provide workers with basic protections-like the right to a minimum wage, overtime pay, and a safe and healthy workplace-apply to all workers in the United States, regardless of immigration status, and they have a right to complain to the government when their employer is violating those laws. Employers are also prohibited from threatening, intimidating, or in any other way retaliating against any worker because they’ve asserted their rights under the law.  

These laws are intended to protect all workers from exploitation, and to eliminate employer incentives to hire-and underpay-workers who lack status over those who have it. Notwithstanding these legal protections, violations are rampant. According to a May 2017 report from the Economic Policy Institute, 2.4 million workers in the ten largest states lose $8 billion annually to minimum wage violations alone. Extrapolating nationwide, this suggests that workers are losing more than $15 billion per year, without even including overtime violations. 

Other studies clearly show that workers who lack immigration status are disproportionately affected. For example, the landmark 2009 study “Broken Laws, Unprotected Workers” found that 37 percent of undocumented immigrant workers surveyed were victims of minimum wage violations in the prior week, compared with 24 percent for immigrants with work authorization and 16 percent for U.S.-born workers.  

(Read More)

UBC: $2.6B in taxes lost yearly to under-the-table pay

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Author: Kim Slowey
Published: March 19, 2019

The United Brotherhood of Carpenters (UBC) has levied a serious charge against the U.S. construction industry – that it is shorting the American taxpayer to the tune of up to $2.6 billion each year by making under-the-table payments to more than a million workers. In Texas alone, the losses reportedly top $1 billion.

Prevailing wage proponents and research group Smart Cities Prevail provided the estimates to the UBC.

The UBC adds to that figure about 300,000 independent contractors that the organization maintains are really misclassified employees, forced to work as independents so that employers don’t have to pay them benefits, cover them with workers’ compensation insurance or make federal and state tax payments on their behalf.

“That’s shocking,” said Frank Spencer, UBC general vice president. “Think about it: The number of construction workers forced to work off-the-books is about four times greater than the number of misclassified workers. There’s no mistaking the blatant tax fraud.”

Small, legitimate independent contractors, however, do have a place in the industry, providing critical services and often supplementing the construction industry labor pool, a sentiment echoed by Kristen Swearingen, the Associated Builders and Contractors’ vice president of legislative and political affairs.

“Independent contractors are an important part of the construction industry, and ABC supports efforts to provide a clear, concise and reasonable definition thereof,” Swearingen told Construction Dive. “Any independent contractor reform effort must recognize that independent contractors are necessary, productive participants in the construction industry and their ability to contribute to the marketplace must be preserved.”

Generally, in order to qualify as an independent contractor under the Internal Revenue Service’s rules, the individual must be free to control the details of how he or she accomplishes the work.

(Read More)

Fed watchdog wants DOD to have better insight into contractors’ safety records

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Author: Kim Slowey
Published: March 21, 2019 

Dive Brief:

  • The U.S. Government Accountability Office, a congressional “watchdog,” has issued recommendations to the U.S. Department of Labor’s OSHA and the Department of Defense aimed at helping them better track defense contractor safety violations. GAO was tasked with reviewing safety and health records of contractors and how they were handled by DOD, the largest contracting agency in the government, with $320 billion in contracts in 2017.
  • The GAO report noted that OSHA’s inspection data does not include a corporate identification number, which means “website users will likely have difficulty obtaining accurate information on individual companies’ previous violations,” such as whether the violations occurred on defense projects. DOD also may be missing opportunities to consider a company’s safety performance when awarding contracts, it continued, because only a few parts of the agency rate contractors in this category.
  • GAO recommends that OSHA consider requiring a corporate identification number as part of the information it collects during an inspection, and that DOD officials use OSHA’s website to find contractor safety information and consider requiring a safety performance rating for contractors engaging in construction and other risky types of work.

Dive Insight:

  • New regulations requiring a safety record review could have contractors bracing for a legal fight, and it wouldn’t be the first time this has occurred.
  • In 2017, President Donald Trump with congressional backing repealed the Fair Pay and Safe Workplaces executive order that former President Barack Obama issued in 2014. The rule would have required that companies bidding on federal contracts of $500,000 or more disclose up to three years of past OSHA and other labor violations. Opponents of the regulations quickly dubbed it the “blacklisting” rule, and industry groups such as the Associated Builders and Contractors of America took the matter to court, claiming that the rule violated contractors’ First Amendment rights and restricted fair and open competition for federal contracts by mandating that firms disclose even unadjudicated allegations of violations.

(Read More)

Financial Fraud and Wage Theft Continue to Plague Construction Industry

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Cases of fraud and wage violations continue to soil the image of the construction industry during this labor shortage

FEBRUARY 28, 2019

Every week there seems to be yet another item in the news about contractors being charged with fraud, wage theft and more. This week is no different, unfortunately.

…

Meanwhile in Massachusetts, a state that has been under scrutiny for construction wage theft, Attorney General Maura Healy issued 165 civil citations against 66 construction companies in 2018. According to a press release from the Attorney General, restitution in 2018 exceeded $1.47 million for more than 1,030 employees, and the companies were fined more than $1.23 million.

Wage Theft Big Problem in Massachusetts Construction Industry

Violations included:

  • Failure to page proper wages
  • Failure to pay overtime
  • Retaliation
  • Failure to furnish records for inspection
  • Failure to pay prevailing wage
  • failure to submit true and accurate certified payroll records
  • Failure to register and pay apprentices appropriately

“Workers in the construction industry are particularly vulnerable to wage theft from dishonest contractors who cheat their workers,” said AG Healey. “As Massachusetts undergoes a historic construction boom, my office will continue to fight for exploited workers and ensure they are paid the wages they earn.”

(Read More)

Sanders Vows to Ban ‘Disastrous’ Anti-Labor ‘Right-to-Work’ Laws

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“Treat your workers with the dignity and the respect they deserve,” Sanders said of powerful corporations

Published on Monday, April 08, 2019
by Julia Conley, staff writer

Sen. Bernie Sanders on Monday told a gathering of union machinists that as president he would keep states from undermining their rights by pushing for a federal ban on so-called “right-to-work” laws.

Calling the rules “disastrous,” Sanders told the International Association of Machinists that he would call on lawmakers to pass the Workplace Democracy Act, a proposal which he has regularly introduced in Congress since 1992 and which he plans to bring to the Senate floor once again in the coming days.

Under “the most significant labor legislation introduced in very, very long time…we will end once and for all the disastrous right-to-work laws in 28 states,” Sanders said to loud applause.

The senator and 2020 presidential candidate also said the law would keep companies from “ruthlessly exploiting their employees by misclassifying them as independent contractors and [denying] them overtime by calling them supervisors”-both common practices by corporations.

“Workers in the construction industry are particularly vulnerable to wage theft from dishonest contractors who cheat their workers,” said AG Healey. “As Massachusetts undergoes a historic construction boom, my office will continue to fight for exploited workers and ensure they are paid the wages they earn.”

Under right-to-work laws, unions are barred from requiring that all workers contribute dues if they benefit from the union’s contract. The laws have been aggressively pushed by Republican governors and lawmakers in recent years, with proponents claiming they protect workers from being forced to join a union.

“The reality is that federal law already makes it illegal to force someone to join a union,” the AFL-CIO says. “The real purpose of right to work laws is to tilt the balance toward big corporations and further rig the system at the expense of working families. These laws make it harder for working people to form unions and collectively bargain for better wages, benefits, and working conditions.”

(Read More)

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Labor woes must be addressed to solve California’s housing crisis (CA)

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Scott Littlehale, Guest Columnist
Published 3:47 p.m. PT – March 5, 2019

If you are concerned about California’s housing affordability crisis, remember these three numbers – 15, 33, and 200,000.

Fifteen is the percentage of total residential project costs consumed by construction labor. The other 85% is the stuff really driving up the cost of your homeland acquisition: Zoning, permitting, environmental compliance and related costs.

Thirty-three (percent) is how much less, on average, residential construction workers earn compared to construction workers who build our commercial facilities and public works.

Put in perspective: The last time California produced housing quantities similar to what Governor Newsom is calling for today – the 1970s – there was no wage gap between residential and non-residential construction work.

Two hundred thousand is the minimum number of new residential construction workers that California needs – under current levels of labor productivity – in order to build enough new housing units to keep our affordability crisis from getting worse.

Obviously, if you want to build more housing units, the last number is the most concerning. Construction is one of the nation’s most dangerous occupations. The industry’s jobs are amongst the most economically volatile – often the first to go during cyclical downturns and recession. Employers must be willing to offset these risks with higher compensation to attract new workers.

But most are not.

Recent research shows that the cost of living adjusted compensation for California construction workers ranks now 46th among US states. One in six construction workers faces some form of wage theft. Residential construction workers earn 24% less per year than other jobs on average, and more than half do not get health insurance at work.

Complicating matters for the housing industry is that there are no longer any shortcuts available to meet its labor force needs. The nation is near full employment, net immigration flows have been negative since 2005 and California’s population of young men without a college degree is shrinking.

(Read More)

Bill aims to better classify California construction workers (CA)

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AUTHOR – Kim Slowey
PUBLISHED – April 2, 2019

Dive Brief:

  • California legislators are considering a new test for contractors to use when deciding if construction workers qualify as independent contractors, according to the San Francisco Chronicle, making the misclassification of workers more difficult.
  • The proposed state law would require employers to use the “ABC” method of determining whether a worker is a legitimate independent contractor or an employee. Under ABC, which was upheld by the California Supreme Court in April 2018, a worker can be classified as an independent contractor if he or she is free from the control and direction of the employer as it relates to the performance of the work; performs work that is normally outside the scope of work of the hiring contractor; and is usually engaged in the same type of work as part of the business. Through the legislation, legislators are seeking to codify the court’s decision.
  • A University of California Berkeley Labor Center study found that construction workers were one of three occupations in California routinely misclassified and not paid employee benefits due to them. Independent contractors, according to UC Berkeley, make up about 26% of the state’s construction workforce.

Dive Insight: 

Three other states – New Jersey, Massachusetts and Connecticut – also use the ABC test in their wage and hour laws, according to a report from the National Employment Law Project, and about half of all states apply it in some form in their unemployment laws. Ten states use it in relation to their labor laws for high-risk sectors like construction.
There are other tests contractors can use to determine whether a worker is an independent contractor, including one from the Internal Revenue Service that considers how the worker is paid, if the relationship with the hiring business is permanent, and whether the individual will achieve a profit or loss as part of his or her operations, among other factors.  
There are still some contractors, however, that leapfrog over the responsibility to classify workers correctly. They often count on not having to pay for things like workers’ compensation coverage, health insurance, federal and payroll taxes, figuring those savings into their bids.

(Read More)

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‘Put The Exploiters In Jail’: Wage Theft Bill Cracks Down On Employers (CO)

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By Shaun Boyd
April 2, 2019 at 11:59 pm

DENVER (CBS4) – State lawmakers want to crack down on bosses who don’t pay up. Wage theft is a big problem in Colorado.

The Colorado Fiscal Institute says more than 500,000 Colorado workers are victims of wage theft each year, losing an estimated $750 million. And right now, there’s little prosecutors can do about it.

Under current state law, wage theft is a misdemeanor, no matter if it’s $100 or $100,000. Representatives Jonathan Singer and Meg Froelich plan to change that.

“When a hard day’s work is put in, an honest day’s pay is deserved,” said Singer.

He and Froelich have introduced a bill that would align wage theft with other thefts. If it’s over $2,000, it would be a felony.

“Wage theft is perpetrated against the most vulnerable workers,” said Froelich.

It is especially common in the construction and food service industries. Jim Gleason, a carpenter, says he was a victim.

“We were getting paid every week until about the 4th or 5th week and we were informed that there wasn’t enough money to make payroll so if we didn’t mind waiting a week, we’d pay for two weeks the next week,” he said. “Well, the next week came and there was no check. It’s time we put the exploiters in jail and got the penalties that they deserve and give the wages to the people who deserve them.”

The Colorado District Attorney’s Council agrees.

(Read More)

Colorado bill set to make wage theft a felony (CO)

Posted by National Alliance for Fair Contracting on

AUTHOR- Kim Slowey
PUBLISHED – April 8, 2019

Dive Brief:

  • The Colorado General Assembly’s House Judiciary Committee approved a proposed wage theft bill that would make intentional underpayment of certain wages a criminal offense. 
  • In Colorado it is a misdemeanor to willfully short employees on their paychecks, but the new measure would make it a felony theft to intentionally underpay them by $2,000 or more. The bill includes migratory and foreign workers under the definition of employee.
  • One of the bill’s stated intentions is to provide an additional vehicle for state law enforcement to fight labor trafficking by recognizing labor as a thing of value that is subject to theft. According to the General Assembly, labor trafficking each year costs Colorado workers hundreds of millions of dollars and the loss of tens of millions of dollars to the state.  

Dive Insight: According to the Colorado Fiscal Institute, more than 500,0000 workers in the state – many of them in the construction industry – lose $750 million a year because of wage theft. The institute’s analysis shows that the most common methods employers use to short employees on their pay are:

  • Nonpayment, which includes late payments and not paying employees what they’ve earned.
  • Underpayment.
  • Misclassification of employees as independent contractors in order to avoid having to pay benefits.  
  • Unauthorized payroll deductions for expenses like transportation, materials and tools.

There has been a push by some states and cities to address wage theft and misclassification of workers as independent contractors. In California, lawmakers are considering codifying a state Supreme Court ruling that sets the parameters of which workers qualify as independent contractors. The “ABC” test asks whether the person claiming to be an independent contractor is free from the control and direction of the employer; performs work that the hiring employer doesn’t typically do; and engages in the work as part of a business.

(Read More)