Feds: Stadium subcontractor ‘repeat violator’ of wage laws (NV)

Posted by National Alliance for Fair Contracting on

May 11, 2020 10:21 am

The company hired to paint portions of Allegiant Stadium is alleged to be “a repeat violator of the FLSA (Federal Labor Standards Act)” according to a U.S. District judge citing a Department of Labor complaint against Unforgettable Coatings, its owner Cory Summerhays and his partners for failing to pay overtime.

The DOL, which filed a complaint against Summerhays and the others on March 12, filed a similar complaint in 2013, that resulted in an order that Summerhays make good on overtime owed to employees.

“Instead of coming into compliance, it appears that Defendants then devised a new set of procedures to obscure its continued failure to pay overtime and then commenced a campaign to deter their workers from speaking truthfully to government investigators,” U.S. District Judge Kent Dawson wrote last month when he enjoined the company from cutting pay and from firing workers in alleged retaliation for cooperating with investigators.

“Defendants have tried not only to silence their workers, but also to actively manipulate them to provide false information to the government’s investigators,” Dawson’s order says. “When workers are first hired, Defendants advise them that they will not be paid overtime premiums, but they will make a flat $12 to $25 per hour – not minimum wage.”

“DOL investigators showed Defendants’ pay stubs demonstrating how an individual worker’s gross pay, when divided by the number of hours worked, always showed the worker being paid the worker’s straight time regular rate for all his hours worked – regardless of the number of overtime hours worked.”

“Wage theft is a rampant problem in the non-union construction industry and it drives down standards for all workers,” says the Laborers International Union of North America.

Between 2010 and today, the DOL has recovered more than $19 million in back wages from 1,615 employers in Nevada.

Taxpayers are often on the hook for providing services when workers don’t receive wages to which they are entitled.

The cost to taxpayers of providing Medicaid to Unforgettable Coatings’ eligible employees and family members in Nevada was $93,703 in fiscal year 2018, according to an annual report required by the Legislature.

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You Say Independent Contractor; Virginia Says Employee (VA)

Posted by National Alliance for Fair Contracting on

Michael Marr
May 14, 2020

Effective July 1, 2020, Virginia will expand its reach into the employee versus independent contractor misclassification issue. Previously, Virginia had focused its efforts on the construction trade, where the Commonwealth believed most misclassifications occurred and workers were most vulnerable. With this new law in place, the cost to business owners of getting the classification of their workers wrong has grown exponentially and has unfortunately become potentially, financially catastrophic. See Va. Code §§ 40.1-28.7:7

…

The law contains two key elements that represent a real sea change in Virginia’s labor and employment law. First, the law establishes a presumption that a worker is an employee, not an independent contractor. In other words, Virginia law will now deem a worker to be an employee until proven otherwise by the business owner. That presumptive status of the worker as an employee can only be rebutted if the business owner can prove that the worker meets the Internal Revenue Service’s test for an independent contractor. Please see https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation and the IRS SS-8 form for guidance.

The IRS test is complicated and anything but a bright-line rule. The only easy answer, and quite frankly the one Virginia is apparently compelling business owners to make, is every worker is an employee; there are no independent contractors unless it is unmistakably, inarguably, and unambiguously obvious that the worker is an independent contractor.

The more complex the misclassification test, the more case-by-case determination required to satisfy that test, the greater the expense will be to make the correct determination at the beginning of the employment relationship-bearing in mind, of course, this law presumes your initial classification of a worker as an independent contractor is wrong. The legal expenses required to prove that the worker is not an employee are difficult to quantify but, whatever they may be, these expenses will fall squarely upon the business owner.

Please note that the business owner’s good faith and due diligence in making the right call are not available defenses under the statute as it is written. Rather, the issue framed by the statute is simple: Can the business owner prove the employee is an independent contractor based upon a multitude of IRS factors directed towards financial control, behavioral control, and the relationship between the parties? The resolution of that issue, however, is complex and uncertain, which leads to the second key element of the statute.

The new Virginia law expressly creates-for the first time-a private right of action for the worker. The new statute openly invites workers, and their labor and employment lawyers, to test a business owner’s classification determination before seven jurors, in a jury trial, in a Virginia circuit court, with no automatic right to appeal to the Virginia Supreme Court.

This private right of action expressly authorizes the worker-presumed employee to sue the employer directly for a violation of this misclassification statute and then to recover from the employer (if the employer cannot rebut the employee presumption) the full amount of any (i) wages, (ii) salary, (iii) employment benefits, including expenses incurred by the employee that would otherwise have been covered by insurance, or (iv) other compensation lost to the individual.

This statute also authorizes the court to award the employee’s reasonable attorney’s fees and the costs to file and prosecute the lawsuit, if successful. In other words, the statute allows the employee to shift the entire cost of the misclassification litigation onto the employer-that is, not only the employee’s but also the employer’s attorney’s fees if the employer/business owner is found to have misclassified the worker as an independent contractor.

Note that this civil lawsuit by the plaintiff-employee against the defendant-business owner is in addition to any sanction or penalty the Virginia state government or the U.S. federal government might impose for a misclassification. In a separate, but related law, which will take effect in January 1, 2021, Virginia may impose the following penalties (see Va. Code § 58.1-1901):

  • First misclassification offense: Up to $1,000 per individual worker.
  • Second misclassification offense: Up to $2500 per individual worker.
  • Third and following offenses: Up to $5000 per individual worker.

Note also that the business owner’s woes are still not over. In yet another new and related law, a business owner may not retaliate against a worker who reports a potential misclassification issue or who prompts a state investigation. Such an alleged retaliation will result in an administrative action against the business owner before the Virginia Department of Labor & Industry. see Va. Code § 58.1-1901

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COVID-19 creates more competitive bidding for city construction projects (SD)

Posted by National Alliance for Fair Contracting on

Posted: May 11, 2020

SIOUX FALLS, S.D. (KELO) – It’s not business as usual for public construction projects but it isn’t poor business.
While the coronavirus pandemic is causing likely declines in local sales tax revenue, it’s also caused some lowering of prices for city street projects.

“The majority of our (bids) have come in at the estimates or below since COVID-19,” Mark Cotter, director of public works in Sioux Falls, said.

“With the bids coming in the last month, we’ve had more bidders and very competitive prices,” Cotter said. “It’s a great time for cities, states and counties for bidding on projects if they’ve got the resources (for projects).”

Increased competitive bidding has resulted in at least $1.6 million when approved bids are compared to original estimates in three major projects, which illustrates the benefits of more bidders.

Cotter said the construction project on 57th Street between Minnesota and Western was estimated to cost $2.07 million but the approved low bid was $1.7 million.

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IDOL Reminds Local Governments They No Longer Need to Approve Prevailing Wage Ordinances (IL)

Posted by National Alliance for Fair Contracting on

Published May 11, 2020

SPRINGFIELD – The Illinois Department of Labor (IDOL) wants to remind local units of governments that while they still must pay prevailing wages for public works projects, a 2019 change in the law means they no longer need to adopt a prevailing wage ordinance or file it with IDOL.

“While most local governments are aware of the change, some continue to adopt prevailing wage ordinances and attempt to file them with the Illinois Department of Labor. That is no longer a requirement,” said IDOL Director Michael Kleinik.

The enactment of Public Act 100-1177, which took effect June 1, 2019, relieves local units of government from the former requirement of passing a prevailing wage ordinance, publishing it and filing it with the Illinois Department of Labor.

The prevailing wage schedules for each county in the state are now ascertained by IDOL and published on its website.

The changes to the Prevailing Wage Act also required IDOL to create an electronic database of certified payrolls where contractors will submit certified payrolls directly online rather than filing them with the local government.

Here is a link to the current prevailing wage rates for Illinois counties: https://www2.illinois.gov/idol/Laws-Rules/CONMED/Pages/Rates/2020/March-Rates.aspx

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Governor Newsom Signs Executive Order Regarding Workers’ Compensation Presumption For Certain COVID-19 Related Claims (CA)

Posted by National Alliance for Fair Contracting on

May 15, 2020

Under the California Workers’ Compensation Act (“the Act”), employers must carry workers’ compensation insurance for employee injuries or illnesses which “arise out of and in the course of” employment. The Act, first passed in 1911 and amended over the years by the Legislature, provides a comprehensive system for administering claims, including the provision of disability benefits and the payment for associated medical expenses for work-related injuries.

Now comes the COVID-19 pandemic and a panoply of emergency orders by governors across the country. On May 6, 2020, Governor Newsom signed Executive Order #N-62-20 which creates a presumption that any COVID-19-related illness of an employee shall be presumed to arise out of and in the course of the employment for purposes of awarding workers’ compensation benefits if certain conditions are met.
Those conditions include the following:

  1. The employee tested positive for or was diagnosed with COVID19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction;
  2. The day referenced in subparagraph (a) on which the employee performed labor or services at the employee’s place of employment at the employer’s direction was on or after March 19, 2020;
  3. The employee’s place of employment referenced in subparagraphs (a) and (b) was not the employee’s home or residence; and
  4. Where subparagraph (a) is satisfied through a diagnosis of COVID-19, the diagnosis was done by a physician who holds a physician and surgeon license issued by the California Medical Board, and that diagnosis is confirmed by further testing within 30 days of the date of the diagnosis.

Thus, the Governor has taken the extraordinary step of presuming a workplace injury without specific evidence of job-causation. While the scope and legality of the new Executive Order may be subject to challenge, it is incumbent upon the California employer to review and enforce workplace safety, in all areas, and to specifically protect against the risk of employee exposure to a communicable disease, thereby avoiding added liability and costs associated with job illness or injury claims.

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Civil procedure – jurisdiction (IL)

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Where an employee is hired to perform labor for public works covered by the Prevailing Wage Act, they retain the right of action from the act even if their contract does not contain the provision guaranteeing them prevailing wage in contravention of the act.

Posted May 7, 2020 9:54 AM

The 1st District Appellate Court reversed and remanded the decision of Cook County Circuit Judge Margaret Ann Brennan.

The plaintiffs in this case are 12 landscape laborers employed by Moore Landscapes LLC (Moore) as tree planters. Moore had three contracts with the Chicago Parks District for landscaping and related work, each of which contained a standard “prevailing wage rates provision” which mandates that the contractor pay all their employees prevailing wages “if applicable.” It is not disputed that $41.20 is the prevailing wage for landscape related work and the plaintiffs were paid an hourly rate of $18 for their labor. Section 11 of the Prevailing Wage Act (Act) requires all public works to pay the prevailing wage for the labor, and provides a right of action for any laborer who was paid less than the prevailing wage for a contractor doing public works.

The plaintiffs filed suit against Moore in September 2018 seeking unpaid wages, punitive damages, prejudgment interest and reasonable attorney fees and costs. Moore moved to dismiss, arguing their work was exempt from the prevailing wage provisions of the act and citing interpretations by the Illinois Department of Labor. Moore also moved to dismiss under fail to allege facts sufficient to support a claim, asserting the laborers failed to allege facts that supported the inference that the type of labor they performed was covered by the Wage Act. The trial court granted the motion to dismiss. The plaintiffs appealed.

On appeal, Moore argued that, for section 11 of the act to apply, the contract with the laborers must specify that they would be paid prevailing wages, and their contracts had no such provision. The plaintiffs argued that section 11 of the act also mandated that Moore include such a provision, which Moore did not deny, but instead claimed that because there was no contractual stipulation, the plaintiffs had no right of action and must rely on the Department of Labor to enforce any provisions of the act on their behalf. The plaintiffs claimed that the trial court’s interpretation rewards those who issue contracts which violate the act by protecting them from the right of action the act guarantees their employees.

The appellate court agreed with the plaintiffs. The court found that an employer’s failure to adhere to section 4 of the act, which mandates that the contracts include the provision at issue, does not in any way limit an employee’s right of action granted under section 11 of the act for any work where they should have been covered under the act. The appellate court emphasized that to do otherwise would allow employers to avoid liability by failing to adhere to the mandates of the act. The appellate court acknowledged that there is an issue as to whether the labor performed by the plaintiffs was covered under the act, but found that this was a material question of fact suitable for an evidentiary hearing. For that reason, dismissal was inappropriate.

The appellate court therefore reversed and remanded the decision of the circuit court.

Samuel Valerio, et al. v. Moore Landscapes LLC
2020 IL App (1st) 190185
Writing for the court: Justice Bertina E. Lampkin
Concurring: Justices Robert E. Gordon and Eileen O’Neill Burke
Released: March 26, 2020

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LYNN WAGE THEFT ADVISORY COMMITTEE: WAGE THEFT ‘IS GOING TO HAPPEN’ (MA)

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BY DAVID MCLELLAN | March 11, 2020

LYNN – There are hundreds of construction workers who are or will be working at Lynn’s many current and future development sites. According to the Lynn Wage Theft Advisory Committee, it’s virtually guaranteed a chunk of them will get ripped off.

“It’s going to happen. It’s a slam dunk. It’s just so easy to get away with,” said Robert Reynolds, a member of the Wage Theft Advisory Committee who gave a talk on wage theft to the Greater Lynn Chamber of Commerce Government Affairs Committee Wednesday morning.

“This is something the whole community has a stake in. This harms everyone,” Reynolds said.

Wage theft is a term that encompasses a variety of legal infractions committed by employers, including failure to pay overtime wages, failure to pay a minimum wage, or otherwise not paying an employee the full amount to which they are legally or contractually entitled.

It harms the workers themselves, but also the larger community, Reynolds said. Tax revenue is lost, workers’ compensation and unemployment funds are lost, and honest businesses are disadvantaged.

According to Reynolds, construction is the No. 1 industry in terms of wage theft prevalence, followed by the food industry. Lynn officials should be paying extra attention to potential wage theft, given the amount of current or upcoming development in the city, he said.

“It’s almost guaranteed that that’s going on at every construction site,” he said. “You want a big banner hanging over the General Edwards Bridge saying, ‘If you’re going to engage in that stuff, we don’t want you here. And if you do engage in that stuff, we’re going to come after you.'”

With the recent increase in development – including at least six major waterfront developments adding thousands of new apartment units – the Wage Theft Advisory Committee is educating the public.

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Matthew Fritz-Mauer: The hollow promise of workers’ rights in DC (DC)

Posted by National Alliance for Fair Contracting on

March 4, 2020

It might seem like working people in the District of Columbia have a lot to celebrate. In fact, researchers at Oxfam not long ago named DC the most worker-friendly place in the country. Over the past few years, the DC Council has raised the minimum wage, guaranteed paid sick days, and created a paid family leave program.

But despite these accomplishments, there’s something wrong in our city: Employers frequently violate basic workplace laws, and DC is failing to protect workers’ rights. The name of the problem is wage theft, and it wreaks havoc on the lives of working people. Wage theft occurs when a worker is denied the wages or benefits to which he or she is legally entitled. Common forms include not paying minimum wage or overtime, denying paid leave, and failing to pay for all hours worked.

In too many cases, employers steal from their workers. One study estimated that low-wage workers lose 15% of their income to wage theft; another estimated that nationwide minimum wage violations alone cost low-wage workers $15 billion per year. Across the country, millions of people have their basic workplace rights violated every year.

Research commissioned by the DC Department of Employment Services (DOES) estimates that nearly 40,000 workers per year experience minimum wage violations here in DC. Those of us who work with the low-wage community hear stories of wage theft over and over again. My research, which involves detailed interviews with low-income people, found that wage theft is a persistent and devastating problem in their lives.

Wage theft makes it hard to pay rent, buy food, go to the doctor, and keep on the heat and water. Many workers feel angry, depressed and helpless over it. For some, the strain becomes too much, and they think about or even attempt to die by suicide. Wage theft weakens families and communities, strains the social safety net, and makes it hard for legitimate employers to compete against companies that cut costs by defrauding employees.

How can this be the case? In 2014, DC passed a law specifically designed to attack wage theft. The Wage Theft Prevention Amendment Act increased civil and criminal penalties, expanded the authority of DOES, incentivized lawyers to take on claims, and issued a clear statement about our city’s values. It is one of the most robust and progressive anti-wage theft laws in the country.

But that law is, in many ways, failing.

Today, workers who suffer wage theft have four options: They can go to the DC Office of the Attorney General (OAG), find a private lawyer, file a lawsuit themselves, or file a wage-theft claim with DOES. Realistically, though, DOES has to be the primary enforcer of basic workplace laws. Both the OAG and private-sector attorneys have increased enforcement activities, but resources are limited. The vast majority of people can’t get a lawyer to represent them, and filing a lawsuit on their own is too intimidating and confusing. Going to DOES should be a quick, easy and effective way to fight back against wage theft. In reality, it’s anything but.

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Two Florida companies underpaid workers $175,000. Now, one can’t bid on federal contracts (FL)

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BY DAVID J. NEAL
MARCH 05, 2020 06:54 AM

Two Florida electrical contractors paid $175,413 in back wages and fringe benefits to workers after they violated numerous federal guidelines while working on a West Palm Beach apartment building.

The Department of Labor said Monday the back compensation went to 46 workers or $3,813.32 per worker of Tampa’s Southern Integrated Systems and subcontractor West Palm Beach’s J & Brothers Electrical Corp. This all happened while working on Royal Palm Place in West Palm Beach.

Also, Southern is debarred or banned from bidding on federal contracts for three years.

The company run by manager Jason Dinger, according to state of Florida records, didn’t pay electricians overtime when they earned it, Labor said.

On top of that, Southern “submitted falsified certified payroll records that failed to report accurately all the hours employees worked on the project. Although the employees worked overtime every workweek, the certified payroll did not reflect those hours.”

J & Brothers, run by Juan Vincente Escalante, also tried some shucking and jiving with payroll records. Labor’s Wage and Hour Division investigators saw records that said overtime hours had been paid properly, “despite the employer’s admission that they paid their workers at straight-time rates for all the hours that they worked.”

When some workers spent part of the day or week on other projects, J & Brothers didn’t keep a proper record when they were working on the Royal Palm, a federal project – thus requiring paying the area’s prevailing wages and fringe benefits – and when they were on another project. There was no way for J & Brothers to pay employees accurately.

The “prevailing wages” requirement comes from Davis Bacon and Related Acts. Paying straight time for all hours worked, when there should’ve been overtime violates the Fair Labor Standards Act and the Contract Work Hours and Safety Standards Act (CWHSSA).

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Officials want to crack down on employers (LA)

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By David Jacobs The Center Square
Mar 6, 2020

Growth of Louisiana’s unemployment trust fund could lower the tax bills of state employers, though many businesses are not paying their share, officials said Friday.

Many companies avoid paying into the fund by classifying employees as temporary contractors, which gives those businesses an unfair competitive advantage and makes employers who follow the law shoulder more of the unemployment fund costs, said Ava Dejoie, secretary of the Louisiana Workforce Commission.

“It is an unfair advantage and it hurts all of us,” she said.

Employers support the trust fund with taxes on the first $7,700 of each employee’s pay. When the fund reaches $1.15 billion, the taxable wage base falls to $7,000 and unemployment benefits increase. When it hits $1.25 billion, funding for a state program employers can use for worker training increases from $20 million to $35 million, Dejoie said.

While the fund is expected to hit both of those benchmarks over the next 18 months or so, she said, misclassification hurts that progress. The practice also allows companies to reduce their labor costs so they can outbid employers that play by the rules, Dejoie added.

The United States Treasury Department estimated in 2013 that preventing worker misclassification would generate $8.32 billion in federal revenue over 10 years. The Louisiana Legislative Auditor has said misclassification cost Louisiana at least $9 million from 2014 through 2018, though the actual number could be much higher. Over the past two years, the Workforce Commission conducted 19 audits that identified 1,100 misclassified workers and $18.5 million in unreported wages, officials said.

The LWC does not get state tax dollars to support its enforcement efforts. Dejoie said additional funds to hire more auditors and a full-time attorney or two would help.

Louisiana also is the only state in the nation that requires employers that break classification rules to get a warning on their first offense.

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