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U.S. Department of Labor Finds Three Chicago Area Companies Violated Child Labor Regulations After Minors Suffer Serious Injuries (IL)

Posted by National Alliance for Fair Contracting on

11/12/19
WorkersCompensation.com

Chicago, IL – After investigations by the U.S. Department of Labor’s Wage and Hour Division (WHD), it was determined that three Chicago-area companies – Maria V. Contracting, Prate Roofing & Installations LLC, and Red Line Management – violated the Child Labor Provisions of the Fair Labor Standards Act (FLSA). WHD has also assessed a total of $127,262 in civil money penalties against the companies under the Child Labor Enhanced Penalty Program (CLEPP) because three minors suffered substantial impairment during their unlawful employment.

WHD opened the investigations after receiving referrals from the Department’s Occupational Safety and Health Administration (OSHA) regarding injuries suffered by minors employed in positions that violate “Hazardous Occupation Orders,” which prohibit specific jobs for workers under 18.

“The Child Labor Standards specifically prohibit minors from working with equipment and in jobs that expose them to hazards. In each of these cases, minor employees suffered serious injuries because they were assigned tasks – such as working on roofs, and operating forklifts or other dangerous machinery – that violate employment rules for minors,” said Wage and Hour Division District Director Tom Gauza in Chicago, Illinois. “The U.S. Department of Labor’s Wage and Hour Division is committed to ensuring minors and their parents are aware of the child labor rules and that employers comply. We encourage employment opportunities for minors, but they must be safe.”

WHD assessed civil money penalties of $63,814 to Maria V. Contracting after investigators found a minor employed by the company suffered electrical shock and serious burns when he fell 25 feet from an excavator bucket while cutting power lines. He also sustained fractures to his right femur and patella bone. Investigators found the company violated Child Labor standards by allowing a minor to drive a company pick-up, work on roofs, conduct demolition tasks and work around power-driven hoisting apparatus.

WHD assessed Prate Roofing & Installations LLC with $16,742 in civil money penalties after the Wauconda, Illinois, employer allowed a 16-year-old worker to engage in roofing activities. Investigators found that, while working on a roof, he fell approximately 25 feet through a skylight onto a concrete floor. OSHA investigators determined the minor was not attached to safety cord or wearing a helmet. He suffered a burst fracture in his spine and a fracture dislocation of the ankle requiring emergency surgeries and several months of rehabilitation.

WHD assessed Red Line Management with $46,706 in civil money penalties after a 17-year-old employee suffered multiple injuries when he fell more than 6 feet while riding on top of a forklift to steady the load. The fall resulted in a chest contusion, fractured left arm, torn left rotator cuff and torn ligaments in both knees that required multiple surgeries and months of rehabilitation. Investigators found the minor was operating forklifts, a prohibited occupation for minors, about 75 percent of his time on the job.

The CLEPP provides for civil money assessments of $11,000 to $50,000 for each employee who was the subject of a violation of the child labor regulations and suffered permanent loss, permanent paralysis, or substantial impairment because of their employment.

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Constructing a Cheaper Classification of Workers (LA)

Posted by National Alliance for Fair Contracting on

“A contractor who doesn’t do it right can bid lower than those who do.” – Louisiana Legislative Auditor Daryl Purpera

By Sue Lincoln
June 26, 2019

From the time in early 2016 that newly-minted Gov. John Bel Edwards signed his first executive order accepting Medicaid expansion, arch-conservatives in the state legislature have been sounding alarms over purported fraud in the program. And when Louisiana Legislative Auditor Daryl Purpera addressed the Baton Rouge Press Club on Monday, June 24, he didn’t hesitate to wax eloquent on that topic. In particular, Purpera reiterated his “need” to access taxpayer-specific Department of Revenue information. The Revenue Department has refused to provide that data, and presently the Auditor is suing them for it, asking the courts for a declaratory judgment that will authorize release of the information.

In addition to the cause celebre of alleged Medicaid fraud, Purpera also had a few things to say about a new performance audit issued earlier in the day, which looks at how the Louisiana Workforce Commission is handling the problem of “misclassified workers”.

“Our audit samples, covering 2014 through 2018, showed employers misclassifying workers failed to pay nearly $3-million in unemployment taxes,” Purpera told the Press Club. “In addition, they failed to collect and remit an estimated $9-million of state income tax from these workers.”

This isn’t about putting someone on the payroll as a receptionist when she is actually performing the duties of a secretary, to cover up for paying her less. Nor is it about designating a busboy as a waiter, so that instead of paying him $7.25 per hour, you can get away with paying him just $2.13. Instead, as stated in the audit, “Worker misclassification occurs when an employer improperly classifies a worker as an independent contractor instead of an employee.”

An employee is subject to payroll withholding of taxes, and is eligible for employment benefits such as insurance. An independent contractor is instead paid a flat amount, and is responsible for paying his or her own taxes and/or insurance.

“This is pervasive in some industries,” Purpera stated. “Construction particularly.”

Federal law requires each state’s labor agency to annually audit one-percent of all employers and one-percent of total employee wages, and this report notes the Louisiana Workforce Commission is in full compliance with that rule. In fact, LWC is ranked 2nd in the nation for its employer audit program. This legislative audit also states LWC consistently found the more misclassified workers within construction companies than within other types of employers: on average, 12 workers for each construction firm audited. From 2016 through 2018, 453 audits of construction companies (15.4% of the total number of employer audits reviewed) revealed 5,493 misclassified workers (or nearly 42% of all the 13,106 workers determined to be misclassified.)

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Hennepin County’s first labor-trafficking case ends in guilty plea (MN)

Posted by National Alliance for Fair Contracting on

Prosecutors say they’re keeping tabs on other cases in the construction industry where contractors are exploiting immigrant workers

Riham Feshir
Minneapolis
November 18, 2019 7:40 p.m

A Twin Cities contractor accused of exploiting immigrant workers was supposed to face criminal charges in a first-of-its-kind trial in Hennepin County this week.

But Ricardo Batres instead pleaded guilty Monday to labor trafficking, and prosecutors say other cases in the construction industry are coming.

Batres, 47, admitted he took advantage of employees’ federal immigration status to force them to work for him. In one case, he bailed one of his workers out of immigration custody, but told him the man would need to pay off his debt. He also he lied on his workers compensation insurance papers to save money.

Batres took the deal, pleading guilty to labor trafficking and insurance fraud, after acknowledging that the evidence against him was strong.

“The insurance fraud and other things are not very good things,” said Hennepin County Attorney Mike Freeman after the hearing. “But what’s really bad is when you’re trafficking in human beings.”

Batres’ case marked the first time his office prosecuted someone under the state’s labor trafficking statute. But it won’t be the last, Freeman said.

“We are looking at other cases now,” he said. “We spent most of our time and energy, all of us, making sure this one worked. The industry is watching for a change, and they don’t like this. It makes the industry look bad.”

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Making NJ Affordable Shouldn’t Mean Cutting Wages For Skilled Tradesmen (NJ)

Posted by National Alliance for Fair Contracting on

By Guest Contributor | December 9, 2019

A recent poll showed 44 percent of the people are planning on leaving New Jersey- soon. The reason is costs. It’s a damn expensive place to live. Gov. Murphy is accepting of the fact that New Jersey taxes are high (and likely to go higher) so either get used to it or move. Republican State Sen. Mike Doherty has recently chimed in with his ideas on creating affordability and his approach isn’t much better than the governor’s. The senator wants to punish hard working tradesmen and blame them for New Jersey’s affordability crisis.

Doherty has sponsored a bill (S-175) that will allegedly deal with bringing down the cost of transportation infrastructure construction. But Doherty has already betrayed the real reason for the legislation – it is his published opinion that that New Jersey’s prevailing wage laws are the culprit in the state’s high costs and that the state would be better off if it paid building tradesmen a lot less. Baloney.

Skilled tradesmen built the infrastructure upon which the state’s economy rests. It is their hard work that allow people like Sen. Doherty to reap the economic benefit of the tradesmen’s hard work. Nevertheless, Sen. Doherty, an attorney, is reviving a shopworn attack on the state’s prevailing wage law. (The prevailing wage is the union wage scale for skilled trades workers in publicly financed projects.) There are many things that make New Jersey unaffordable, but the prevailing wage law isn’t one of them.

New Jersey ranks at or near the bottom in every measurable economic index from property taxes, to debt, to business environment. Despite the obvious need to cut unnecessary spending, borrowing and regulation, Sen. Doherty, blames skilled labor for the state’s high cost of living. He finds trade unionists making $68 an-hour for public projects untenable. But that wage (of which $40 is actual salary and the rest is benefits, pension and training costs) is a pittance compared to what those in Doherty’s profession take from taxpayers.

A large share of public infrastructure costs is paid long before the jobs are even started. The money is paid to lawyers, bond counsel and other professionals used to execute the borrowing to finance the projects. The professional class also exacts healthy fees from taxpayers to conduct the consulting work on the actual projects once the money is in hand. These professionals enjoy generous six figure consulting fees are they are paid at every level of government and at dozens of obscure agencies and authorities, such as county improvement authorities.

For example, last year the Passaic County Freeholders funded construction of a new public works building and bonded $17 million through the county improvement authority. The fees paid to lawyers and other financial consultants to borrow that money was $241,000! Over in Bergen County, the improvement authority there paid out more than $431,000 in professional fees for six of its last 10 financings – topping out at $674,000 for one refinancing package! State government pays similar sky-high fees to professionals just to borrow money.

The fees paid to execute borrowing are not competitively bid nor are they publicly reported. Similarly, legal, and other professional work commissioned by governments for construction projects are not subject to the state’s bidding laws.

If Sen. Doherty truly wanted to reduce costs for public works project, he would sponsor legislation mandating competitive bidding and transparency for professional fees; but I doubt he or any other legislator is willing to do that. For Doherty to complain about the high cost of living in New Jersey and then turn a blind eye toward the lucrative dark-money industry of professional fees is at best hypocritical. Don’t those fees contribute to the state’s affordability problem?

Good paying jobs in New Jersey are disappearing as corporations move to less expensive states. Manufacturing jobs have been pushed out for decades; replaced by low wage service jobs. And with the growing internet economy, even low wage retail jobs are disappearing. The only jobs that New Jersey seems to entice lately are low-wage warehouse jobs.

The prevailing wage money paid to union tradesmen are among the few good-paying jobs that still exist in this state. The prevailing wage law makes certain that those who are charged with updating our electrical, water and transportation infrastructure are capable of sustaining themselves and their families. The wages earned by tradesmen helps support the local economy and ensures that contractors hire skilled, knowledgeable workers trained in their craft and in safety precautions. If Sen. Doherty had his way, state contractors could hire unskilled labor or illegal immigrants and pay them whatever they pleased. From an attorney’s perspective that may seem okay, but it is not fair to working people or good for our economy.

To create an affordable New Jersey, our elected officials need to summon the courage to cut unnecessary spending and the discipline to set spending priorities and stick to them – and not place the burden of cost cutting on hardworking trades people.

BY CHRISTIAN BARRANCO

Christian Barranco is a journeyman member of IBEW Local 102 and presently works as a project manager and supervisor on many large, critical energy and industrial infrastructure projects in New Jersey. He is also the founder of Square Deal for NJ, an organization founded to encourage ideas to address New Jersey’s many problems.

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Singleton Calls for Crackdown on Employee Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

November 13, 2019

Moorestown, NJ – Senator Troy Singleton today called on the Executive Branch of State Government to stop the rampant and widespread illegal abuse of workers in the construction industry through employee misclassification.

Companies who misclassify full-time workers as contractors commit wage theft by paying below minimum wage, establishing illegal work weeks, paying cash and evading taxes – all to increase profits. Senator Singleton called on the NJ Department of Labor, the Attorney General’s Office, the Department of Treasury, and the Governor’s Task Force on Misclassification, to continue to address this issue.

“Employee misclassification is a problem because when workers are misclassified as independent contractors by their employers, it not only diminishes their access to labor protections, but it also has real consequences on the State’s economy and tax revenues,” said Singleton. “Ensuring workers are treated fairly is a priority for me and while progress has been made when the Governor signed my Stop Work Order legislation, more needs to be done to protect workers and hold offenders accountable.”

Singleton was the prime sponsor of Senate Bill 2557, which concerns stop-work orders related to prevailing wage and construction worker employment. S2557 was signed into law in July 2019 and 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.

“There must be a level playing field for all New Jersey workers,” continued Singleton. “As a devout supporter of the construction trades, I call on those in the Executive Branch of our state government to use all available resources to crack down on this unfair practice immediately.”

The William J. Hughes Center at Stockton University released a study that said approximately 35,000 workers are illegally misclassified as independent contractors, while the state is losing $25 million a year in tax revenue due to the fraud.

(See Article)

New Jersey Is About to Take Another Step Towards Eliminating the Use of Independent Contractors by Providing Them with Benefits (NJ)

Posted by National Alliance for Fair Contracting on

October 30, 2019
J.D. Supra

Executive Summary: The New Jersey Legislature appears poised to pass S67, the Portable Benefits Act for Independent Contractors, in the upcoming lame-duck session. If passed, the Governor is expected to sign the bill before the end of the year. The bill doubles down the current administration’s effort to end misclassification of independent contractors by creating a financial disincentive to utilizing contractors. Though the intent of the bill seems to be directed at online companies such as Uber, Lyft, Amazon, Handy and others, the impact will affect any business that relies on contractors. The bill also appears to subtly create new opportunities for organized labor through the creation of “Qualified Benefit Providers.” At least half of the members of the Boards of these funds must be worker representatives or workers. Though not in its final form, it appears some form of this bill will soon become law.

Summary of Bill Provisions: In sum, the Bill requires any entity that utilizes 50 or more contractors in 12 consecutive months within the state of New Jersey to contribute funds to a Qualified Benefit Provider for the benefit of the independent contractors. The amount contributed must equal 25 percent of the contractor’s total fee or $6.00 per hour, prorated to ten cents per minute. Contributions must be made on no less than a monthly basis.

Contributions are made to Qualified Benefit Providers, who will create trust funds to provide contractors with workers’ compensation and other benefits, which are to be selected by the contractors. Qualified Benefit Providers may use up to five percent of the amounts collected to cover administrative costs. The New Jersey Department of Labor (NJDOL) will determine who may be a Qualified Benefit Provider utilizing the following criteria: 1) must be a nonprofit, 2) half the board must consist of workers or organizations representing workers, 3) board members may not have any interest in entities that utilize contract workers, 4) the organization must work toward maximizing benefits for workers, 5) the board has a fiduciary responsibility to the workers and 5) the organization must demonstrate adequate viability and financial sufficiency. These criteria seem to place organized labor in a prime position to be selected to run these new trust funds.
The bill only exempts four types of contractors: real estate agents; financial product salespersons; anyone subject to a collective bargaining agreement; or anyone who solicits orders as a sales representative of the principal entity. NJDOL will be responsible for monitoring, overseeing these new benefit providers, ensuring workers’ compensation insurance is provided, and establishing a fee to charge entities utilizing contractors to fund their efforts. Failure to comply with this Act may be enforced by either the NJDOL or a private right of action on behalf of the contractors.

Employers’ Bottom Line: Although it is unclear what the language of the final law will be, it is clear that New Jersey is aggressively attempting to eliminate reliance on independent contractors. We expect this legislation to become New Jersey law soon, which will substantially increase the cost of utilizing independent contractors within New Jersey.

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Sweeney Bill Would Protect Workers Against ‘Misclassification’ (NJ)

Posted by National Alliance for Fair Contracting on

November 14, 2019

Trenton – A bill authored by Senate President Steve Sweeney that would help protect workers from being exploited through their misclassification as independent contractors gained the approval of the Senate Labor Committee today.

“This is a pro-worker bill for the new gig economy,” said Senator Sweeney. “It will codify into law existing regulations and close a loophole that has allowed for the misclassification and exploitation of some employees. It’s all about protecting the rights of workers.”

A misclassification is the improper designation of workers as “independent contractors” rather than “employees” in order to allow employers to evade basic workers’ rights. Employers are required to contribute to unemployment and temporary disability insurance, abide by labor protections such as the minimum wage and overtime, allow employees to take maternity, paternity, and family leave, and withhold New Jersey income taxes – but they are not required to do the same for independent contractors.

“Misclassification not only hurts workers, it hurts law-abiding businesses and the state,” said Senator Sweeney. “The businesses that don’t play by the rules aren’t paying into the unemployment fund or the disability fund, which raises costs for workers and all other businesses. It shortchanges everyone else.”

Currently, the “ABC test,” adopted by the New Jersey Department of Workforce Development and affirmed by the New Jersey Supreme Court, is used to determine whether a worker should be classified as an employee or independent contractor for the purpose of labor and tax laws.

The bill would strengthen the “B prong” of the three-part test so that workers could not be deemed exempt from employee status because they perform their work “outside of all the places of business of the enterprise for which the service is performed.” It would also strengthen the “C prong” of the test by requiring that work performed to meet this standard is in an independently established trade, occupation, profession, or business in which the individual providing the service is customarily engaged.

The bill, S-4204, was approved with a vote of 3 – 1.

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Responsible Bidder Requirements OK’d (NJ)

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By Vince Conti
Nov 9, 2019

COURT HOUSE – Long ordinance drafts filled with legal language and dealing with issues of contract performance do not generally gain the attention of many citizens, even though they may provide important protections for the taxpayer.

That was the case Nov. 4, when Middle Township Committee held the second reading and public hearing on an ordinance that establishes “responsible bidder” requirements for municipal contracts. No one spoke at the hearing, and the ordinance was adopted unanimously.

The bidder requirements protect the municipality from situations where it might have been required to accept a low bid on a contact from a firm that could not satisfactorily complete the contract.

The ordinance lays out bidder requirements that speak to a potential contractor’s compliance with federal, state, and county laws, adequate insurance coverage, satisfactory past performance, a record of conformity with environmental and other laws, skilled workforce levels, and other factors.

Having the ordinance in place lessens the chance that a municipal action to justifiably bypass a low bid would be overturned in court.

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State agencies help workers fight wage theft, know their rights (NJ)

Posted by National Alliance for Fair Contracting on

By Michael Hill, Correspondent
November 8, 2019, 3PM EST

For many New Jersey workers, wage theft, discrimination, sexual misconduct and more are all-too-common workplace realities. That’s why the Department of Community Affairs and the Attorney General’s office are equipping workers with knowledge of their rights through a series of wage theft clinics across the state.

The target audience of one clinic in Atlantic City was immigrant communities, who are especially fearful about “… coming forward to the department to express their rights,” according to NJ Department of Labor & Workforce Development Commissioner Robert Asaro-Angelo, who spoke to attendees in Spanish.

The Hispanic Association of Atlantic County encouraged the state to hold the clinic, and it reached out to Latinx workers, but only a handful came.

“Obviously, to come out to settings like this, maybe the fear is too great for them to come out,” said Bert Lopez, the association’s president.

Those that did come got a step-by-step lesson in filing a complaint with the state department and some advice about proving wage theft.

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Workers owed $105K in back pay on Las Vegas Strip bollards project (NV)

Posted by National Alliance for Fair Contracting on

By Shea Johnson
Las Vegas Review-Journal
December 6, 2019 – 5:30 pm

A Las Vegas construction company that installed bollards on the Strip owes more than $105,000 in wages to workers it underpaid and cannot hold a public works contract for three years, a state agency ruled.

Muller Construction must also pay $56,000 in administrative penalties after losing its appeal to the April decision by the Nevada Office of the Labor Commissioner, agency spokeswoman Teri Williams confirmed Friday.

The office’s ruling Wednesday followed an administrative hearing in October, where Muller Construction objected to the agency’s findings that it failed to pay prevailing wage to 28 workers.

Those workers fabricated bollards in the company’s work yard, which should have been deemed a public works site subject to prevailing wage, the agency said.

Muller Construction was awarded a $5 million county contract in June 2017 to install on the Strip hundreds of bollards, the four-foot steel posts rooted into sidewalks to protect pedestrians from vehicles.

Robert Kern, an attorney representing the company, said he believed evidence presented to the agency established the yard was used for multiple public and private projects, meaning it did not fit the definition of a public works site.

“I can’t quite grasp the logic of it,” he said about the decision.

Kern said he planned to appeal the decision to state court and seek to delay the ruling’s enforcement.

One worker was ordered to be paid more than $19,000, according to Tommy White, a laborers union leader and chairman of the Nevada Foundation for Fair Contracting. It’s the nonprofit labor management watchdog whose complaint to the agency sparked the investigation.

“It looks like it will be a nice Christmas for all those workers,” White said, adding they deserved the money to which they are entitled.

The company was originally ordered by the Office of the Labor Commissioner to pay more than $92,000 in back wages and $130,000 in penalties. But the decision was modified Wednesday, Williams said.

Muller Construction has accused Laborers Local 872, the union where White is business manager and secretary-treasurer, of defamation over the matter. The lawsuit filed in January 2018 in Clark County District Court remains unresolved, court records show.
The company had completed 10 other county public works projects since 2015 without a prevailing wage violation, according to the county.

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