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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New bill targets wage theft by forcing construction managers to foot the bill (NY)

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The legislation seeks to make it easier for workers to recoup wages

By Kathryn Brenzel
March 12, 2020

A new bill seeks to crack down on construction wage theft in New York by shifting more responsibility to construction managers.

The legislation would leave general contractors on the hook for any outstanding wages or benefits owed to subcontractors on a project. Typically, workers can file a lawsuit against their employer – often a subcontractor – to recoup wages. But state legislators feel this leaves too many opportunities for companies to evade paying their workers.

“This is a major issue in the construction industry where, oftentimes, such direct employer is an unscrupulous subcontractor or labor broker willing to hide assets, change corporate identity and take part in other unscrupulous practices to avoid liability and make themselves judgment proof from a wage theft action,” a memo for the bill states.

The memo adds that making the “prime contractor” of a construction project (the company that inks a contract with the owner of a project) liable for the actions of their subcontractors would allow construction workers to collect unpaid wages more quickly and serve as “an incentive for the construction industry to better self-police itself.”

Sen. Jessica Ramos, who is the prime sponsor of the bill alongside Assembly member Marcos Crespo, said she’s been working with Laborers’ International Union of North America on the bill. She hopes the legislation will help hold companies accountable, given that construction is an industry where the hierarchy of labor can sometimes enable companies to defer responsibility. All too often, she said, companies think of construction workers as “disposable.”

“I want you to know what human beings you are employing,” she said.

In January, Gov. Andrew Cuomo vetoed a bill that would have allowed employees of all industries to place a lien against their employers’ assets while a civil action is pending. The legislation was intended to prevent instances where a company or entity dissolves before an employee is able to recoup their wages through court action.

Instead, the governor signed a bill into law that targeted limited liability companies, making the 10 members with the largest ownership interest in such entities responsible for unpaid wages to employees (but without the lien option). …

At the state level, in 2017, the Department of Labor reclaimed $6 million owed to ironworkers and welders from November 2013 to December 2017, marking the largest monetary recovery of its kind at the time. According to Cuomo’s office, the state has recovered nearly $300 million in stolen wages since 2011. The U.S. Department of Labor estimates that $1 billion in wages, across various industries, are stolen each year in New York.

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Suffolk County DA: Businesses cheated workers, state (NY)

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Wage and benefit fund theft, wage violations, and fraud in unemployment insurance & workers comp were among alleged crimes, prosecutors say.

Michael DeSantis
March 9, 2020

SUFFOLK COUNTY, NY – Eight people and nine businesses have been charged in a labor-related crackdown in Suffolk County.

The crimes collectively saw the theft of more than $250,000 in employees’ wages and benefits, nonpayment of more than $58,000 to the Department of Labor for unemployment insurance fund contributions, and failure to pay more than $133,000 to the state’s insurance fund for workers’ compensation insurance premiums, prosecutors said. Two defendants also illegally dumped polluted water into a public storm water drain, prosecutors said.

“Here in Suffolk County, we will not tolerate the exploitation of workers or our taxpayers by greedy corporations and business owners,” Suffolk County District Attorney Timothy D. Sini said in a news release. “That is why my Office, along with our partners, is aggressively identifying and prosecuting bad actors in the business community and holding them accountable. Indeed, not only will our efforts protect workers and taxpayers, they will also prevent these bad businesses from gaining an unfair competitive advantage against legitimate, law-abiding businesses.” …

“The Governor and the Department of Labor take the responsibility of enforcing labor and worker protections very seriously,” Roberta Reardon, New York State Department of Labor commissioner, said. “We have zero tolerance for those businesses who seek to defraud the system. Businesses who don’t play by the rules will be held accountable. We are fortunate to have law enforcement partners like the Suffolk County DA’s office to help us reinforce those protections.”

The investigations are ongoing. Sini urges anyone who worked for one of the companies and was underpaid or deprived of his or her wages to contact the Labor Crime Unit at 631-853-4232 or via email to InfoDA@SuffolkCountyNY.gov.

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Why Philadelphia Needs a Department of Labor (PA)

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OSCAR PERRY ABELLO
MARCH 3, 2020

Nadia Hewka has been fighting against wage theft pretty much since the day she first came to work at Community Legal Services of Philadelphia – in 1997. Then, the term “wage theft” wasn’t yet the established term. The going phrase at the time was “underpayment of wages.”

“It just doesn’t capture what’s happening,” Hewka says. “People’s labor and hours and time are being stolen when their wages are stolen.”

Wage theft comes in a few different forms. Employers may refuse to pay workers, pay them less than minimum wage, refuse to pay overtime, undercount workers’ hours or otherwise fail to pay workers for hours that qualify as work under the law. Employers may require workers to work before and after their shifts or before or after they have clocked in, without compensation.

All those forms of wage theft are already illegal, by state or federal law, or both. But enforcing those laws has been another story. Enforcing worker rights, from wage theft and beyond, has long depended on victims taking employers to court. Often, employers don’t get caught because not every wage-theft victim has the time and resources to meet with lawyers, give extensive depositions and go through a legal battle in court.

Wage theft most affects low-wage workers. In a landmark 2015 study from the Sheller Center for Social Justice at Temple University Beasley School of Law, which looked at wage theft across Pennsylvania, researchers found that in the five-county Philadelphia metropolitan area alone, every year an estimated 128,476 low-wage workers experienced minimum wage violations, 105,458 experienced overtime nonpayment violations, and 83,344 experienced off-the-clock violations. That report helped fuel the campaign in 2016 to finally make wage theft illegal at the local level in Philadelphia.

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Gov. Wolf Highlights Efforts to Improve Workforce Development in Pennsylvania, Cuts Ribbon on Northeast Philadelphia Workforce Development Center (PA)

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March 05, 2020

Governor Tom Wolf today helped cut the ribbon on Toben Center, Northeast Philadelphia’s first comprehensive workforce development center. He was joined by Sen. Christine Tartaglione, Rep. Jared Solomon and representatives from Toben Center tenants PhillyWorks, Harcum College, and Northeast Learning Center to celebrate this new piece of workforce development, which builds upon programs already established by the Wolf Administration and proposed as part of Gov. Wolf’s 2020-21 Budget.

“Workforce development is one of my highest priorities because Pennsylvanians can’t get good jobs without the training they need, and businesses can’t succeed without trained workers,” Gov. Wolf said. “Last year, I signed an executive order creating the Keystone Economic Development and Workforce Command Center. I tasked a group of leaders from labor, business and government with identifying hurdles that prevent workers from finding good jobs, and businesses from finding good workers. The Toben Center will serve as a ladder up for residents of Northeast Philadelphia’s neighborhoods and it will strengthen the business community by creating a stronger pool of educated, skilled workers.”

Gov. Wolf’s budget proposes $12 million for competitive grants to address employment barriers and a $2 million increase for WEDnetPA, which helps businesses with training to upskill existing employees. The investments will continue the progress already made on overcoming the hurdles the Command Center identified that can prevent workers from success, including transportation, child care, re-entry, licensure and training. Many of these are addressed by services offered at the Toben Center.

The governor’s innovative workforce development initiative PAsmart launched two years ago and has invested $30 million to expand hands-on job training through career and technical education, registered apprenticeships and Next Generation Industry Partnerships. The number of apprentices registered with the Department of Labor and Industry annually has tripled since 2015 when the Apprenticeship and Training Office was created.

…

“Governor Wolf’s dedication to workforce is evident through these types of strategic partnerships, which he spoke of in his recent State budget address,” said H. Patrick Clancy, president and CEO at Philadelphia Works. “As the State’s largest workforce board, we strive to stay aligned with the Governor’s priorities. The location of the Toben Center directly addresses transportation access and gaps in workforce training. The services provided in the center ensure that education and workforce resources are accessible at the same time, in the same space, lessening the burden on career seekers. In workforce, we work better together.”

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Former MGT employee pleads guilty in fraud conspiracy case (VA)

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Michael Schwartz
March 3, 2020

One of the co-conspirators at the center of an accounting fraud that two years ago toppled Richmond-based MGT Construction has pleaded guilty to federal criminal charges related to the scheme.

Patrick Lindsey, who handled the books at the now-bankrupt general contracting arm of local real estate giant Thalhimer, entered into a plea agreement on Monday afternoon in federal court in Richmond with one felony count of conspiracy to commit wire fraud and bank fraud.

The 42-year-old now faces a maximum of five years in prison, a maximum fine of $250,000 and three years of supervised release, although the government is recommending a sentence below the maximum in part because of Lindsey’s cooperation with authorities. …

Also in attendance were federal investigators, as well as Thalhimer executives.

Lindsey was charged Feb. 18 via a so-called criminal information charge, which does not require a grand jury indictment. He was not arrested as part of the charge.

Lindsey started working at MGT in 2007 as an estimator. He had moved up to a vice president role by the time he was terminated in November 2016, when Thalhimer said it internally discovered the accounting problems.

A statement of facts included in the case states that he was integral to the orchestration of a five-year scheme that manipulated MGT’s books by moving expenses from one construction project to another in order to make completed jobs appear more profitable. That resulted in boosted bonuses for Lindsey and others, while concealing the company’s true, tenuous financial state.

“During the course of the conspiracy, Lindsey moved (or deleted) thousands of invoices, concealing the fact that – by the end of the conspiracy – MGT Construction was at least $28 million in debt,” it continued. …

The statement of facts states only that from 2011 through 2016, Lindsey conspired with “others known and unknown” and that he acted at “the direction of his co-conspirators.”

To keep the scheme going, Lindsey and his alleged co-conspirators had to continuously start new construction jobs to allow the manipulated numbers to keep making sense.

“This necessity for continued accounting manipulation meant that MGT operated under the perverse incentive of acquiring new projects at any cost – even if that required MGT to submit deliberately under-valued project estimates in order to ensure that MGT would under bid other construction firms when competing for new projects,” the government wrote in the statement of facts.

The wire and bank fraud conspiracy charges are a result of Lindsey and others submitting false documents that were used to obtain loans for MGT from various banks such SunTrust, BB&T, PNC and Fulton Bank, as well as to insurance companies for bonds on construction projects.

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New Jersey DOL cites, fines Katerra sub for wage violations (NJ)

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AUTHOR: Kim Slowey
PUBLISHED: Feb.18, 2020

Dive Brief:

  • The New Jersey Department of Labor & Workforce Development (NJDOL) has issued a stop-work order to subcontractor REB Construction and Maintenance LLC for failure to take the proper deductions from its employees’ pay and for not keeping the required payroll records related to work performed on a project in Jersey City, New Jersey. The department also fined REB $19,250. …
  • The authority that the NJDOL has to stop work on a construction project when significant pay, benefits or other workers’ rights violations are documented is part of new legislation based on the July 2019 recommendations of New Jersey Gov. Phil Murphy’s task force on employee missclassification.

Dive Insight:

…

Stop-work orders (A5838): The NJDOL can force an employer to stop work if it determines that the employer violated state wage, benefit or tax laws.

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Shortchanging Workers in Concord Won’t Pencil Out (CA)

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Why prevailing wage standards are good for workers – and even good for developers.

By Matthew Miller
MARCH 04, 2020

The development and re-use project at the former Concord Naval Weapons Station has now been nearly 15 years in the making. With plans for 13,000 housing units, a college, and more than 8 million square feet of commercial space, the Naval Weapons Station could be a regional economic engine for decades.

In winning the Concord City Council’s selection as master developer for the project, the Florida-based developer Lennar made a number of commitments to the community, and has entered into discussions with the city and relevant labor stakeholders regarding the best ways to honor them. Among them, an agreement that would cover things like the hiring of local construction workers and paying the local market prevailing wage.

Recently however, reporting indicates that Lennar may not sign onto an agreement that does right by the skilled workers by paying them prevailing wages, because it claims that doing so does not pencil out. Before any hasty decisions are made, it is important to dispel such myths.

Prevailing wage is the local market wage floor for specific types of skilled construction work. It includes not just wages, but investments in apprenticeship training that ensure communities can meet their long-term construction labor force needs. Both the federal government and 25 states, including California, have laws that prescribe these standards for schools, roads, and other types of public construction to ensure taxpayer-funded projects are done right the first time.

Over the years, armies of economists have studied whether prevailing-wage standards make construction projects more expensive. The overwhelming consensus of peer-reviewed studies is that they do not. The reason why is because construction labor constitutes less than a quarter of total project expenditures on average. In other words, it is simply not what drives costs. And research also shows that projects paying prevailing wage consistently offset higher wages with higher levels of productivity and less spending on materials, equipment, and other purchased services.

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