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AG’s Office accuses Framingham companies of underpaying workers of public projects

Posted by National Alliance for Fair Contracting on

Zane Razzaq
MetroWest Daily News
Dec. 29, 2021

FRAMINGHAM — A Hollis Street construction company and its owners will be fined more than $540,000 over allegations they failed to pay prevailing wages to employees who worked on public projects at the Middleborough and Westport police stations, according to the Attorney General’s Office.

Superior Carpentry Inc. and its president, Fernando Barroso, and vice president, Felipe Drumond, were issued five citations by Attorney General Maura Healey’s office for failing to pay prevailing wages, not submitting accurate payroll records and falsifying records, according to a press release.

Another Framingham company, BPI Construction Management Inc. on 110 Mill St., also received a separate complaint from the office alleging it knowingly facilitated the submission of fraudulent payroll records.

BPI subcontracted the work to Superior Carpentry.

“These companies cheated workers out of the wages they earned while working on public construction projects and then repeatedly lied about it to the municipalities involved,” said Healey in a statement. “Contractors and constructions companies at every level, in every trade, are responsible for performing their work in accordance with the law. It is a priority of our office to ensure that workers are paid the wages owed to them.”

(Read More)

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New York Significantly Expands Application of Prevailing Wage Requirements

Posted by National Alliance for Fair Contracting on

December 27, 2021
Cole Schotz

On January 1, 2022, an expansion of prevailing wage law in New York will become effective. The new law will significantly increase the universe of construction projects subject to prevailing wage requirements.

In brief, when a project is subject to prevailing wage requirements, workers must be paid set hourly wage rates and hourly benefit amounts as determined by the fiscal officer of each New York county. These rates are substantially higher than minimum wage and also traditionally far greater than average non-union rates largely due to the added benefits amount.

Under the Budget Bill, S.7508-B A.9508-B, signed into law by former Governor Cuomo on April 3, 2020, workers must be paid prevailing wages on “covered projects,” which refer to “construction work done under contract which is paid for in whole or in part out of public funds where the amount of all such public funds, when aggregated, is at least thirty percent of the total construction project costs” and “where such project costs are over five million.”

Previously, projects were subject to prevailing wage requirements only if a public entity was a party to a construction project and the purpose of the work was to benefit the public.

The law broadens the definition of “public funds” from the traditional definition of direct public investment. “Paid for in whole or in part out of public funds” refers to money from the following sources:

  1. “The payment of money, by a public entity, or a third party acting on behalf of and for the benefit of a public entity, directly to or on behalf of the contractor, subcontractor, developer or owner that is not subject to repayment;”
  2. “The savings achieved from fees, rents, interest rates, or other loan costs, or insurance costs that are lower than market rate costs; savings from reduced taxes as a result of tax credits, tax abatements, tax exemptions or tax increment financing; savings from payments in lieu of taxes; and any other savings from reduced, waived, or forgiven costs that would have otherwise been at a higher or market rate but for the involvement of the public entity;”
  3. “Money loaned by the public entity that is to be repaid on a contingent basis; or”
  4. “Credits that are applied by the public entity against repayment of obligations to the public entity.”

(Read More)

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Maine Voices: Proper worker classification is a vital foundation of Maine’s economy

Posted by National Alliance for Fair Contracting on

BY LAURA A. FORTMAN AND JOHN C. ROHDE – SPECIAL TO THE PRESS HERALD
December 23, 2021

Misclassification deprives employees of needed protections, puts other employers at a disadvantage and affects taxpayers as well

A recent court case (“Scarborough roofing contractor found not guilty in death of worker,” Dec. 9) has raised the issue of worker classification. We, along with Maine State Chamber of Commerce President Dana Connors and Maine AFL-CIO President Cynthia Phinney, are writing to explain why the proper classification of workers is so important.

When an individual or business hires another person to perform work for them, that person will either be an employee or an independent contractor. Misclassification occurs when an employer hires an employee but treats them like an independent contractor.

Why does it matter if an employer treats an employee like an independent contractor? There are several important reasons.

• Independent contractors who do not purchase workers’ compensation insurance do not have access to lost wages and medical benefits under the Workers’ Compensation Act if they are injured on the job. An employee misclassified as an independent contractor can file a claim with the Workers’ Compensation Board. However, in addition to showing they were hurt at work, the misclassified employee will also have to prove they were an employee. This almost always means the injured employee’s claim will take longer to resolve.

In the meantime, and maybe permanently if the employer does not have workers’ compensation insurance, an injured misclassified employee will have to find a way to pay for the medical treatment they need. If the injury is serious, they may have to do this without any income.

• Similarly, if a misclassified worker loses their job through no fault of their own and files for unemployment insurance, it will take longer for the employee’s unemployment claim to be resolved.

• Employers that misclassify employees as independent contractors are probably not following federal and state employment laws that regulate minimum wages, overtime, paid leave and safety, among other protections. Misclassified employees may receive less pay than they are entitled to and work in conditions that are not as safe as they should be.

• Misclassification also adversely affects other employers. Employers that properly classify their workers – as the vast majority do – will find themselves at a disadvantage when bidding for jobs or otherwise competing against employers that do not. Employers that follow the law may also pay higher workers’ compensation rates if the pool of workers they are insuring is smaller because their competitors have misclassified their employees.

(Read More)

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More than $3 billion in stolen wages recovered for workers between 2017 and 2020

Posted by National Alliance for Fair Contracting on

Economic Policy Institute | December 22, 2021
Report by Ihna Mangundayao, Celine McNicholas, Margaret Poydock, and Ali Sait

Over the last four decades, the U.S. economy has been marked by extreme inequality, which has only been exacerbated by the COVID-19 pandemic. In the midst of this global pandemic and an economic crisis, the number of individuals with household weekly earnings below the poverty line rose to 65.1 million, a 28% increase from February to June 2020 (Saenz and Sherman 2020). In contrast, CEO pay rose by nearly 19% in 2020 (Mishel and Kandra 2021). This rise in poverty and pay inequality is compounded by wage theft, which robs millions of workers of billions of dollars from their paychecks each year (Cooper and Kroeger 2017).

What this report finds: Each year millions of workers across the country are victims of wage theft—meaning they are paid less than the full wages to which they are legally entitled. Between 2017 and 2020, more than $3 billion in stolen wages was recovered on behalf of workers by the U.S. Department of Labor, state departments of labor and attorneys general, and through class and collective action litigation.

Why it matters: This staggering amount represents just a small portion of wages stolen from workers across the country. And while wage theft impacts workers broadly, it disproportionately affects low-wage workers, many of whom already are struggling to make ends meet. Wage theft also disproportionately impacts women, people of color, and immigrant workers because they are more likely than other workers to be in low-wage jobs. Finally, these stolen wages hurt local economies and tax revenues.

What can be done about it: Increase funding for the Department of Labor’s Wage and Hour Division to boost institutional and investigative capacity; engage in proactive and strategic enforcement in those industries where violations are especially severe or rampant; enhance civil monetary penalties for wage and hour violations; protect worker rights to collective action, as union workers are less likely to experience wage theft because they have the bargaining power to establish mechanisms to combat the practice; and strengthen and boost funding for state and local enforcement.

Wage theft occurs any time employees do not receive wages to which they are legally entitled for their labor. This could take many forms, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts.

Even the theft of seemingly small amounts of time can have a large impact. Consider a full-time, minimum wage worker earning the federal minimum wage of $7.25 an hour who works just 15 minutes “off the clock” before and after their shift every day. That extra half-hour of unpaid work each day represents a loss to the worker (and a gain to the employer) of around $1,400 per year, including the overtime premiums they should have been paid. That’s nearly 10% of their annual earnings lost to their employer that can’t be used for utilities, groceries, rent, or other necessities.

Background and prior studies
While quantifying the true extent of wage theft can be a challenging undertaking—much of it goes unreported—existing reports and studies paint a clear picture: Wage theft is a costly and undeniably pervasive problem that affects millions of workers across the country.

Cooper and Kroeger (2017) investigated just one type of wage theft and found that in the 10 most populous states in the country, 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Extrapolating from these 10 states, Cooper and Kroeger estimate that workers throughout the country lose $15 billion annually from minimum wage violations alone.

The personal cost of wage theft to these workers is significant: Cooper and Kroeger found that on average, the workers suffering from minimum wage violations in these 10 states were cheated out of $64 a week—about $3,300 annually for year-round workers. These workers lost almost one-quarter of their earnings, receiving on average only $10,500 in annual wages instead of the $13,800 they should have received.

(Read More)

More than $3 billion in stolen wages recovered for workers between 2017 and 2020

Posted by National Alliance for Fair Contracting on

EPI Report By Ihna Mangundayao, Celine McNicholas, Margaret Poydock, and Ali Sait
December 22, 2021

Over the last four decades, the U.S. economy has been marked by extreme inequality, which has only been exacerbated by the COVID-19 pandemic. In the midst of this global pandemic and an economic crisis, the number of individuals with household weekly earnings below the poverty line rose to 65.1 million, a 28% increase from February to June 2020 (Saenz and Sherman 2020). In contrast, CEO pay rose by nearly 19% in 2020 (Mishel and Kandra 2021). This rise in poverty and pay inequality is compounded by wage theft, which robs millions of workers of billions of dollars from their paychecks each year (Cooper and Kroeger 2017).

What this report finds: Each year millions of workers across the country are victims of wage theft—meaning they are paid less than the full wages to which they are legally entitled. Between 2017 and 2020, more than $3 billion in stolen wages was recovered on behalf of workers by the U.S. Department of Labor, state departments of labor and attorneys general, and through class and collective action litigation.

Why it matters: This staggering amount represents just a small portion of wages stolen from workers across the country. And while wage theft impacts workers broadly, it disproportionately affects low-wage workers, many of whom already are struggling to make ends meet. Wage theft also disproportionately impacts women, people of color, and immigrant workers because they are more likely than other workers to be in low-wage jobs. Finally, these stolen wages hurt local economies and tax revenues.

What can be done about it: Increase funding for the Department of Labor’s Wage and Hour Division to boost institutional and investigative capacity; engage in proactive and strategic enforcement in those industries where violations are especially severe or rampant; enhance civil monetary penalties for wage and hour violations; protect worker rights to collective action, as union workers are less likely to experience wage theft because they have the bargaining power to establish mechanisms to combat the practice; and strengthen and boost funding for state and local enforcement.

Wage theft occurs any time employees do not receive wages to which they are legally entitled for their labor. This could take many forms, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts.

Even the theft of seemingly small amounts of time can have a large impact. Consider a full-time, minimum wage worker earning the federal minimum wage of $7.25 an hour who works just 15 minutes “off the clock” before and after their shift every day. That extra half-hour of unpaid work each day represents a loss to the worker (and a gain to the employer) of around $1,400 per year, including the overtime premiums they should have been paid. That’s nearly 10% of their annual earnings lost to their employer that can’t be used for utilities, groceries, rent, or other necessities.

(Read More)

(See Full PDF Copy of Report)

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California Labor Commissioner Collects Over $2.6 Million in Wages for 100 Workers on a Public Works Project

Posted by National Alliance for Fair Contracting on

CA Dept. of Industrial Relations | NEWS RELEASE
Release Number: 2021-122
Date: December 16, 2021

Long Beach— The Labor Commissioner’s Office collected $2,631,876 in wages and $37,672 in apprenticeship training funds resulting from a prevailing wage assessment against Torrance-based general contractor TOBO Construction, Inc. The wages collected will compensate 100 workers for unpaid prevailing wages and overtime while working on a construction project on El Camino Community College’s campus in Torrance.

“Contractors on publicly-funded construction projects must pay workers a prevailing wage,” said Labor Commissioner Lilia García-Brower. “TOBO Construction, Inc. cheated these workers out of millions of dollars in pay and benefits.”

El Camino Community College District hired TOBO Construction, Inc., a general building, engineering and electrical contractor, as prime contractor to build a $35 million Student Services Center building. Workers hired included bricklayers, carpenters, drywall installers, laborers, ironworkers, steel framers and other trades workers.

The Labor Commissioner’s Office opened its investigation in May 2018 after receiving a report of public works violations from the Carpenters Contractors Cooperation Committee and the Painters and Allied Trades Compliance Administrative Trust. The investigation included interviews with over 40 workers and an audit of payroll records, which were turned over only after the investigators served subpoenas on TOBO Construction, Inc.

The investigation determined that TOBO Construction had maintained false payroll records over a 31-month period to cover up the wage theft. The contractor hired brokers to provide staffing for the construction project, and those brokers paid the workers in cash or personal checks $100 to $160 per day. Investigators reviewed thousands of falsified checks that were not issued to workers, many of them signed by the same person.

Additionally, investigators found that TOBO Construction failed to comply with apprenticeship requirements for a public works project. TOBO Construction failed to provide contract award information to all applicable apprenticeship committees, and failed to hire apprentices in the required ratio of one hour of apprentice work for every five hours performed by journeypersons in the applicable craft or trade.

(Read More)

SAVE THE DATE – 2022 NAFC National Conference, October 23-25, 2022 – Chicago, IL

Posted by National Alliance for Fair Contracting on

December 14, 2021

The 2022 NAFC National Conference will be held on Oct. 23-25, 2022, in Chicago, Illinois, at the Palmer House Hotel. Please save the date and ensure to join NAFC members and affiliates at the most comprehensive fair contracting conference in the nation. The NAFC National Conference is attended by hundreds of participants from across the nation, including representatives from labor organizations, responsible contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

Visit our website for further information.

(Visit NAFC’s Conference Page)

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Prevailing Wage Database Allows Public to Monitor Wages Paid on Projects

Posted by National Alliance for Fair Contracting on

Mattoon, IL, USA / MyRadioLink.com
Dec 7, 2021

SPRINGFIELD – Beginning January 1, 2022, the Illinois Department of Labor (IDOL) will be responsible for maintaining a database that allows the public to search certified payrolls submitted by construction contractors on public works projects subject to the Illinois Prevailing Wage Act. This is the result of Public Act 102-0332 that was passed by the General Assembly and signed by Governor Pritzker.

“This is a step toward transparency in public spending that will help keep employers accountable,” said Illinois Department of Labor Director Michael Kleinik. “It will also allow public bodies to monitor the wages paid on projects they initiate.”

In 2020, IDOL began accepting certified payroll submissions from construction contractors on public works projects subject to the Illinois Prevailing Wage Act. Contractors are required to file those certified payrolls by the 15th of each month. This is done to ensure contractors are complying with the Illinois Prevailing Wage Act.

By the 16th day of each month following the month work was performed, IDOL will make relevant information available to the public.

That information includes each worker’s classification, skill level (such as apprentice or journeyman), gross wages paid in each pay period, number of hours worked each day, start and end times of work each day, hourly wage rate, hourly overtime wage rate, and hourly fringe benefit rate.

The database shall be searchable by contractor name, project name, county in which the work was performed and contracting public body.

(See Article)

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Wage Theft Ordinance Passes

Posted by National Alliance for Fair Contracting on

KC Labor Beacon
Nov. 24, 2021

Another success in our ongoing fight against wage theft! Recently, Kansas City, Mo city council passed its first ever Wage Theft ordinance to hold cheating contractors accountable. Members of organized labor joined Councilman Kevin O’Neill after  the first ever Wage Theft ordinance was passed\. The ordinance will criminalize those contractors who use labor brokers, 1099s, pay cash without certified payrolls and other forms of illegal payments to workers. The new Civil Rights and Equal Opportunity Department will enforce prevailing wage, wage theft and city tax evaders by monitoring all worksites that are either contracted with the city or have city incentives tied to their project. In addition, changes were made to the Fairness in Construction Board which will include four new members. The board will include a member from organized labor, one from the Associated General Contractors and two from the community.

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Navillus Construction Executives Convicted of Embezzling from Union Benefits Funds

Posted by National Alliance for Fair Contracting on

Department of Justice
U.S. Attorney’s Office
Eastern District of New York
Friday, October 22, 2021

Defendants Engaged in Years-Long Fraud Scheme Designed to Evade Making Required Contributions for Their Employees

Earlier today, in federal court in Brooklyn, a jury returned guilty verdicts against Donal O’Sullivan, the founder, owner and President of Navillus Tile, Inc. d/b/a/ Navillus Contracting (“Navillus”), one of New York City’s largest construction firms, Padraig Naughton, Navillus’s Financial Controller, and Helen O’Sullivan, a Payroll Administrator, on all 11 counts charging wire fraud, mail fraud, embezzlement from employee benefits funds, submission of false remittance reports to union benefits funds, and conspiracy to commit those crimes.   The verdicts followed a three-week trial before United States District Judge Pamela K. Chen.  When sentenced, each of the defendants faces up to 20 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, announced the verdict.

“As found by the jury, the defendants deliberately devised a fraudulent scheme to avoid making required contributions to union benefits funds on behalf of Navillus’s workers, in order to deprive the workers of benefits they had earned and deserved,” stated United States Attorney Peace. “This Office and its law enforcement partners will continue to investigate and prosecute these types of blatant frauds that are harmful to workers.”

(Read More)