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Biden’s Nominee for Secretary of Labor Wants ‘Wage Theft’ Cops

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SEAN HIGGINS | 4.20.2023 8:00 AM

California’s experience combatting wage theft has been a headache for employers without much in the way of restitution for workers.

Julie Su wants to be the nation’s top cop on wage theft, and she means that quite literally.

Su, President Joe Biden’s nominee to be the Secretary of Labor, believes that allegations of not paying workers what they are due are so serious that the accused—business owners—should be put in handcuffs.

As the head of the California Labor Department under Gov. Gavin Newsom, Su created the state agency’s first-ever criminal investigations unit. Su vowed that the unit would go after those “who underpay, underbid and under-report in violation of the law.” And the wage theft police were born.

“When we first implemented the unit, newspaper headlines warned of armed Labor Commissioner deputies coming to get employers in California and arrest them for crimes. And, well, we are!” Su boasted in a 2015 lecture. “We have filed over a dozen felony wage-theft cases with district attorneys across the state and we have had employers arrested and thrown in jail for the wage theft they committed.”

 

For the first time, Philly enforces its wage theft law by suing an employer who stiffed workers

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The Philadelphia Inquirer
by Juliana Feliciano Reyes
Apr 5, 2023

The lawsuit, against Joe Carvalho of Carvalho Construction, represents an escalation of the city’s efforts to enforce wage theft violations.

For the first time in seven years, the City of Philadelphia has sued an employer who broke the city’s wage theft law.

The lawsuit represents an escalation of the city’s efforts to enforce its 2016 wage theft law. In some cases, it can take years for workers to get paid after they win a wage theft claim; some never get paid at all.

The Law Department, which hired a dedicated attorney last spring to handle these kinds of cases for the Department of Labor’s Office of Worker Protections, has begun taking legal action “to force bad actors into compliance,” a spokesperson for the Office of Worker Protections said in a statement. Lawsuits are “an avenue of last resort,” the spokesperson said.

Bad actors are employers that broke the law but refuse to comply with city orders and pay workers what they’re owed. More than 90% of employers that have broken the law comply, the spokesperson said.

The city filed a complaint in Common Pleas Court earlier this year against Joe Carvalho, a Philadelphia construction company owner who the city says broke its wage theft law twice.

In March 2021, Carvalho didn’t pay an employee for eight days of work, owing him $1,105 in wages and overtime, a city investigation found. Carvalho had said he would pay the worker $130 per day.

The following month, the worker repeatedly asked for his pay and Carvalho ignored the texts or “responded with curse words,” according to a city violation notice.

(Read More)

US Department of Labor Recovers $633k In Back Wages for 84 Workers for Violations by District of Columbia Development Site’s Subcontractors

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Agency: Wage and Hour Division
Date: March 20, 2023
Release Number: 23-462-PHI

Investigators also find some employers falsified records at Southeast residential development
WASHINGTON – The U.S. Department of Labor has recovered $633,029 in back wages for 84 workers denied their full wages and benefits by subcontractors involved in construction of an affordable housing development funded by the District of Columbia.

Three offices of the department’s Wage and Hour Division conducted investigations of six subcontractors hired to work on The Bridge project in the district’s southeast section by the development’s general contractor, McCullough Construction and its first-tier subcontractors. The division found the employers violated the Davis- Bacon Act, Contract Work Hours and Safety Standards Act, and the Fair Labor Standards Act.

The division recovered $292,193 in back wages for 14 employees of MTZ Electric Service LLC of Laurel, Maryland, after determining the subcontractor misclassified workers as independent contractors, failed to pay prevailing wage rates and the required overtime premium, failed to provide health and welfare fringe benefits, and violated recordkeeping requirements when it omitted workers from certified payroll records and falsified certified payroll records. Colonial Electric Company Inc. of Harwood, Maryland – the first-tier subcontractor that hired MTZ Electric – agreed to pay the back wages.

To resolve the case, MTZ’s owner, Victor Martinez, signed a consent agreement to accept debarment, which prohibits the employer from bidding on federally funded construction projects for a period of three years.

The division also recovered $253,146 in back wages for seven workers of Igloo Construction Inc. in Westminster, Maryland. Investigators found the employer failed to pay proper prevailing wages and fringe benefits, falsified certified payroll records, and hired a labor broker who failed to report its workers on weekly certified payroll records. The division held the first-tier contractor – Titan Mechanical Inc. of Manassas Park, Virginia – liable for the back wages because they failed to include the required Davis-Bacon labor standards’ clauses in their subcontract with Igloo.

(Read More)

 

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Michigan lawmakers repeal right-to-work, revive prevailing wage

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The Detroit News | March 21, 2023
Beth LeBlanc & Craig Mauger

Lansing — The Democratic-led Michigan Legislature voted along party lines Tuesday on landmark legislation to restore prevailing wages for state construction projects and repeal the right-to-work law that barred union contracts from requiring membership fees as a condition of employment.

The Michigan Senate took a final vote on the bill to repeal the right-to-work law for private employers and sent the measure to Gov. Gretchen Whitmer’s desk on Tuesday afternoon. The Senate passed the bill 20-16 along party lines after the legislation cleared the House in a 56-52 party-line vote.

The House on Tuesday also approved two other labor bills in the package, one House bill that helps to require union-rate wages for public construction jobs and another bill that would repeal right-to-work for public sector employees.

The votes Tuesday were significant for the labor movement nationally, said Ron Bieber, president of the Michigan American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).

“It’s a huge day for the working people of Michigan,” Bieber said.

Rep. Regina Weiss, the Oak Park Democrat who sponsored the public sector right-to-work repeal, said the final passage of the bills Tuesday delivered on changes promised by the new Democratic majorities when they took office in January. Weiss rejected arguments that the right-to-work repeal would hurt the state’s economy.

“To me, it’s not a choice,” Weiss said. “You don’t have to choose to support business and then also choose to screw over workers. You can support business, you can support workers at the same time.”

The legislation headed to Whitmer’s desk would allow union contracts to require workers to pay agency fees for the cost of representation at the bargaining table with their employer.

(See Article)

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2023 Prevailing Wage Seminars

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The U.S. Department of Labor’s Wage and Hour Division (WHD) will offer compliance seminars for contracting agencies, contractors, unions, workers, and other stakeholders to provide information on paying prevailing wages on federally funded construction and service contracts.

The virtual prevailing wage seminars will include video trainings on a variety of Davis-Bacon Act and Service Contract Act topics that participants can view at their convenience, followed by corresponding virtual Question & Answer sessions, which will be offered live on multiple dates throughout the year to accommodate participants’ schedules. Sessions on Davis-Bacon compliance are scheduled for March 8, June 27, and September 13, and sessions on SCA compliance are scheduled for March 9, June 28, and September 14.

Register Now

The training is a component of WHD’s ongoing efforts to increase awareness and improve compliance with federal prevailing wage requirements.

While seminar attendance is free, registration is required. More information, including the links to video trainings and virtual Q&A session dates, will be provided to participants upon registration.

For more information on the Davis-Bacon Act, the Service Contract Act, and other federal wage laws, please call the Department’s toll-free helpline at 1-866-4US-WAGE (487-9243) or visit dol.gov/whd.

Commentary: Results in states that repealed their prevailing-wage laws aren’t pretty

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Crain’s Chicago Business
January 30, 2023 | Frank Manzo

A good rule of thumb in policymaking is “first, do no harm.” When elected leaders fall short, the genius of our system is that we have the opportunity to course correct, either at the ballot box or by demanding legislative change.

In the case of states that repealed laws governing who can win bids on public infrastructure projects, the data overwhelmingly suggests that such a correction is warranted.

Between 2015 and 2018, six U.S. states—Indiana, Wisconsin, Michigan, Kentucky, West Virginia and Arkansas—each repealed their state prevailing-wage laws that established minimum labor standards on taxpayer-funded projects like roads, bridges, schools and water infrastructure. All did so promising to save money, including by “building five schools for the price of three.”

The problem is: it never happened. As one Indiana Republican lawmaker put it, “we got rid of prevailing wage and, so far, it hasn’t saved us a penny.” His conclusions were ultimately confirmed by the Indiana Department of Labor.

In Wisconsin, a study that examined highway projects pre- and post-repeal showed that the state not only failed to save money, but that it might have increased cost overruns. In West Virginia, the School Building Authority similarly concluded that prevailing-wage repeal was not saving taxpayers any money. The list goes on.

…

That’s why researchers at the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois Urbana-Champaign recently compared construction labor market outcomes in repeal states against the states that maintained their prevailing-wage laws.

The results are not pretty.

Compared to states that maintained their prevailing-wage laws, construction wage growth lagged by 4% to 13% in repeal states. Construction employment growth and workforce productivity were slower as well. On-the-job fatalities increased by 14%. Repeal created unnecessary hardships for blue-collar workers struggling to keep up with rising costs.

Repeal also imposed new burdens on taxpayers. Local businesses won fewer projects, with more than $1 billion in taxpayer dollars being exported to out-of-state contractors annually. And, instead of delivering any project savings, repeal states saw the number of construction workers relying on food stamps and other government assistance programs grow as job quality eroded.

The bottom line is that market standards and job quality matter. Especially in construction, where competence can be a matter of life and death and a lack of job quality only makes it harder to attract skilled workers to in-demand and physically challenging occupations.

(Read More)

Are plumbing apprentice graduates safer than their non-apprentice peers? Workers’ compensation claims among journey level plumbers by apprenticeship participation

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Journal of Safety Research
Volume 83, December 2022, Pages 349-356

Abstract
Introduction: Apprenticeships combine mentored on-the-job training with related instruction to develop a workforce with the skills sought by employers. Workplace safety is an important component of apprenticeship training. Whether that training results in fewer work injuries, however, is largely unknown. Method: We linked Washington’s registered apprenticeship data, plumber certification (licensing) data, employment data, and workers’ compensation claims to compare claim rates among journey level plumbers (JLP) by apprenticeship participation. We used negative binomial regression models to estimate rates of total claims, wage replacement/disability claims, acute injuries, and musculoskeletal disorders (MSD), adjusted for worker characteristics. Results: Among JLP certified between 2000 and 2018, rates among JLP with no apprenticeship training were 46% higher for total workers’ compensation claims (adjusted Rate Ratio (aRR) = 1.46, 95% CI: 1.26–1.69) and 60% higher for wage replacement/disability claims (aRR = 1.60, 95% CI: 1.22–2.11), compared to rates among JLP who completed a plumbing apprenticeship. Apprentice graduates experienced a greater decline in the rate of total claims between the 5 years preceding JLP certification and the years after certification (55.3% vs. 41.4% among JLP with no apprenticeship training). Greater rate reductions among JLP apprentice graduates were also observed for acute injuries and MSD, although the decline in MSD was not significantly different from the decline among JLP with no apprenticeship training. Conclusions: Successful completion of a plumbing apprenticeship program is associated with fewer work injuries throughout the career of a JLP. Apprenticeships appear to play a key role in reducing work injuries among JLP, especially acute injuries. Practical Applications: Apprenticeships are an effective model for reducing workplace injuries. The mechanisms by which apprenticeship training improves workplace safety should be identified to better inform injury prevention efforts among apprentices as well as among workers outside of a formal apprenticeship arrangement.

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State study: Apprenticeship training connected with safer workplaces

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MLT News | Posted: January 14, 2023

Apprenticeship programs result in safer workers. That’s the conclusion of a first-of-its-kind study by the Washington State Department of Labor & Industries (L&I). As apprenticeship programs continue to grow, they could reduce serious worker injuries and workers’ compensation claims.

“Apprentices are safer because they’re learning all the proper techniques,” said Peter Guzman, manager of L&I’s Apprenticeship Program. “Now the science backs us up.”

…

The results of the study come at a time of expansion for registered apprenticeship programs in Washington. There is record involvement, with 22,000 workers currently participating in apprenticeships across about 200 registered programs in the state. While construction trades such as carpenter, ironworker and electrician have the most active participants, there are growing programs in the technology, aerospace and medical assistant fields.

The study, by L&I’s Safety and Health Assessment and Research for Prevention (SHARP) Program, linked registered apprenticeship data with plumber certification information. Then, it compared worker compensation claims between 2000-2018. The work underwent a rigorous peer review and publication last fall in the Journal of Safety Research.

The findings show workers’ compensation claim rates were 31% lower among journey-level plumbers with apprenticeship training compared to plumbers who did not complete an apprenticeship.

“This study provides support for what many believe: There are fewer injuries among apprentices,” said Dr. Dave Bonauto, SHARP manager.

SHARP epidemiologist Dr. Sara Wuellner, a 13-year agency veteran, led the study.

“While the study focused on plumbers, it indicates apprenticeships not only provide well-trained workers, they also contribute to a safer workplace,” she said. “Other studies could look at specific parts of apprenticeship and show how that occurs.”

(Read More)

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DOL and IRS Unite to Battle Misclassifying Workers

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Jan. 12, 2023 | David Sparkman

Agreement follows similar arrangements between other federal agencies.

In mid-December 2022, the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) published an updated Memorandum of Understanding (MOU) for employment tax referrals that arise from investigations of workers’ possible employment misclassifications.

This agreement follows a pattern of similar partnerships entered into by other federal agencies during the Biden Administration that also have been crafted specifically to deal with the classification issue.

“We are determined to identify and resolve labor violations by employers who benefit by misclassifying employees as independent contractors and deprive them of the protections of the labor standards laws we enforce,” said Jessica Looman, principal deputy wage and hour administrator.

In 2011, DOL’s Wage and Hour Division (WHD) and the IRS first entered into a similar MOU to allow both agencies to use their resources to promote employer compliance with obligations to pay employee’ and related employment taxes.

The new MOU explains that the two agencies will establish a methodology for exchanging investigative leads, complaints and referrals of possible violations “to the extent allowable by law and policy.” However, the agencies assert that the terms of the MOU do not provide for any exchange of federal tax information.

The memo explains that the collaboration will enable both agencies to leverage existing resources and promote employer compliance with obligations to properly pay their employees and to pay all applicable employment taxes.

Although concerns over misclassification have been around for decades, the primary target has most often centered around independent contractors, such as trucking owner-operators. Concerns at the state level have included the failure of contractors to pay for workers’ compensation insurance and unemployment taxes. The focus has been expanded in recent years to include all sorts of freelancers and gig workers, such as computer programmers, and also has been a long-term issue for the nation’s labor unions who are prohibited by law from organizing independent contractors.

A new set of criteria that eliminates most of those workers who previously were able to legally claim independent contractor status was enacted in a California law and is being emulated by other states. The California approach also is contained in legislation that was introduced by Democrats in Congress as soon as President Biden was sworn in but has yet to make much headway.

Before the DOL-IRS announcement took place, the most recent similar agreement between federal agencies was forged between the National Labor Relations Board (NLRB) and the Federal Trade Commission (FTC) regarding gig workers. That MOU is aimed at addressing a number of other labor law issues in addition to workers’ misclassification, such as noncompete and nondisclosure provisions that may be included in worker contracts.

The new DOL-IRS agreement states that the “collaboration will enable both agencies to leverage existing resources and promote employer compliance with obligations to properly pay employees and to pay employment taxes. This multi-agency approach presents a united compliance front to employers and their representatives.”

(Read More)

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Federal Court Upholds Federal Contractor Minimum Wage Increase

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JD Supra – Jan. 18, 2023

On Jan. 6, 2023, the U.S. District Court for the District of Arizona upheld President Joe Biden’s authority to issue an Executive Order (EO) increasing the minimum wage for federal contractors and subcontractors to $15 per hour.

As McGuireWoods previously reported, on April 27, 2021, President Biden signed an (EO) requiring federal contractors performing service, construction or concession contracts to pay a $15 minimum hourly wage to employees working on such contracts. Subsequently, the U.S. Department of Labor issued a Final Rule implementing the EO.

The EO invited litigation, and on Jan. 6, 2023, an Arizona federal court ruled in favor of the Biden Administration, dismissing a challenge brought by attorneys general for Arizona and four other states. The states argued that the EO and Final Rule violated the Federal Property and Administrative Service Act (FPASA), the Administrative Procedures Act and the Spending Clause of the U.S. Constitution, among other things. In response, the federal government argued the EO and Final Rule were “unremarkable,” noting that the past three presidents had altered the minimum wage for federal contractors pursuant to the FPASA.

The court found the wage increase had a sufficiently close nexus to the FPASA’s purposes of promoting economy and efficiency in federal contracting. In so holding, the court credited the President’s rational determination that improvements to productivity and quality of work from a wage increase would outweigh any cost increases in federal procurement.

The court further found the application of the wage increase to subcontractors was valid, and noted their inclusion was necessary to close potential loopholes.

The administration continues to defend the wage increase in other venues, including in a similar suit in Texas, and a narrower challenge in Colorado to its application to recreational contractors on public lands. In the Colorado case, the U.S. Court of Appeals for the Tenth Circuit preliminarily blocked the hike on recreational contractors pending substantive review. However, the wage increase otherwise has gone into effect for government contractors and subcontractors, so any bids for government contracts should take it into account.

(See Article)