Democrat Senators Come Out Against DOL ‘Joint Employer’ Rule

Posted by National Alliance for Fair Contracting on

Hassan A. Kanu
Posted June 26, 2019, 10:31 AM

  • Presidential contenders oppose rulemaking
  • Blue state attorneys general join opposition; franchise group in support

Six of the seven senators running for the Democratic presidential nomination in 2020 voiced their “strong opposition” to the Labor Department’s proposal to narrow liability for franchised businesses and companies that rely on temps and other contractors. “The proposed interpretation would violate the language and intent of the Fair Labor Standards Act (FLSA) and weaken the enforcement of wage-and-hour protections on behalf of many of the most vulnerable workers in the country, directly contradicting DOL’s mission,” Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), Kamala Harris (D-Calif.), Kirsten Gillibrand (D-N.Y.), Amy Klobuchar (D-Minn.), and several other Democratic heavyweights said in a June 25 letter to Labor Secretary Alexander Acosta.

The DOL proposed a new joint employer regulation-or interpretive rule-in April, seeking to narrow the circumstances when multiple companies can be considered “joint employers” of a group of workers. The Obama administration had looked to expand the scope of joint employer liability. The DOL said in April that its new proposal would reduce uncertainty about which businesses are responsible for workers’ employment protections and any associated liability for violating labor laws.

“As the prevalence of contracting, temporary staffing, and franchising arrangements has ballooned throughout the American economy, it is increasingly important that companies that share responsibility for workers are held liable for wage theft, child labor abuses, and other violations of federal wage-and-hour law that too often devastate the financial security of working families,” the senators wrote, noting that the 3-million temp-worker contingent across the country is “disproportionately made up of African American and Latino workers earning significantly less than other groups.

The joint employer issue is a flashpoint for franchised and gig economy companies and worker advocates. The comment period on the joint employer proposal ended June 25. The DOL’s proposal also drew attention from a group of Democratic attorneys general and the largest business association in the franchise sector, the International Franchise Association. The IFA argues that long-accepted practices in franchising shouldn’t be considered evidence of joint liability.

“The Department of Labor has put forward a rule that can add much-needed clarity for franchise businesses,” IFA Senior Vice President of Government Relations Matt Haller said in a June 25 announcement. “An expanded joint employer standard has cost the economy billions and slowed down hiring and job growth-this rule is a major step toward righting that wrong.”

Officials from 18 states including New York, California, North Carolina, Wisconsin, Pennsylvania, and the District of Columbia wrote to Acosta to oppose the rulemaking. “The experiences of many of the undersigned state Attorneys General (“State AGs”) in enforcing labor laws and protecting workers argue strongly against adopting the Proposed Rule,” the prosecutors wrote. “Based on our collective experience, we believe that the Proposed Rule does not adequately reflect today’s workplace relationships, in which growing numbers of businesses are changing organizational and staffing models by outsourcing functions to third” parties.”

The DOL regulation is considered an interpretive rule because Congress hasn’t directly authorized the agency to define joint employment. Critics have suggested the eventual policy will be subject to legal challenges.

The letter from Congress also was signed by Sherrod Brown (D-Ohio); Patty Murray (D-Wash.); Maggie Hassan (D-N.H.); Dick Durbin (D-Ill.); Ben Cardin (D-Md.); Chris Van Hollen (D-Md.); Tammy Baldwin (D-Wis.); and Ron Wyden (D-Ore.).

(See Article)

How to Combat Wage Theft

Posted by National Alliance for Fair Contracting on

By Rebecca Koenig, Staff Writer
June 24, 2019, at 10:26 a.m.

AS LOW-INCOME WORKERS know, it’s tough to get by on modest wages. When those wages are stolen through illegal employment practices, it makes life even harder.

Unfortunately, wage theft is a problem low-income workers encounter pretty often. For example, among the roughly 110 people who pass through the doors of the Workers’ Rights Clinic each month in Washington, D.C., many come with valid claims of not having been paid properly, says Allen Cardenas, clinic coordinator.
Wage theft describes a variety of pay violations.

Examples of wage theft include:

  • Not being paid for all hours worked.
  • Not being paid overtime.
  • Not being paid at least the applicable minimum wage.
  • Not being paid at all.
  • Not taking home all earned tips.
  • Not being permitted to take earned breaks.
  • Having pay deducted illegally.
  • Being required to work “off the clock.”

Employers are responsible for following labor laws, but they don’t always comply. Follow these steps to help prevent wage theft and to take action if it occurs to you.

Know your rights.

The first step of combating wage theft is understanding the rights to which you’re entitled as a worker under federal, state and local laws. These include minimum wages, overtime pay, work breaks, reasonable medical and religious accommodations and protections from retaliation, safety hazards and discrimination.

Don’t assume wage theft is accidental.

While a company may occasionally make a bookkeeping error that results in your paycheck being smaller than it should be, most wage theft is not accidental, according to Daniel A. Katz, senior counsel at the Washington Lawyers’ Committee, which hosts the Workers’ Rights Clinic.

“The vast majority of these claims are clearly intentional violations,” he says.

Wage theft is more common in some settings and occupations than others, according to research published by the National Employment Law Project, which advocates for low-wage workers. It happens relatively frequently in textile factories, private households, restaurants, retail stores and warehouses and to people who work in child care, personal services, building services, hospitality and food preparation.

(Read More)

unnamed

Are General Contractors Liable For Their Subcontractors’ Actions Or Inactions?

Posted by National Alliance for Fair Contracting on

JD Supra
June 26, 2019

A general contractor in Southern California found itself on the hook for its subcontractor’s failure to pay wages to its workers, even though the general contractor had no knowledge of it. The case illustrates an important reminder for general contractors. The general contractor was fined close to $600,000 under a 2017 California law, A.B. 1701, which holds general contractors liable for their subcontractor’s failure to pay wages owed to workers.

Holding a general contractor responsible is not new or limited to state law. Under most federal employment laws, a general contractor could be found to be a joint employer with its subcontractor, or a temporary staffing agency, when certain conditions are met. In determining if the general contractor is jointly employing workers with its subcontractors, courts will look at the level of control exercised by the general contractor over these workers, as well as intermingling of operations, common ownership, supervision of work, pooling of employees, sharing of clients or customers, and agreements between the companies.

Unexpected and significant consequences for a general contractor may result from its subcontractor’s noncompliance with the law. For example, under the Fair Labor Standards Act, a general contractor found to be a joint employer could be liable for a subcontractor’s failing to pay wages or overtime and misclassifying a worker as exempt or as an independent contractor, among other things.

In addition, more and more courts are looking at whether general contractors should be held accountable for a subcontractor’s alleged harassing or discriminatory conduct under Title VII of the Civil Rights Act.

State and federal agencies and workers may go after a general contractor for joint-employment liability when the subcontractor cannot cover the liability on its own or it is no longer operating, and the general contractor has deeper pockets.

Accordingly, to reduce risk, general contractors should consider carefully who they choose to do business with and take steps to ensure that their business partners are compliant with federal and state laws.

(See Article)

Exposing Wage Theft Without Fear: States Must Protect Workers from Retaliation

Posted by National Alliance for Fair Contracting on

NELP
June 24, 2019

Around the country, workers who speak up about workplace violations often face a significant risk of retaliation by their employer. Yet our laws generally place the burden on workers to come forward and report violations, either through complaints filed with enforcement agencies or through lawsuits filed in state or federal court. Government investigations or audits of employers are relatively rare. Retaliation is therefore one of the most pressing and persistent challenges to effective enforcement of our workplace laws-workers should not fear that their employer will punish them for asserting their rights. Ultimately, any law intending to protect workers’ rights must protect workers from retaliation in order to make that law a reality.

Why Do Workers Experience Retaliation?

  • Workers in the U.S. generally bear the burden of enforcing their own labor protections-it is up to them to come forward to report violations.
  • When a worker comes forward to report a workplace violation, we know that employers often retaliate or threaten to retaliate against the worker.
  • ·Under our current system, workers bear the entire risk of retaliation from their employer when they report violations.

What Does Retaliation Look Like?

  • Retaliation takes many shapes and can be difficult to pinpoint or prove. Employers, for example, may fire a worker, demote a worker, reduce a worker’s hours, change worker’s schedule to a less favorable one, subject a worker to new forms of harassment, unfairly discipline a worker, threaten to report a worker or a worker’s family member to immigration authorities, and much more.

What Does Retaliation Cost Workers?

  • When workers experience retaliation for trying to protect their rights, the costs can quickly escalate from both a financial and emotional standpoint, especially for the countless workers nationwide who live paycheck to paycheck. A worker may experience lost pay, for example, which can quickly lead to missed payments, lower credit scores, eviction, repossession of a car or other property, suspension of a license, inability to pay child support or taxes, attorney’s fees and costs, stress, trauma, and more.

Department of Labor details response to cybersecurity incident (MD)

Posted by National Alliance for Fair Contracting on

From Staff Reports | Jul 8, 2019

BALTIMORE — The Maryland Department of Labor on July 5 began notifying 78,000 customers with details about potential unauthorized activity on two of its database systems.

While some personally identifiable information may have been accessed without authorization, a thorough investigation conducted by the Department has not revealed any misuse of the accessed data.

Earlier this year, at the request of the Maryland Department of Labor, the Maryland Department of Information Technology — the agency overseeing all state information technology functions and policies — initiated an investigation and determined that files stored on the Literacy Works Information System and a legacy unemployment insurance service database were subject to possible unauthorized access through the internet.

Upon notification of the possibility of unauthorized access, Maryland DoIT implemented countermeasures and initiated an investigation. Working with the Department of Labor, Maryland DoIT also notified law enforcement and retained an independent expert to investigate how the information was accessed.

A full review of the department’s protocols and security measures has been completed to prevent future incidents. To date, this investigation has not produced evidence to confirm that any personally identifiable information was downloaded or extracted from Labor servers.

With this investigation now complete, the Department of Labor is contacting the customers who were impacted by the incident and encouraging them to carefully monitor their accounts. Those who have been affected will be offered two years of free credit monitoring through an independent service.

(Read More)

unnamed

Shady contractors jailed in Bay area and on Long Island (NY)

Posted by National Alliance for Fair Contracting on

June 20, 2019 – 11:47 AM CDT
BY MARK GRUENBERG

Minnesota isn’t the only state that’s cracking down on construction wage theft. New York is, too, and the feds did in Northern California.

The two cases from opposite ends of the country illustrate the prevalence of cut-rate contractors who routinely exploit their workers, especially immigrant workers, shorting them of pay and overtime, all to line the contractors’ own pockets and gain an edge over honest firms.

Their reward in these cases? Prison bars. In the California case, for a good long time.

In New York, contractor Vickram Mangru will serve a month in jail and three years of supervised probation for lowballing workers on Bronx school construction projects. His wife, Gayatri Mangru, drew a conditional discharge. Both have already repaid $80,000 in restitution for paying “far less than” prevailing wages to three workers from Dec. 22, 2012, to Valentine’s Day 2015 – and owe the workers another $201,630.09.

Both pled guilty earlier after a long investigation and charges from the state attorney general’s office, and were sentenced on June 11.

Mangru got a light sentence, compared to Job Torres Hernandez of Hayward, Calif. Torres faces sentencing this month of up to 20 years in prison and $500,000 in fines, the U.S. Attorney for Northern California said.

Of course, Torres did more than just steal the workers’ wages, a 10-day jury trial in federal court in March showed. He imported undocumented workers from Mexico, kept them toiling in virtual slave labor, and threatened those who complained with violent retaliation.

Torres set up several construction companies to handle business and disguise his doings. But he also hired a subcontractor for an apartment tower in San Jose. The sub got caught, too. It paid $250,000 in back pay to 22 workers – cracking the case. The whole mess also prompted the San Jose City Council to pass a stronger ordinance, in fines and jail terms, against wage theft.

(Read More)

unnamed

When a ‘Jobs Act’ creates no jobs (WV)

Posted by National Alliance for Fair Contracting on

Hoppy Kerchaval
June 19, 2019 at 12:37AM

Back in 2001, the West Virginia Legislature passed the West Virginia Jobs Act. The aim was to require companies working on public projects financed all or in part with state taxpayer dollars to hire more local workers.

According to the law, “The Legislature finds that the employment of persons from outside the local labor market on public improvement construction projects contracted for and subsidized by the taxpayers of the state contributes significantly to the rate of unemployment and the low per capita income among qualified state residents who would otherwise be hired for these jobs.”

So, I suppose you can give lawmakers the benefit of the doubt. Their hearts may have been in the right place, but their economics were flawed, and the execution has been pitiful. That is evident in the findings in a report by the Legislative Auditor’s Performance Evaluation and Research Division (PERD).

Let’s start with the most incriminating conclusion. From 2011 until this year, Workforce West Virginia, which oversees the program, could not document any hires for a public works project because of the law. Not one.

The legislative audit found a series of problems with the program.

First, the law defined the local labor market as all of West Virginia and any county in surrounding states within 50 miles of West Virginia’s border. The law was likely written that way so it would not violate the Privileges and Immunities Clause of the U.S. Constitution which has been interpreted to prevent the discrimination of non-residents and preference for state residents.

(Read More)

California advances bill tightening definition of independent contractors (CA)

Posted by National Alliance for Fair Contracting on

Author – Kim Slowey
Published – June 19, 2019

Dive Brief:

  • A California Senate labor committee is reviewing a bill that could narrow the definition of an independent contractor and limit its use in the state’s construction industry. The state assembly approved the measure at the end of last month.
  • If enacted, California employers would be required to use a strict method, called the ABC test, to determine if a worker is either an independent contractor or an employee entitled to the protections and benefits that go along with that status.
  • The assembly added exceptions for certain professions to the proposed measure before it went to the state senate. Some professions that would be exempt from the new law would be engineers, architects, real estate licensees and direct sales salespeople.

Dive Insight:

Under the three-part ABC test, workers can only be classified as independent contractors if they perform their work free from the control and direction of the employer; offer services that are outside the hiring contractor’s normal scope of work; and usually work as part of a business.

According to a report from Material Handling & Logistics, some business groups are putting pressure on the California senate to add more exceptions to the measure prior to a vote.

Proponents of AB-5 seek to codify into law a 2018 state Supreme Court ruling, although that decision is under appeal.

Unscrupulous employers sometimes classify workers as independent contractors instead of employees to avoid paying them a fair wage, paying payroll taxes on their behalf and being forced to provide health insurance or workers’ compensation coverage.

(Read More)

unnamed

General contractor also found responsible for unpaid wages under contractor liability law that went into effect in 2018 (CA)

Posted by National Alliance for Fair Contracting on

LOS ANGELES, May 29, 2019 /PRNewswire/

The Labor Commissioner’s Office has issued citations totaling $597,933 in unpaid wages and penalties to Universal Structural Building Corp. of Chatsworth after 62 construction workers were never paid for weeks of work on two projects in Hollywood and Ventura. J.H McCormick Inc., a general contractor for one project, was named jointly and severally responsible for $68,657 of the citations pursuant to a section of the labor code added last year by Assembly Bill 1701 that holds general contractors liable for their subcontractor’s wage theft violations.

“Up-the-chain general contractors are now responsible for wage theft committed by their subcontractors on all construction projects in the state,” said California Labor Secretary Julie A. Su. “General contractors who choose subcontractors that do not pay wages owed will pay a hefty price. The Labor Commissioner’s Office will use all the tools at its disposal to return these stolen wages – including the placement of liens on these properties which will have a hold until the labor these workers poured into these projects is paid for in full.”

The Labor Commissioner’s Office has filed a civil action with the Los Angeles Superior Court against J.H McCormick to help secure funds to pay back wages.

(Read More)

unnamed

Contractor sentenced to 8 years in prison in forced labor case (CA)

Posted by National Alliance for Fair Contracting on

AUTHOR – Kim Slowey
PUBLISHED – July 3, 2019

A federal judge sentenced construction company owner Job Torres Hernandez to eight years and seven months in prison for harboring undocumented workers for commercial advantage or private financial gain and for forcing some of those individuals into providing labor on projects in the San Francisco Bay Area.

Torres, who was convicted in March, must also pay $919,738 in unpaid wages as restitution and must serve three years under supervised release after his prison term ends.

One of the most disturbing aspects of the Torres case is worker testimony that, since 2015, he recruited undocumented individuals from Mexico with the promise of construction jobs only to make some work as long as 24 consecutive hours without pay. He locked them up after hours in squalid living spaces with makeshift beds and limited access to toilets and showers. If they complained, witnesses told the court, Torres threatened deportation and physical harm to them and their families in Mexico.

Torres supplied some of this labor to the Silvery Towers condo project in San Jose, California, and, last year, developer Full Power Properties paid $250,000 in back wages to 22 of Torres’ employees. After the settlement, Full Power told Constructive Dive that it denied any wrongdoing and that it, as well as the general contractor on the project, has since altered its due diligence procedures for the selection of subcontractors to avoid future issues.

Protection for workers

Because of the Torres case, San Jose lawmakers passed a new law aimed at protecting workers late last month, the San Jose Spotlight reported. After negotiating with local trade unions and considering arguments from the business community about added costs for the development of new housing, San Jose now requires private construction companies to pay a prevailing wage on all projects that receive city subsidies.

On some construction projects, laborers get lost in the shuffle as the companies they work for try to save money. One of the ways some contractors try to reduce costs is by classifying their workers as independent contractors so that they don’t have to provide employee benefits like workers’ compensation insurance coverage or pay payroll taxes on their behalf. Some states like California, however, are considering new legislation to prevent that from happening.

(Read More)