GUEST COMMENTARY: Reviewing Indiana’s common construction wage law (IN)

Posted by National Alliance for Fair Contracting on

Dewey Pearman
Sept. 2, 2018

Interesting data is now becoming available to test the pro and con arguments made in 2015 in the debate on legislation in the Indiana General Assembly to repeal Indiana Common Construction Wage law. That law was repealed in reaction to arguments that repeal would accomplish two objectives. First, repeal would increase competition in bidding among building contractors seeking to do work for public agencies. And, the cost of construction projects paid for by taxpayers would decrease. Opponents of repealing the law asserted that not only would these results fail to be realized but that repeal would result in, among other outcomes lower wages for workers.

Indiana’s common construction wage law, like similar laws in other states and at the federal level are intended to insure that when government spends money in a given labor market it does not inadvertently impact wages normally, or commonly paid in that market for similar type of work. That is, if as an example a carpenter in a given area is typically paid $25.00 an hour in wages and received $10.00 an hour in fringe benefits workers on public projects should not be paid more or less than those amounts for the same work. Doing so would interfere in the private labor market by providing an upward or downward pressure on local wages. The law required all contractors bidding on a public project to pay the wages and benefits customarily paid in that area. The law provided for an objective process by which wage and benefit rates were determined and also provided for public input into the determination.

On the issue of lower costs to taxpayers a 2018 study released by the Midwest Economic Policy Institute, The Effects of Repealing Common Construction Wage In Indiana, Impacts on Ten Construction Market Outcomes, finds that the average cost of school construction projects did not decrease after repeal but actually increased. The study focused on school projects because they tend to be more homogeneous than other types of public construction projects. The study, written by Kevin Duncan, Ph.D. Colorado State University-Pueblo and Frank Manzo IV, MPP, Midwest Economic Policy Institute looked at 146 school projects awarded before and 189 projects awarded after repeal of the law. The average project cost before repeal was $1.42 million and $1.48 million after the repeal. Contrary to arguments for taxpayer savings the average cost of school projects went up $60,000 after repeal. These findings are consistent with similar studies in many other states.

…

In the end, what Indiana got with the repeal of the common construction wage law is an increase in taxpayer costs and lower wages for blue collar construction workers. While, the Indiana Department of Labor is required to submit a report on the effects of repeal of the common construction wage before July 2021 the early evidence suggest it is already time for the Indiana General Assembly to put this law back on the book.

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State targets misclassified workers (LA)

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By Mike Hill / Business Editor
Jul 29 2018

The state is cracking down on companies that are misclassifying workers to avoid paying federal government taxes, the Louisiana Workforce Commisson says.

Since July 1, 2017, state field auditors have completed nearly 1,000 audits of companies, uncovering more than 3,300 misclassified workers, the commission said in a news release.

“The 3,300 misclassified workers resulted in more than $11 million in unreported taxable wages and hundreds of thousands of dollars in unpaid unemployment taxes,” LWC Secretary Ava Dejoie said. “This practice creates a financial disadvantage to those companies that are complying with employment and payroll laws.”

The agency has conducted unannounced site inspections, particularly in the New Orleans area.

“Unannounced site inspections will continue until the unfair business practice of misclassifying workers stops,” Dejoie said. “Our message is clear – misclassifying workers will not be tolerated in our state.”

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Nearly $10 million in fines, penalties issued against Massachusetts employers accused of wage theft in 2018 (MA)

Posted by National Alliance for Fair Contracting on

Updated Sep 4; Posted Sep 4
By Kristin LaFratta

In Massachusetts, state officials found $9.6 million in restitution and penalties against businesses and employers who stole wages and exploited workers.

Attorney General Maura Healey released a 2018 Labor Day report this week that explores the findings of wage theft and other means of exploiting workers. Investigations were performed by the AG’s Fair Labor Division, or those who enforce wage laws and the fair bidding of construction projects.

The report revealed wage theft and labor violations occurred across industries, and many by contractors based outside of Massachusetts. In fiscal year 2018, Fair Labor conducted 247 “field visits” across Massachusetts to investigate unfair pay practices, which found both civil and criminal violations in various businesses.

Healey said her office chose to prioritize wage theft in the construction industry last fiscal year, which resulted in nearly $1.5 million in penalties and restitution, according to the report. In that time Fair Labor issued citations or other assessments against 61 different employers in the construction industry.

Methuen’s E.J. Paving Company, Florida-based contractor Southern Road and Bridge, LLC and J. Donlon & Sons Inc., which worked on a public works project in Medford, were among the “notable cases” listed in the report, all of which failed to pay workers properly in overtime pay or minimum wage.

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Winchester construction company failed to pay workers minimum wage (MA)

Posted by National Alliance for Fair Contracting on

Posted Aug 1, 2018 at 5:46 PM

A Winchester construction company J. Donlon and Sons Inc. has paid more than $121,000 in wages and penalties for violating the Massachusetts prevailing and minimum wage laws by failing to properly pay workers on a Medford public works project, Massachusetts Attorney General Maura Healey announced today. The company is located at 86 Cross St. in Winchester.

“This company and its owners gained an unfair advantage by cheating their workers out of the wages they earned,” said Attorney General Healey in a press release announcing the settlement. “With this settlement, we are sending a message that there are serious consequences to breaking our laws.”

J. Donlon and Sons Inc.’s owner Joseph M. Donlon Sr., and his two sons Joseph M. Donlon Jr. and Sean Donlon, were cited for intentionally failing to pay prevailing wage, failing to submit true and accurate certified payroll records, failing to pay the state minimum wage and failing to maintain true and accurate general payroll records from January 2012 through December 2016, according to the release. As part of the settlement, the company and all three corporate officers are prohibited from bidding or working on any public works construction project in Massachusetts for 10 years.

The attorney general’s Fair Labor Division began investigating J. Donlon and Sons after a former employee submitted a complaint alleging he was not paid the proper prevailing wage rate for work performed on a city of Medford utility trench patching public works project. According to the release, the attorney general’s office determined that employees on the project were paid far less than the established prevailing wage rate. During one three-year period, for example, employees were paid an hourly rate of between $8 and $20 when they should have been paid between $51.35 and $54.10 per hour.

The company also submitted certified payroll records to the city of Medford during certain years that listed only members of the Donlon family as having worked on the project and omitted other employees, the attorney general’s office stated. The investigation found that general payroll records were also inaccurate, and two employees were paid less than the applicable minimum wage.

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AG orders Methuen paving company pay restitution for wage theft (MA)

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By Zoe Mathews (zmathews@eagletribune.com)
Jul 20 2018

BOSTON – A Methuen paving contractor and its president have been cited $172,554 in restitution and penalties for violating the Massachusetts overtime law for work performed on various public works projects across the state, Attorney General Maura Healey announced Friday.

“State prevailing wage laws ensure that companies working on public works projects do not cut corners to gain an unfair competitive edge,” said Healey in a press release on Friday. “This company cheated its workers out of overtime pay and with this action by my office, will now pay them what they are owed.”

The AG’s Fair Labor Division began an investigation into EJ Paving and its president, Thomas Evangelista, after receiving a complaint from an employee alleging he was not paid overtime for all hours worked in excess of 40.

The investigation revealed the company paid overtime to its employees after they had worked in excess of 45 hours during a week, though the law requires employees be paid time and a half after working more than 40 hours a week.

The investigation also revealed that when employees worked on both private and public works projects during the same week, EJ Paving failed to account for the different hourly rates of pay when overtime was calculated.

The AG’s office issued one citation for failure to pay overtime, which EJ Paving has paid in full, according to the release.

(See Article)

Proposed Detroit ordinance could mandate 51% local hires for all city construction work (MI)

Posted by National Alliance for Fair Contracting on

By Kim Slowey
Sept. 20, 2018

Dive Brief:

  • At a Sept. 17 press conference, Detroit City Council President Pro Tem Mary Sheffield proposed a measure that would require all city-funded demolition and construction work to be performed by at least 51% city residents, the Detroit Free Press reported. The ordinance will be presented to the city council during the next few months as part of a package of “People’s Bills” aimed at helping Detroiters.
  • Sheffield told the Free Press that the push behind the construction-related measure was the revelation that local residents were not well represented in the city’s Land Bank demolition program, which funds the razing of blighted homes in Detroit. Of the $70 million spent on the initiative so far, more than 50% of the contracts have gone to suburban Detroit companies, 26% to minority firms and only 16% to African American-owned companies.
  • Detroit Mayor Mike Duggan instituted a similar program in 2014, but Sheffield’s proposal differs in that it would lower the current threshold of $3 million – at which hiring requirements kick in – to a lower, undetermined amount; include demolition projects; and impose expensive fines on companies that do not comply. The fines would go into a workforce training fund, though Sheffield maintains there are plenty of qualified Detroiters that simply have not been given work opportunities. Sheffield said her ordinance would pursue more rigorous enforcement and collection of fines, but Duggan’s office said they have been conscientious about going after violators.

Dive Insight:

Sheffield’s plan is similar to those instituted in other areas of the country, but at 51%, it’s higher than what is outlined in most other regulations, and many agencies forego fines and rely on contractors making their best efforts to comply.

The City of Sacramento is one of the latest municipalities to enact a local hiring law, the Local Hire and Community Workforce Training Program. The regulation, passed last month, requires that contractors use local workers when performing city-funded work valued at $1 million or more. The ordinance also requires that 20% of apprentices either live in an economically disadvantaged area or be a member of a special class – homeless, a woman, former offender, foster youth or recipient of public assistance.

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Local Impact of Prevailing Wage (MN)

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September 06, 2018 10:41 PM
(ABC 6 News)

When a construction worker goes to work on a project with a private contractor, the contractor decides what workers will be paid. However, when they work on a government-funded project, workers must be paid “prevailing wages.”

President of South Eastern Minnesota Building and Construction Trades Council Nate O’Reilly says for every construction project funded by the state, workers must be paid a minimum base rate called “prevailing wage.”

“When public dollars are being spent…it creates that level playing field to ensure the public expenditures reflect the local area standards for wages and benefits,” said Nate.

In the private construction industry, the lowest bidding contractor almost always gets the construction job. Executive Director of the Fair Contracting Foundation Mike Wilde says prevailing wage is intended to protect local workers and ensure they get paid fairly. This prevents the job from going automatically to whoever can do it the cheapest, which Mike says is often workers from out of the area.

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“You want people that live in the area, perhaps reside in the housing, and support the economy. You want them to be your workforce, as opposed to people who might come in and do unskilled, unsafe, and insufficient work and perhaps take the wages out,” said Mike.

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Savings from prevailing wage law changes uncertain (MO)

Posted by National Alliance for Fair Contracting on

Date: July 22, 2018
Author: Philip Joens

Jefferson City and Cole County officials said any savings they incur from a partial repeal to the state’s prevailing wage law likely will be negligible.

Gov. Mike Parson signed House Bill 1729 on July 13, rolling back several provisions of the state’s long-standing prevailing wage law. The changes will take effect Aug. 28.

Most notably, the bill eliminates prevailing wage requirements for projects costing more than $75,000.

Jefferson City Public Works Director Matt Morasch and Cole County Public Works Director Larry Benz said most city and county construction projects cost more than that threshold.

Many city projects, like Jefferson City’s plans to resurface about 60 roads between 2018-20, cost at least $1 million, Morasch said.

“At the city, we do very few that are under $75,000,” Morasch said.

Benz said even simple projects like curb replacements can cost about $100,000. He estimated fewer than 10 percent of Cole County projects cost less than $75,000.

“It may affect some of the smaller (projects),” Benz said, “(like) drop inlets, but most of the time we do that work ourselves.”

Missouri’s prevailing wage law dates back to 1959, and is similar to the federal Davis-Bacon Act of 1931, which requires workers be paid minimum wages on federal construction projects.

Under existing law, the state compares the number of hours worked in each county at the collectively bargained rate and the rate non-union contractors pay. The rate with the most hours worked each year prevails and becomes the prevailing wage for each skill set and occupation in each county.

Under the new law, at least 1,000 hours of work in a given county and job category must be reported to the state for the previous year for the prevailing wage rate to apply. If that does not happen, a contracting minimum wage defined as 120 percent of a county’s average wage will be paid to construction workers.

HB 1729 also exempts all public works projects costing less than $10,000 from competitive bid requirements. This provision and the $75,000 threshold appear to attempt to distinguish between construction projects and maintenance projects.

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Missouri voters just blocked the right-to-work law Republicans passed to weaken labor unions (MO)

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By: Alexia Fernández Campbell
August 7, 2018

It’s the first time voters have overturned right-to-work laws through a ballot referendum in recent years.

Missouri voters made history on Tuesday, blocking the state’s Republican lawmakers from enacting right-to-work laws to cripple labor unions. The state’s primary voters rejected Proposition A, which would have made it illegal for unions to charge fees to workers they represent who don’t want to pay them, by a two-to-one margin when the vote was called by Decision Desk around 10 pm Eastern.

Missouri was on track to become the 28th state to enact such a law. Last year, the state’s then-governor, Republican Eric Greitens, signed the right-to-work bill, saying that it would encourage businesses to move to the state. Missouri would have followed Michigan, Wisconsin, and other Rust Belt states that have passed similar anti-union measures in recent years under pressure from business groups.

But workers and union leaders in Missouri put up a fight. They gathered about 300,000 signatures – more than double the number needed – to freeze the law and put it on the ballot for voters to decide. On Tuesday, voters rejected the bill.

Tuesday’s election marks the first time voters have overturned a right-to-work law through a ballot referendum since Ohio did something similar in 2011. No other state has even tried to in recent years. It’s also a major victory for the US labor movement at a time when Republican leaders, big businesses, and the courts have doubled down on their attempts to weaken the influence of labor unions and the workers they represent. And after the US Supreme Court’s June ruling in Janus v. AFSCME, which mandated right-to-work rules for all government unions, Missouri’s vote is a sign that unions are far from dead. They might even see a revival.

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Wage theft “epidemic” in construction. Taxpayers paying the tab. (NV)

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AUTHOR – Dana Gentry
PUBLISHED – July 27, 2018

A new ad from Attorney General Adam Laxalt’s gubernatorial campaign alleges his opponent, Steve Sisolak, awarded a public works job to Las Vegas Paving, a union company, for $100 million, over a non-union contractor who bid $4.6 million less.

But construction industry experts contend lower bids generate projects that are too often built on the backs of Nevada workers who are enduring a wave of wage theft on public works jobs. And your tax dollars are fueling it.

“From what I’ve seen, if you point out a project, someone is cheating on it,” says Evangelina Diaz of the Painters’ Union. “It’s crazy out there. It’s a dirty business.”

“It’s the only way the contractor can submit a lower bid. A gallon of paint is going to be the same. Brushes, rollers – materials are going to cost the same. It’s the wages where they can cheat,” Diaz says.

“There is a company, Vision Drywall, that paid over a million dollars years ago in back wages and they are still in business. Then we caught them again and they paid several hundred thousand dollars. That’s just the cost of doing business for them,” Diaz says.

Federal court records indicate Vision Dry Wall entered into a confidential settlement in 2014 with workers who claimed they were intentionally and systematically denied overtime. The Nevada Labor Commission reports eight complaints filed against the company, the last in 2015.

Nevada law requires prevailing wages be paid on public works jobs of $250,000 or more, while all federal jobs of $2,000 or more require prevailing wage.

Las Vegan Guy Bennallack owns a number of construction companies in a variety of trades including painting and roofing, and has contracted on numerous public works jobs.

Bennallack was convicted of 13 counts of tax evasion in 1994. Court records from his failed appeal reveal how far Bennallack was wiling to go to save money by defrauding the government.

“Here, appellant created false documentation to hide his illegal conduct; provided false W-2 forms to his employees for them to prepare false returns; used Southern Distributors as a secret supplier of cash by directing them to issue rebate checks to appellant; evaded detection by instructing Southern Distributors to issue the checks in amounts less than $10,000; maintained two sets of books in order to conceal sales; withheld information from his tax-advisors in order to falsify his returns; withheld invoices from the IRS.”

Today, Bennallack says he has 500 jobs going on at one time. He says cheating employees, who he says are well-versed in the law, would be impossible.

“I’m telling you there’s no way to do that. The penalties are far worse than anything you would ever gain,” he says. Asked what the penalty would be, Bennallack admits workers would be paid the amount they would have legally been due, but likely no more.

A spokeswoman for the state says the Bennallack-owned Painting Company has had two wage and hour complaints and two prevailing wage cases prior to 2012.

The Original Roofing Company, owned by Bennallack, had one wage and hour complaint in 2016.

Nevada’s Labor Commissioner is tasked with ensuring workers are paid fairly, and has an online list of contractors who are prohibited from bidding on prevailing wage projects because of prior violations.

The law allows the Labor Commissioner to assess a $5,000 administrative penalty against wage violators and the discretion to increase it in certain cases.

Contractors who are assessed an administrative penalty by the state may be prohibited from being awarded a public works contract for three years for a first offense and five years for subsequent offenses.

The Attorney General, who is notified of all violations, has the ability to prosecute. Adam Laxalt’s office did not respond to the Current’s request for information on wage theft prosecutions.

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