New Jersey Is About to Take Another Step Towards Eliminating the Use of Independent Contractors by Providing Them with Benefits (NJ)

Posted by National Alliance for Fair Contracting on

October 30, 2019
J.D. Supra

Executive Summary: The New Jersey Legislature appears poised to pass S67, the Portable Benefits Act for Independent Contractors, in the upcoming lame-duck session. If passed, the Governor is expected to sign the bill before the end of the year. The bill doubles down the current administration’s effort to end misclassification of independent contractors by creating a financial disincentive to utilizing contractors. Though the intent of the bill seems to be directed at online companies such as Uber, Lyft, Amazon, Handy and others, the impact will affect any business that relies on contractors. The bill also appears to subtly create new opportunities for organized labor through the creation of “Qualified Benefit Providers.” At least half of the members of the Boards of these funds must be worker representatives or workers. Though not in its final form, it appears some form of this bill will soon become law.

Summary of Bill Provisions: In sum, the Bill requires any entity that utilizes 50 or more contractors in 12 consecutive months within the state of New Jersey to contribute funds to a Qualified Benefit Provider for the benefit of the independent contractors. The amount contributed must equal 25 percent of the contractor’s total fee or $6.00 per hour, prorated to ten cents per minute. Contributions must be made on no less than a monthly basis.

Contributions are made to Qualified Benefit Providers, who will create trust funds to provide contractors with workers’ compensation and other benefits, which are to be selected by the contractors. Qualified Benefit Providers may use up to five percent of the amounts collected to cover administrative costs. The New Jersey Department of Labor (NJDOL) will determine who may be a Qualified Benefit Provider utilizing the following criteria: 1) must be a nonprofit, 2) half the board must consist of workers or organizations representing workers, 3) board members may not have any interest in entities that utilize contract workers, 4) the organization must work toward maximizing benefits for workers, 5) the board has a fiduciary responsibility to the workers and 5) the organization must demonstrate adequate viability and financial sufficiency. These criteria seem to place organized labor in a prime position to be selected to run these new trust funds.
The bill only exempts four types of contractors: real estate agents; financial product salespersons; anyone subject to a collective bargaining agreement; or anyone who solicits orders as a sales representative of the principal entity. NJDOL will be responsible for monitoring, overseeing these new benefit providers, ensuring workers’ compensation insurance is provided, and establishing a fee to charge entities utilizing contractors to fund their efforts. Failure to comply with this Act may be enforced by either the NJDOL or a private right of action on behalf of the contractors.

Employers’ Bottom Line: Although it is unclear what the language of the final law will be, it is clear that New Jersey is aggressively attempting to eliminate reliance on independent contractors. We expect this legislation to become New Jersey law soon, which will substantially increase the cost of utilizing independent contractors within New Jersey.

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Multnomah County takes on wage theft (OR)

Posted by National Alliance for Fair Contracting on

Apr 16, 2019 | Workers Rights
By Don McIntosh

A proposed pilot program could make Multnomah County a trailblazer in fighting wage theft in construction. To make the case for it, a panel of union members and advocates addressed the County Commission April 9 about the many ways unscrupulous contractors cheat workers out of wages – and why the complaint-driven process at Oregon’s understaffed Bureau of Labor and Industries isn’t enough to stop it. [Watch their presentation here.]

Wage theft is the underpayment or nonpayment of wages or benefits that workers are legally entitled to receive. It’s not uncommon in construction – even on taxpayer-funded public construction projects that employ compliance staff to guard against it. Those staff need help, several union representatives told commissioners.

And they’d get that help under the proposal put forward by Multnomah County Chair Deborah Kafoury’s office. As detailed in a budget memo, the proposed Labor Compliance Pilot Program would allow knowledgeable members of the public, such as union representatives, to volunteer to help enforce prevailing wage and wage and hour laws on County construction projects. The volunteers would have access to the certified payroll records that contractors submit to the County – and be allowed to visit worksites to interview workers.

Modeled on a program at Los Angeles Unified School District, the pilot project would assign a half-time-equivalent staff person to train and support 10 volunteers who would visit the County’s construction projects.

…

Thirteen ways to cheat your employees out of wages

Wage theft is far too common in construction. Here are some ways crooked contractors do it.

  • Don’t pay them. Hire a day laborer for a day’s work, then stiff them when the work is done.
  • Don’t pay for breaks. Tell them the company’s in too big a hurry for them to take meal and rest breaks.
  • Don’t pay them overtime. You can’t afford time-and-a-half.
  • Tell them they’re independent contractors. That gets you out of paying employer Social Security tax, unemployment insurance, workers’ comp, and maybe even minimum wage.
  • Don’t pay them for time in transit. Tell them to pick up the company truck and equipment and drive 50 miles to the work site, but pay them only for the hours they work on site.
  • Call them apprentices. Pay your journeymen the apprentice wage.
  • Work them off-the-clock. Ask them to do a little prep work before they clock in, or a little cleanup after they clock out.
  • Ask for kickbacks. You gave them the prevailing wage job, didn’t you? Have them pay some of those higher wages back to you, or to the foreman, or labor broker.
  • Pay piece rate. So what if it ends up less than minimum wage?
  • Deduct things from their wages. Why should you pay for the tools or supplies they need to do the job?
  • Misclassify them. On a prevailing wage job, pay them at the laborer rate while they do carpenter or painter work.
  • Leave off benefits. Prevailing wage includes money for benefits, but who can afford to offer them?
  • Lie about the number of hours they work. Pay the prevailing wage. Just tell the project superintendent that your employees worked half as many hours as they really did.

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LA Task Force Says “GAME ON” in Fight to Stop Misclassifying Workers (LA)

Posted by National Alliance for Fair Contracting on

10/26/17
WorkersCompensation.com

Baton Rouge, LA (WorkersCompensation.com) – It’s a hidden crime with thousands of unsuspecting accomplices, a multi-million dollar payroll, and an unfair business advantage to the bad guys. But a team of state and federal agencies are working together to tell companies that if they misclassify workers, then it is GAME ON.

GAME ON is the acronym for Government Against Misclassified Employees Operational Network, a unique task force found only in Louisiana. Partnering together are the Louisiana Workforce Commission (LWC)’s Unemployment Insurance and Office of Workers’ Compensation divisions and the Louisiana Department of Revenue, with cooperative agreements with the Internal Revenue Service and the U.S. Department of Labor’s Wage & Hour Division.

“We are putting companies on notice that misclassifying workers won’t be tolerated in Louisiana,” said LWC Executive Director Ava Dejoie. “The practice isn’t fair to the unsuspecting workers who are cheated out of critical benefits and protections, and it’s not fair to the thousands of businesses who ‘play by the rules’ but are undercut by companies that intentionally trim labor costs by misclassifying.”

Misclassification refers to a worker who by law is an employee, but is incorrectly classified as something other than an employee. Most misclassifications usually involve workers labeled as independent contractors.

The GAME ON task force has focused efforts on the industries historically known to use independent contractors to a large degree, namely construction, health care, hospitality, personal services and staffing companies.

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Why You Should Care About Compliance

Posted by National Alliance for Fair Contracting on

Forbes.com
POST WRITTEN BY Gene Zaino
JUL 27, 2017 @ 08:00 AM

As the on-demand economy grows, independent professionals are becoming a larger and more essential part of the workforce. The number of self-employed Americans rose to nearly 41 million in 2017 and is predicted to rise to 47.6 million in just five years. This shift away from traditional employment allows independents to work on their own terms while organizations that engage them fill skills shortage gaps, gain staffing flexibility, and realize lower costs.

Coupled with this growth, however, we’ve seen an increase in federal and state government efforts to combat employees being misclassified as independent contractors. In June, the Department of Labor (DOL) removed the Obama-era guidance about joint employment and independent contractors. While it has been widely reported that this withdrawal does not change the legal responsibilities of employers under the Fair Labor Standards Act (FLSA), it may indicate that the current administration is taking a more traditional view of employment relationships, as opposed to past interpretation of these documents that assumed most workers were employees.

We’ve seen the results of these actions in the increase in class-action lawsuits, such as Citigroup’s $325,000 settlement for misclassification of technology workers, Zenefits’ $3.4 million payment to misclassified employees for unpaid overtime, and FedEx’s $228 million settlement for misclassification of delivery drivers.
Lawsuits like these are just one of many very real consequences of misclassification, but avoiding a misclassification suit isn’t the only reason to care about how one should engage independent talent.

Here are three reasons compliance should be top of mind for all organizations that engage independent professionals.

Compliance Aids In Proper Classification

Classification of independent contractors is not a clear-cut process. Federal, state and local government agencies use a variety of tests to determine whether or not a worker is a true independent contractor.

Just because independent contractors call themselves an independent contractor doesn’t mean they are one in the eyes of the law. Independents come from various backgrounds and experience levels and have different levels of self-employability. When engaging independent talent, it’s up to organizations to make a final determination of classification, but because tests vary from agency to agency and because regulations are constantly changing, these decisions can be complex.

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Are Georgia firms cheating 1,000s of workers out of benefits, health care? (GA)

Posted by National Alliance for Fair Contracting on

By Jon Greenberg on Thursday, August 10th, 2017 at 2:51 p.m.

With health care policy in limbo in Washington, the politicians who would like to be Georgia’s next governor are staking out their own policy outlines. Democratic State Rep. Stacey Evans favors expanding Medicaid, but said the state could take other action as well.

“There are thousands of Georgia workers that are misclassified as independent contractors, so that their employers can wrongfully deny them the benefits that they deserve, including health care,” Evans said Aug. 5. “By expanding Medicaid and classifying workers appropriately, insurance will be available to hundreds of thousands more Georgians.”

We decided to check Evans’ number of misclassified workers, and found she’s on safe ground.

Defining misclassification

Some businesses avoid treating workers as employees by calling them an independent contractor. The person might work only for that one business, use equipment the business provides and do exactly what the business tells him or her to do, and yet be labeled as if the person was in business for themselves.

The advantage for companies is they avoid paying a number of employment taxes, including Medicare, Social Security and unemployment insurance. If they offer health insurance, they would sidestep that too.

As Georgia’s Department of Labor put it, “independent contractors are not independent just because that is what their employer calls them, because that is what they call themselves, or because they sign an ‘independent contractor agreement.’ Independent contractor status depends on the underlying nature of the work relationship.”

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CONSTRUCTION FIRMS ORDERED TO PAY $2.4 MILLION IN BACK WAGES

Posted by National Alliance for Fair Contracting on

Two entwined Massachusetts companies deliberately misclassified hourly workers as independent contractors

December 06, 2016

The Labor Department said today that Anderson Dos Santos, owner and president of AB Construction Group and Juliano Fernandes, general manager at Force Corporation cheated 478 construction workers out of overtime wages and employment benefits.

The Labor Department said Force prepared and controlled the payroll and payment procedures for both companies. AB Construction was formed to supply Force with labor. The pair used a combination of payroll checks and cash and check payments to pay their employees straight time when overtime pay was required and kept inadequate and inaccurate time and payroll records, in violation of the Fair Labor Standards Act.

“To be cheated out of wages and denied other workplace protections by an employer who deliberately flouts the rules compounds the struggles too many middle-class Americans already face,” U.S. Labor Secretary Thomas E. Perez said in a statement. “Workers who play by the rules deserve nothing less than to be paid what they are owed.”

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De Blasio’s Executive Order Will Expand Living Wage Law to Thousands More

Posted by National Alliance for Fair Contracting on

By MATT FLEGENHEIMER   SEPT. 29, 2014

Mayor Bill de Blasio plans to sign an executive order on Tuesday significantly expanding New York City’s living wage law, covering thousands of previously exempt workers and raising the hourly wage itself, to $13.13 from $11.90, for workers who do not receive benefits.

The change is also intended to frame a looming debate in Albany, where Mr. de Blasio hopes to win the authority to set the citywide minimum wage at the same amount. If Mr. de Blasio succeeds in matching the minimum wage to the living wage, all hourly workers in the city would earn more than $15 by 2019, according to the city’s projections.

The executive order will immediately cover employees of commercial tenants on projects that receive more than $1 million in city subsidies going forward. Workers who receive benefits such as health insurance will earn $11.50 an hour, compared with $10.30 before.

While cautioning that it was “notoriously difficult to develop projections related to economic development,” the administration estimated that about 18,000 workers would be covered over the next five years, roughly 70 percent of all the jobs at businesses that will receive new financial assistance from the city’s Economic Development Corporation.

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