Department of Labor v. Department of Revenue Services: Employee, Independent Contractor, or Both (CT)

Posted by National Alliance for Fair Contracting on

February 7, 2019

For years now, the Connecticut Department of Revenue Services (DRS), the Connecticut Department of Labor (DOL) and the Internal Revenue Service (IRS) have been targeting Connecticut employers for worker misclassification audits. When a misclassification is discovered, these government entities can share information about employers who have misclassified employees as independent contractors. Thus, when one of these government entities finds a misclassification during an audit, audits from the other governmental entities are likely to arise.

When a misclassification is discovered, the employer will be subjected to various federal and state taxes, penalties and interest charges. A misclassification occurs when an employee is incorrectly treated as an independent contractor. As a result, the worker does not have income taxes or payroll taxes withheld from his/her pay and is not issued a Form W-2. Businesses aren’t the only employers targeted for such audits. Charitable organizations, public school systems, cities, towns, and even State departments are subject to audit.

The IRS and the DRS have historically used a 20-factor test to determine if a worker is an employee or independent contractor. The factors are used to determine if the service recipient has the right to control the service provider, not only as to the result to be accomplished, but also as to the details and means by which that result is accomplished. If such control is found, the worker is deemed to be an employee. The 20 factors are used to determine if the service recipient has behavior, financial, or relationship control of the worker. We refer to this as the “IRS Control Test”. The DRS uses the IRS Control Test.However, the DOL, uses a stricter three-part test for determining if a worker is an independent contractor referred to as the “ABC Test.”

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This results in the absurd situation in which a worker is treated as an independent contractor for income and payroll tax purposes and as an employee for DOL purposes, such as unemployment insurance, workers compensation, fringe benefits and labor and employment laws.

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PLAs good for construction industry

Posted by National Alliance for Fair Contracting on

KIMBERLY GLASSMAN
MARCH 5, 2018

On Feb. 12, an op-ed in the HBJ (“State must end project labor agreements”) by the Connecticut chapter of the Associated Builders and Contractors presented an over-simplified and inaccurate description of project labor agreements.

A project labor agreement, or PLA, is a pre-hire agreement that sets construction project employment terms. They’re often used on complex projects that require the services of multiple contractors and subcontractors over a sustained period of time. PLAs are a common procurement method for the state of Connecticut, municipalities and private developers.

The Associated Builders and Contractors (ABC) likes to tout their membership numbers. However, they represent only 1 percent of construction companies in the United States. According to the National Labor College, a meager 22,260 apprentices were enrolled in ABC programs, compared to over 420,000 apprentices enrolled in union-funded programs.

Though we appreciate ABC’s attempt to paint the use of PLAs as a partisan issue by invoking Gov. Malloy’s decision to utilize the agreements, they fail to disclose other elected leaders’ use of them. Republican Mayor Mark Boughton recently signed a PLA for Danbury High School. Former Republican Mayor John Harkins signed PLAs for both the Victoria Soto Elementary School and Stratford High School. And former Gov. John Rowland signed a historic PLA on Adriaen’s Landing in Hartford.

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Prevailing wage: Good for workers, good for business (CT)

Posted by National Alliance for Fair Contracting on

AUGUST 28, 2017
KIMBERLY GLASSMAN

Gov. Malloy and the legislature are considering deep cuts to municipal aid in order to rectify an over $3 billion budget deficit. Connecticut’s Conference of Municipalities (CCM) is rightfully concerned, and looking for other means to keep municipal budgets balanced. One of its main proposals is to raise the thresholds as to when our state’s prevailing wage law is triggered on public construction projects.

Connecticut’s current prevailing wage thresholds are $400,000 for new construction and $100,000 for renovations. If a project falls below that threshold, then workers only have to be paid the minimum wage. When CCM proposes an increase to the thresholds, they’re proposing that more construction workers be paid the minimum wage rather than the family sustaining prevailing wage.

The truth is CCM’s proposal will make Connecticut less competitive. Our neighboring states, Massachusetts and New York, have a zero threshold on prevailing wage, meaning that the wage protection is triggered on dollar one on public works projects. Rhode Island’s prevailing wage threshold is $1,000, which is less than the federal threshold of $2,000. And New Jersey’s threshold is $15,444. We don’t want to lose skilled workers to our surrounding states.

Opponents to prevailing wage perpetuate a misconception that the wage protection somehow only benefits union workers or union companies. But that is not true. Non-union contractors also perform work on publicly funded projects. And all construction workers, regardless of union affiliation, benefit from the prevailing wage law. Prevailing wage rates are based on surveys conducted by the U.S. Department of Labor of what local contractors actually pay workers on public works projects in the state.

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North Branford construction company fined for filing false tax return, underfunding retirement plan

Posted by National Alliance for Fair Contracting on

POSTED: 12/04/15, 7:18 PM EST

 

NEW HAVEN >> A North Branford-based construction company was sentenced Friday to three years of probation and hit with a $200,000 fine for underfunding its retirement plan and filing a false tax return, federal officials said.

Cherry Hill Construction Inc. pleaded guilty in January to one count of filing a false tax return, and one count of making a false statement in relation to documents required by the Employee Retirement Income Security Act of 1974, according to a release from the office of Connecticut U.S. Attorney Deirdre M. Daly.

According to court documents and statements made in court, the construction company provides statewide service in site development, on-site crushing, trucking and demolition, and as well as roll-off Dumpsters, topsoil, aggregates and landscaping.

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