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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.

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Construction Company Operators Plead to Fraud, Labor Theft (CA)

Posted by National Alliance for Fair Contracting on

by Construction Citizen
May 27, 2019

A brother and sister who run a construction company in Paramount have admitted to their roles in a $6 million workers’ compensation fraud and labor theft scheme, the Los Angeles County District Attorney’s Office announced on April 24.

They both admitted an allegation of committing fraud and embezzlement that resulted in a loss of more than $500,000 to the State Compensation Insurance Fund (SCIF).

Sentencing is scheduled for Oct. 22, 2020, in Department 37 of the Foltz Criminal Justice Center.

Under the terms of a negotiated plea agreement, the defendants must pay restitution of $6.3 million and more than $5,000 in investigative costs to SCIF. They also are required to pay $30,000 in fines, have one year of electronic monitoring, complete 500 hours of community service, and comply with SCIF in future business dealings.

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Standing up to tax fraud in the construction business (MA)

Posted by National Alliance for Fair Contracting on

May 29, 2019
By Steve Joyce
Special to the Reporter

Today, one in five contractors in the construction industry commits tax fraud, resulting in $2.6 billion is lost in federal and state income. That’s why it’s more urgent than ever to combat construction industry tax fraud, an unjust and immoral affront to the people of Massachusetts.

Construction tax fraud often manifests itself through dishonest bookkeeping and worker exploitation. Approximately 1.2 million workers are paid ‘off the books’ in the US annually. Without employment records to hold them accountable, contractors have been known to minimize or steal wages at the completion of a job.

And when a contractor does bother to go through the with paperwork, they frequently misclassify workers as “independent contractors.” The workers do the same job as a fulltime employee, but shoulder tax obligations that the employer should be paying. Nearly 300,000 construction workers are misclassified in this manner each year.

These practices allow contractors to sidestep jobsite safety, skirt around workers compensation premiums, and skip out on payroll taxes and critical benefits like Social Security, overtime, unemployment, and retirement.

In Massachusetts, denied payments and overtime to workers and minimum wage violations cost employees $700 millionannually. In a 2018 fair labor report, the Massachusetts attorney general reported restitution and penalties of $9.6 million as a result of wage theft, worker misclassification, and exploitation of young workers. Construction alone resulted in 61 citations, and generated $1.5 million in restitution and penalties.

Honest employers pay the price of these schemes, too. When shady contractors illegally skip taxes and shortchange workers, the prices they offer look like a 30% savings on labor costs. Businesses that do their work by the book, follow the rules, and pay their fair share of taxes can’t bid competitively with artificially low prices in the marketplace. Cheap, cheating contractors are just like a bag of chips that costs a dollar less but is twice as full of air.

In Massachusetts, recent estimates show that $16.5 million is recovered annually in lost payroll taxes and unemployment insurance. Funds like these contribute to tax pools that eventually help pay for things like public services, meaning when taxes go unpaid, the public is cheated. Workers, business owners, and the people of our state lose out when funding for schools, roads, bridges, first responders, veterans, and Medicaid and Social Security are harmed.

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Steve Joyce is the political director of NERCC and a member of Carpenters Local 327. For more information on the New England Council of Carpenters, visit nercc.org or stoptaxfraud.net.

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Case study links inexperience to injuries in Tennessee construction industry (TN)

Posted by National Alliance for Fair Contracting on

Safety & Health Magazine
May 29, 2019

Knoxville, TN – Nearly half of the construction workers in Tennessee who were injured over a recent two-year period had been on the job less than a year, according to a recent case study report from the Center for Construction Research and Training – as known as CPWR.

Analyzing more than 9,000 statewide workers’ compensation claims for injuries that occurred in 2014 and 2015, researchers at the Construction Industry Research and Policy Center at the University of Tennessee found that 44.5% of the claims were from workers who had less than a year of experience in construction, while 30.1% were from workers who had less than six months of experience.

The biggest takeaway is “the persistence of this injury-tenure relationship across time,” Edward Taylor, study author and CIRPC executive director, told Safety & Health. “We saw in the literature that 100 years ago, a steel company reported that their employees with less than 30 days tenure had an injury rate of 12 times the rest of their employees. Here we are in 2019 and the results of our study show, in construction, 44.5% of injuries occur to employees in their first year.”

According to 2016 national data from the Bureau of Labor Statistics, 24% of construction workers are injured during their first year on the job. Likewise, the report notes that the findings are comparable to data in states with similar populations. In Washington, over the same two years, 47.5% of injuries occurred among construction workers who had less than a year on the job, while 37.1% of the injured had been on a job six months or less. In Ohio, those percentages were 45.6 and 33.6, respectively.

Injuries to the lower back, finger, shoulder and hand were most common – accounting for 55.8% of the top 10 body parts injured.

Taylor and his colleagues recommend that employers put additional emphasis on the onboarding of new employees, along with pairing up new workers with an experienced, trusted mentor. “It’s especially important that [workers] learn to recognize hazards as part of that educational process,” he said.

In addition, wearing personal protective equipment can help reduce the number of eye and hand injuries, along with cuts. “Those might be easily preventable,” Taylor said.

(See Article)

The cost of construction and the state’s prevailing wage (NY)

Posted by National Alliance for Fair Contracting on

By JEFF COLTIN
JUNE 4, 2018

Anybody who has seen Gov. Andrew Cuomo give a speech in the past few years knows that New York is in the midst of a building boom.

There are marquee projects like the Gov. Mario M. Cuomo Bridge over the Hudson River or the renovation of LaGuardia Airport in Queens, and there are smaller projects like street enhancements in downtown Watkins Glen or a proposed Metro-North station at Woodbury Common Premium Outlets.

These projects are mostly publicly financed and built by private contractors – and in the midst of this building boom, some state legislators are hoping to clarify what those contractors should be paid.

The state constitution says that construction workers on state-financed projects should be paid the prevailing wage – a set rate of pay and benefits. Prevailing wage rates are maintained by the state Labor Department and vary by location and job. For example, a structural ironworker in Albany County would make $30.50 an hour plus some $27 an hour in supplemental benefits on a public project, while one in New York City would make nearly $52 an hour, plus more than $70 an hour in supplemental benefits. It’s meant to prevent contractors from undercutting wages, and to ensure workers on public projects are getting paid fairly.

A bill is being considered that would expand the number of construction projects subject to the state’s prevailing wage rates. In practice, the bill is meant to clarify the definition of “public work,” legislating that even largely private projects that receive tax breaks or other government subsidies are still required to pay a prevailing wage to workers. The bill’s sponsors say that judicial rulings have caused loopholes that allow contractors to not pay full wages.

Advocates for workers say the state is paying for poor working conditions. “Too often in construction, we see a race to the bottom where unscrupulous contractors are receiving taxpayer dollars to subsidize development with little to no standards in place for the workers on these projects,” said Patrick Purcell, executive director of the Greater New York Laborers-Employers Cooperation and Education Trust, in a press release supporting the legislation.

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See Related Article: New York State Prevailing Wage Law: Defining Public Work,

Fred B. Kotler, J.D., Cornell University ILR School (March 2018)