TENNESSEE DRYWALL WORKERS WIN UNPAID OVERTIME IN DOL SETTLEMENT (TN)

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EMPLOYEES MISCLASSIFIED AS INDEPENDENT CONTRACTORS SHORTED ON WAGES, WORKERS COMPENSATION, SAFE WORKPLACES

November 21, 2018, 1:15PM. By Anne Wallace

Hermitage, TN – On October 19, 2018, the U.S. Department of Labor announced that Tennessee contractor, Vasquez Drywall, had agreed to pay $103,300 in back wages to workers misclassified as independent contractors and a $2,424 civil penalty. Employment misclassification is rampant in the construction industry in Tennessee and throughout the country. The practice deprives employees of overtime pay, workers compensation insurance and basic workplace safety protections. Undocumented construction workers are particularly at risk because they are unlikely to bring lawsuits or seek other enforcement action to preserve their rights.

VASQUEZ DRYWALL — PART OF A BIGGER PROBLEM

DOL Wage and Hour Division investigators found that Vazquez Drywall violated the Fair Labor Standards Act’s (FLSA) overtime requirements by inaccurately classifying employees as independent contractors and paying them piece rates or flat salaries regardless of whether they worked more than 40 hours a week. The Division also found the employer failed to keep accurate payroll records for these workers. “Even if employees are paid piece rates, or on salaries,” noted Wage and Hour Division District Director Nettie Lewis, “they are typically still due overtime when they work more than 40 hours in a week.”

Since the wage order and fine were the products of a settlement, the details of what actually occurred and how many workers were affected remain unclear. What is clear, however, is that underpayment is a chronic problem in the Tennessee construction industry.

In June 2018, workers brought a federal lawsuit against two subcontractors involved in the construction of a new J.W. Marriott in downtown Nashville. The lawsuit claims that Mr. Drywall and First Class Interiors violated the FLSA by failing to pay workers the federal minimum wage or overtime pay for hours in excess of the normal 40-hour work week. It alleges that the company “willfully filed fraudulent information returns [with the IRS] classifying the plaintiffs as independent contractors rather than employees.”

In 2013 the Nashville Post reported that “[b]ased on estimates the [Tennessee Department of Labor and Workforce Development] provided, there are between 21,990 and 36,680 misclassified and unreported construction industry workers in Tennessee. Misclassified and unreported workers are estimated to range from 11 percent to 22 percent of all workers in the construction industry statewide.”

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Alaska governor signs comp reform bill (AK)

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Louise Esola
8/28/2018 – 1:03:00 PM

Alaska Gov. Bill Walker on Friday signed into law a bill that aims to reduce administrative costs in the workers compensation system and provide a clear definition of independent contractor, thus helping to combat worker misclassification.

H.B. 79 also creates an interim legislative workers compensation working group tasked with reviewing the workers compensation system.

“Injured workers and employers will both benefit from these changes to Alaska’s workers compensation system,” Gov. Walker said in a press statement. “We are cutting costs while making workers compensation work more efficiently.”

Labor Commissioner Heidi Drygas said worker misclassification is a growing problem in the state. “Providing a clear definition of independent contractor will help businesses be successful and in compliance, and will help workers clearly understand what constitutes independent contractor status,” she said in the statement.

The Alaska Truckers Association, the Alaska chapter of the National Federation of Independent Businesses, Painters Local 1959, and the Alaska Homebuilders Association all testified in support of the bipartisan legislation, according to the statement issued by the governor’s office.

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State of Alaska Holds Employer Accountable for Fatal Wall Collapse

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10/18/17
WorkersCompensation.com

Anchorage, AK (WorkersCompensation.com) – Contractor Mark Welty, d/b/a North Country Services, has withdrawn his contest of $280,000 in fines assessed by the Alaska Department of Labor and Workforce Development. The department cited him for hazards leading to the workplace death of his employee, Nicholson Tinker. Mr. Welty unlawfully claimed that Mr. Tinker as an “independent contractor” rather than an employee, and willfully exposed Mr. Tinker to unsafe working conditions. The citations and fines will stand as originally imposed by Alaska Occupational Safety and Health (AKOSH).

“Nothing can bring back Nicholson Tinker. I hope this fine sends a clear message. When employers like Mark Welty endanger their workers and unlawfully classify them as independent contractors, our department will seek the strongest penalties possible,” said Alaska Labor Commissioner Heidi Drygas.

On September 30, 2016, Mr. Tinker and his coworker were demolishing wooden stairs and walkways attached to a 60-foot retaining wall at an Anchorage residence. As demolition neared completion, the sole remaining structural support was removed, causing a 29-foot section of the five-foot tall cinderblock wall to collapse on Mr. Tinker, who died from his injuries. This fatality would not have happened if North Country Services owner Mark Welty had taken basic steps to protect the safety of Mr. Tinker and other employees. Instead, Mr. Welty accepted the violations as willful, meaning he acted with plain indifference towards the health and safety of his employees. The violations addressed several critical failures during the planning phase of the job, including lack of proper structural assessment before demolition, inadequate or lack of bracing and shoring for the wall and retained earth, and a total lack of safety training for employees.

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

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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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The St. Petersburg Wage Theft Ordinance: New Notice and Poster Requirements

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Monday, June 26, 2017

The City of St. Petersburg, Florida, recently amended its wage theft ordinance to require employers to provide pay notice to employees at the time of hire and to display “in a location accessible to all employees” a poster about wage theft. See St. Pete. Code, Chap. 15, Art. III, Sec. 15-40, et seq. These requirements are not yet in effect. As detailed below, the effective date is on hold pending the completion of a memorandum of understanding by the City, which is engaging a “community-based” organization to “implement the purposes of this article.”

The ordinance defines the term “employee” broadly to mean a “natural person who performs work within the geographic boundaries of the City while being employed by an employer . . .” including “a person who performs work that benefits an employer located within the City even though the employee may have performed work outside of the City.” The ordinance excludes “any bona fide independent contractor,” stating that the term “independent contractor” “shall have the same meaning as in the Internal Revenue Code, Fair Labor Standards Act, and implementing federal regulations, administrative interpretations and guidance” (though “independent contractor” is defined differently by the Internal Revenue Service and U.S. Department of Labor).

Background

On December 15, 2016, the St. Petersburg City Council passed several amendments to the City’s wage theft ordinance. Under Sec. 15-44, there are three new requirements for employers. Employers must provide a “written notice” to employees at time of hire, including a “template summary” summarizing the employee’s rights (available from the City), written notice of changes in pay, and a poster (available from the City). Sec. 15-44(a)-(d). There is also a $500.00 “per violation” penalty for an employer’s failure to adhere to any part of the ordinance. Sec. 15-44(e). The term “violation” is not defined.

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Drivers Strike Against XPO Logistics in Latest Misclassification Fight

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RYAN ZUMMALLEN
JUNE 19, 2017

Every day Jose Herrera picks up his Kenworth T600 truck from a rented lot in Moreno Valley, Calif., and fights traffic on the 60 Freeway to the office of his employer, XPO Logistics, 70 miles away in Commerce.

The commute puts wear and tear on the vehicle, leads to pricey fuel bills and accelerates the maintenance schedule. But Herrera doesn’t have a choice. XPO, one of the largest shipping companies in the world, doesn’t allow drivers who own their trucks to park overnight at that location, he said.

“You have to spend more money to keep the truck going,” Herrera said.

Herrera was one of about a dozen drivers on a picket line in front of the XPO office Monday. The strike involves more than 150 drivers at XPO’s Commerce location, said Santos Castaneda, an organizer with the International Brotherhood of Teamsters, which is lending support. Drivers also struck at XPO locations in nearby Rancho Dominguez and farther south in San Diego.

It’s the latest effort from drivers to put pressure on shipping companies in the ongoing nationwide dispute over driver claims that they are misclassified as independent contractors rather than employees of the company. Monday’s strike is the 15th at Los Angeles ports in the last four years.

“There has been no impact to customers,” said Erin Kurtz, a spokesperson for XPO.

“We know firsthand that the majority of owner-operators prefer to work as independent contractors, and we will continue to advocate for their right to do so,” XPO said in a statement.

Truckers have filed more than 800 employee misclassification wage claims since 2011 and have been awarded about $40 million over 300 cases, according to the California Labor Commissioner’s office. About 200 cases are still pending, according to the state agency.

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Employers Misclassifying Workers Face Joint Federal/State Investigations

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Brian J. Hoffman, The Legal Intelligencer
November 22, 2016

Employers have often played “fast and loose” with regulations governing workforce classification, tempted by the significant savings associated with independent contractor treatment. As such, in August 2016, Pennsylvania became the 35th state to reach an agreement with federal authorities to coordinate inquiries and share enforcement data in wage and hour investigations.

The Pennsylvania Department of Labor and Industry (PA DOL) and the United States Department of Labor (“US DOL”) inked a Memorandum of Understanding which serves to facilitate the exchange of information during enforcement actions. Historically, a particular focus of both the US DOL and PA DOL has been the misclassification of employees as independent contractors. Previously, an investigation by the PA DOL or US DOL of an employer would NOT necessarily lead to a reciprocal investigation by the other party. Now, given the execution of the Memorandum of Understanding, employers should expect that a wage and hour investigation by one department will likely lead to an investigation by the other. As such, employers challenged on employment classification practices while under audit will likely see overall liabilities increase during any given inquiry, as both federal and state taxes and penalties will be imposed.

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Union: Drywallers working in Douglas County Courthouse were misclassified, denied appropriate compensation

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By Christopher Burbach | 

About 75 laborers and community advocates demonstrated outside the Douglas County Courthouse on Tuesday to demand enforcement of the Nebraska Employment Classification Act.

Their spokesman, union representative Steven Mulcahy, said drywallers on a courthouse renovation job had been misclassified as independent contractors instead of employees.

That meant that the workers were denied overtime pay, and that their employers didn’t pay workers’ compensation or payroll taxes for them, said Mulcahy, of the North Central States Regional Council of Carpenters.

“Our goal is to get some enforcement, because without that, it’s not going to stop,” Mulcahy said. Contractors on the $15 million courthouse renovation could not be reached for comment Tuesday.

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AZ contractor ordered to pay $48K in worker misclassification case

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By Kim Slowey
July 28, 2016

Dive Brief:

  • The U.S. Department of Labor has ruled that Arizona homebuilder DCO Custom Builders must pay $48,000 in back wages and penalties for misclassifying workers as independent contractors and not paying employees at overtime rates when required – in violation of the Fair Labor Standards Act, according to the Arizona Republic.
  • The DOL investigated DCO for two years and ordered the contractor to pay 31 employees $24,255 in unpaid overtime, additional penalty wages and restitution in the amount of $4,604.
  • Despite DCO’s actions, a DOL spokesman said the company is now in compliance with fair labor standards, and DCO managing owner Daniel Osete said the company was unaware it was violating a law and has taken internal measures to make sure the same situation doesn’t happen again.

Dive Insight:

Eric Murray, director of the DOL’s Phoenix Wage and Hour Division office, said misclassifying workers as independent contractors “cheats” employees and taxpayers alike. Murray told the Arizona Republic, “As this outcome shows, we are committed to protecting the rights of construction workers and will use every tool available to hold employers accountable.”

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Independent Contractor Misclassification: A Rising Tide

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Joeseph E. Vaughan & Thomas R. Bond, The Legal Intelligencer
July 21, 2016

Editor’s note: This is the first in a two-part series.

The U.S. Department of Labor has recognized the misclassification of employees as independent contractors as one of the most serious problems facing affected workers, employers and the entire economy. This agency points out on their website that the employment relationship between workers and the businesses receiving the benefit of their labor has fissured apart as companies have contracted out, or otherwise shared activities to be performed by other businesses. This is accomplished according to this agency through the use of subcontractors, temporary agencies, labor brokers, and franchising, licensing, and third-party management. This sharing may lead to the misclassification of employees as independent contractors in a variety of ways, such as employers simply mislabeling certain employees as independent contractors to reduce payroll course.

The Department for Professional Employees, a part of the AFL-CIO, maintains that employer misclassification of employees as an independent contractor is a widespread phenomenon in the United States. They note that the Internal Revenue Service (IRS) estimates that employers have misclassified millions of workers nationally as independent contractors.

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