Officials want to crack down on employers (LA)

Posted by National Alliance for Fair Contracting on

By David Jacobs The Center Square
Mar 6, 2020

Growth of Louisiana’s unemployment trust fund could lower the tax bills of state employers, though many businesses are not paying their share, officials said Friday.

Many companies avoid paying into the fund by classifying employees as temporary contractors, which gives those businesses an unfair competitive advantage and makes employers who follow the law shoulder more of the unemployment fund costs, said Ava Dejoie, secretary of the Louisiana Workforce Commission.

“It is an unfair advantage and it hurts all of us,” she said.

Employers support the trust fund with taxes on the first $7,700 of each employee’s pay. When the fund reaches $1.15 billion, the taxable wage base falls to $7,000 and unemployment benefits increase. When it hits $1.25 billion, funding for a state program employers can use for worker training increases from $20 million to $35 million, Dejoie said.

While the fund is expected to hit both of those benchmarks over the next 18 months or so, she said, misclassification hurts that progress. The practice also allows companies to reduce their labor costs so they can outbid employers that play by the rules, Dejoie added.

The United States Treasury Department estimated in 2013 that preventing worker misclassification would generate $8.32 billion in federal revenue over 10 years. The Louisiana Legislative Auditor has said misclassification cost Louisiana at least $9 million from 2014 through 2018, though the actual number could be much higher. Over the past two years, the Workforce Commission conducted 19 audits that identified 1,100 misclassified workers and $18.5 million in unreported wages, officials said.

The LWC does not get state tax dollars to support its enforcement efforts. Dejoie said additional funds to hire more auditors and a full-time attorney or two would help.

Louisiana also is the only state in the nation that requires employers that break classification rules to get a warning on their first offense.

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Following Hard Rock collapse, council and Mayor begin work on ‘responsible bidders ordinance’ (LA)

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By Michael Isaac Stein
24th February 2020

A New Orleans City Council committee on February 12, heard presentations from labor union leaders, officials with the Louisiana Workforce Commission and other labor advocates about a proposal for the city to pass a “responsible bidders ordinance” in order to hold current and prospective city contractors accountable for the treatment and safety of their employees.

While the details have yet to be worked out, proponents of such an ordinance called for a requirement that companies seeking city work disclose past safety violations and labor complaints as part of their bids.

Public calls for such an ordinance have grown in the months following the October collapse of the Hard Rock Hotel on Canal Street. The incident killed three workers and injured over a dozen more.

Labor advocates told the council’s Economic Development & Special Development Projects Committee on Wednesday that such a disaster was inevitable given the current climate of construction contracting in the city. They argued that public bid laws that apply to construction contracts, which require the city to choose the firm offering the lowest price, drive companies to cut costs wherever possible to the detriment of their employees.

“This has been going on for a really long time,” said Chip Fleetwood, director of business development for the local chapter of the Painters and Allied Trades International Union. “We’re to a point where it’s almost like the wild, wild west. It was only a matter of time before something like that happened. In the building trade’s opinion, we knew there was going to be a breaking point. And we’re at the breaking point now. If something isn’t done, if we don’t really hold contractor’s accountable, it’s going to happen again.” …

Erika Zucker, policy advocate at the Workplace Justice Project at the Loyola College of Law, argued that transparency, monitoring and enforcement should all be part of the equation. She said that major changes should be made to how the city considers and chooses contractors. Instead of just relying on the lowest quote, she said that contractors should have to disclose much more info, such as past labor law and safety violations.
She also said the city should create a fair contracting task force to implement and enforce the new rules.

The Hard Rock Hotel was a private development, not a public one, so the city wasn’t party to the construction contracts. Even so, Zucker argued that a responsible bidders ordinance would still have an effect on private developments.

“The city becomes overall the most responsible contracting entity and sets an example for the region,” she said.

Zucker also argued that the ordinance should be applied to any project that are either “wholly public projects or projects that use public money that looks more like a public-private partnership, which can look like anything from a tax incentive to joint operation.”

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Constructing a Cheaper Classification of Workers (LA)

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“A contractor who doesn’t do it right can bid lower than those who do.” – Louisiana Legislative Auditor Daryl Purpera

By Sue Lincoln
June 26, 2019

From the time in early 2016 that newly-minted Gov. John Bel Edwards signed his first executive order accepting Medicaid expansion, arch-conservatives in the state legislature have been sounding alarms over purported fraud in the program. And when Louisiana Legislative Auditor Daryl Purpera addressed the Baton Rouge Press Club on Monday, June 24, he didn’t hesitate to wax eloquent on that topic. In particular, Purpera reiterated his “need” to access taxpayer-specific Department of Revenue information. The Revenue Department has refused to provide that data, and presently the Auditor is suing them for it, asking the courts for a declaratory judgment that will authorize release of the information.

In addition to the cause celebre of alleged Medicaid fraud, Purpera also had a few things to say about a new performance audit issued earlier in the day, which looks at how the Louisiana Workforce Commission is handling the problem of “misclassified workers”.

“Our audit samples, covering 2014 through 2018, showed employers misclassifying workers failed to pay nearly $3-million in unemployment taxes,” Purpera told the Press Club. “In addition, they failed to collect and remit an estimated $9-million of state income tax from these workers.”

This isn’t about putting someone on the payroll as a receptionist when she is actually performing the duties of a secretary, to cover up for paying her less. Nor is it about designating a busboy as a waiter, so that instead of paying him $7.25 per hour, you can get away with paying him just $2.13. Instead, as stated in the audit, “Worker misclassification occurs when an employer improperly classifies a worker as an independent contractor instead of an employee.”

An employee is subject to payroll withholding of taxes, and is eligible for employment benefits such as insurance. An independent contractor is instead paid a flat amount, and is responsible for paying his or her own taxes and/or insurance.

“This is pervasive in some industries,” Purpera stated. “Construction particularly.”

Federal law requires each state’s labor agency to annually audit one-percent of all employers and one-percent of total employee wages, and this report notes the Louisiana Workforce Commission is in full compliance with that rule. In fact, LWC is ranked 2nd in the nation for its employer audit program. This legislative audit also states LWC consistently found the more misclassified workers within construction companies than within other types of employers: on average, 12 workers for each construction firm audited. From 2016 through 2018, 453 audits of construction companies (15.4% of the total number of employer audits reviewed) revealed 5,493 misclassified workers (or nearly 42% of all the 13,106 workers determined to be misclassified.)

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Dept. of Labor forces contractor to pay New Orleans laborers $180,000 back pay, follows class action lawsuit (LA)

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BY ANTHONY MCAULEY
MAY 21, 2019 – 2:06 PM

The U.S. Department of Labor said Tuesday it had forced a Florida-based contractor, Gomez Drywall Construction Inc., to pay 108 Louisiana-based workers nearly $180,000 in back pay for breaking federal rules on overtime compensation.

The Department of Labor said the action followed an investigation into claims Gomez misclassified workers as independent contractors and subsequently failed to pay them overtime when they worked more than 40 hours in a workweek, a violation of the Fair Labor Standards Act.

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Local building unions, immigrant labor advocates unite over worker misclassification (LA)

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By: Michael Joe, Reporter

February 8, 2019

On a recent Saturday in January at Corpus Christi Church in the 7th Ward, Curiel stood in the afterglow. A workers’ forum aimed at “bringing immigrants out of the shadows” had just concluded. And it was jointly organized by the Southeastern Louisiana Building and Construction Trades Council and three community organizations focused on workers’ rights and economic justice – Step Up Louisiana, the Workplace Justice Project and the New Orleans Workers’ Center for Racial Justice, a grassroots group founded after the storm by immigrants and African Americans.

…

Organizers said the goal on Jan. 26 was to educate immigrant workers about their rights and highlight what they say is a common problem that hurts unions and immigrant workers alike: the misclassification of workers as independent contractors – rather than employees – by construction contractors and subcontractors.

When you call an employee an independent contractor – when they are actually an employee – that allows you to not pay workers’ compensation, not pay social security and not pay time and a half for overtime. Not only is the worker being exploited, it’s creating an unfair playing field for the contractors that are actually doing the right thing,” said Chip Fleetwood, marketing manager with the Painters and Allied Trades International Union, District Council 80, in Kenner.

Union contractors are even more disadvantaged when bidding on jobs, because they are also paying for the health and welfare benefits of unionized workers, Fleetwood added.

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Court: General contractor can be cited for subcontractor violations (LA)

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By Kim Slowey
Dec. 19, 2018

Dive Brief:

  • A U.S. Appeals Court judge for the 5th Circuit in New Orleans has ruled that OSHA can cite general contractors – even if their employees are not affected – for subcontractor safety violations. The ruling came after Labor Secretary Alexander Acosta requested that the 5th Circuit review an OSHA administrative court decision that said a general contractor could only be cited for safety threats to its own employees.
  • In 2017, a Denver Occupational Safety and Health (OSH) Commission administrative judge ruled that Hensel Phelps could not be cited by the agency for safety hazards created by one of its subcontractors on a project in Austin, Texas. However, the 5th Circuit said more recent rulings have rendered the case law on which the administrative judge based his decision “obsolete” and said that Hensel Phelps could be held responsible for safety on the multi-employer site as a “controlling employer.”
  • According to court documents, Hensel Phelps hired subcontractor Haynes-Eaglin-Waters (HEW) for a library construction project, and HEW, in turn, hired CVI Development as a sub-subcontractor to perform demolition, excavation and other work. Hensel Phelps and HEW project staff allegedly directed CVI to work in an unsafe excavation area. An OSHA inspector cited both Hensel Phelps and CVI for safety violations. The OSH Commission will now review the matter again, taking the 5th Circuit’s decision into consideration.

Dive Insight:

While workers might have once been expected simply to accept the risks of working on a dangerous construction site as part of their job, contractors, as well as state and local authorities, have made safety a priority. And authorities have become more willing to pursue criminal charges against contractors when their disregard results in injury or death.

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State targets misclassified workers (LA)

Posted by National Alliance for Fair Contracting on

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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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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LWC Focus on Misclassification of Workers Yielding Record Results

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By WorkersCompensation.com
11/17/2015

 

Baton Rouge, LA (WorkersCompensation.com) – The Louisiana Workforce Commission is on track toward a second consecutive record-setting year in the identification of workers misclassified by employers as independent contractors.

Through November 12, 2015, LWC identified nearly 9,400 misclassified employees in audits of 865 companies. Audits in process through the end of 2015 are expected to surpass 2014’s record discovery of 12,782 misclassified employees.

Misclassifying employees as independent contractors can lead to companies not paying unemployment taxes, workers’ compensation premiums and their portion of Social Security and Medicare taxes. They may also gain an unfair competitive advantage over competitors by improperly lowering their labor costs.

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More than $1.6M in Unpaid Overtime for 1,543 Workers in the Gulf Coast Recovered by US Labor Department

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HOUMA, La. – B & D Contracting Inc., a labor recruiting and staffing agency that caters to oil field services and maritime fabrication facilities along the Gulf Coast, has agreed to pay $1,660,438 in back wages to 1,543 current and former employees. An investigation by the U.S. Department of Labor found that the company engaged in improper pay and record-keeping practices that resulted in employees being denied overtime compensation in violation of the Fair Labor Standards Act. The employees were assigned to client work sites throughout Louisiana, Mississippi and Alabama to work as welders, pipe fitters and shipfitters.

Investigators from the Wage and Hour Division’s New Orleans District Office found the company mischaracterized certain wages as per diem payments and impermissibly excluded these wages when calculating overtime premiums, denying employees earned overtime compensation.

“Temporary staffing agencies serve valuable and legitimate business needs in today’s economy,” said Dr. David Weil, administrator for the Wage and Hour Division, “But employers may not manipulate these arrangements and use evasive pay practices to avoid paying workers their rightful wages.”

“The labor violations we found in this case are not unique to B & D Contracting Inc.,” said Cynthia Watson, regional administrator for the division in the Southwest. “We are increasingly finding the use of per diem schemes as a means of decreasing overtime pay and tax obligations in the staffing and support services industry in this region. The resolution of this case demonstrates our continued focus on combating such labor violations in order to improve compliance in this industry.”

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