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Acting AG Bruck: New Jersey Supports Adoption of Stronger Federal Protections against Worker Misclassification

Posted by National Alliance for Fair Contracting on

For Immediate Release: February 10, 2022
Office of The Attorney General
Andrew J. Bruck, Acting Attorney General

TRENTON – Acting Attorney General Andrew J. Bruck announced today that New Jersey is co-leading a multistate effort to support the adoption by the National Labor Relations Board (NLRB) of stronger protections for workers whose employers would misclassify them as independent contractors — a designation that can deprive workers of wages earned, core workplace benefits and the ability to organize.

In an amicus brief filed with the NLRB today, New Jersey urges the Board to adopt a more worker-protective standard for determining whether a worker is an employee protected by federal labor laws safeguarding the right to organize and collectively bargain, or, in the alternative, an independent contractor not covered by such legal protections.

Acting Attorney General Bruck is co-leading today’s multi-state amicus brief to the NLRB along with Pennsylvania Attorney General Josh Shapiro. A total of 14 other Attorneys General have signed onto the brief, which describes misclassification as a burgeoning problem that harms both workers and states, and asserts that “this is not the time to weaken protections” against the employer tactic.

“Here in New Jersey, we care about workers’ rights,” said Acting Attorney General Bruck. “Workers who are misclassified as independent contractors end up suffering a whole host of disadvantages – including substandard wages, denial of workplace safety protections, denial of employment benefits they rightfully deserve and, crucially, the right to fight for improved working conditions by organizing and collectively bargaining.”

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Payroll tax fraud believed to be spreading throughout Indiana’s construction industry (IN)

Posted by National Alliance for Fair Contracting on

By: Drew Gardner
Posted: Feb 25, 2019 10:34 PM EST


SOUTH BEND, Ind. — The construction industry across Indiana is facing something many contractors call a growing problem — payroll tax fraud.
Some contractors are believed to be misclassifying workers, which robs them of many of the regular benefits employees receive and robs the state and federal government of hundreds of millions in tax dollars.

As you drive through Michiana it’s easy to see things are pretty good in the construction industry right now. There are new developments around almost every corner, but in recent years contractors like Tim Larson of La Porte-based Larson-Danielson construction noticed something seemed ‘off’ in some of the bids they were seeing.

” When we bid for a job we know how much is labor, how much is material and we found other contractors bidding at prices we couldn’t quite perceive how they were getting there, because we knew how much they were spending on material and we figured they had to be spending a lot less on labor than we were,” said Larson.

That’s because some contractors are believed to be participating in worker misclassification.

Worker misclassification is the practice of labeling workers as independent contractors instead of employees.

The IRS has a 20 point checklist to determine whether a worker is an employee or an independent contractor.

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Alaska governor signs comp reform bill (AK)

Posted by National Alliance for Fair Contracting on

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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DC Attorney General alleges electrical contractor misclassified 535 workers (DC)

Posted by National Alliance for Fair Contracting on

By Laurie Cowin
Date: Aug. 7, 2018

Dive Brief:

  • The attorney general for the District of Columbia sued Power Design on Monday, alleging that the Florida-based electrical contractor purposefully misclassified at least 535 construction workers as independent contractors so that it could cut costs, avoid legal responsibilities and evade taxes. The lawsuit also alleges various minimum wage, overtime and other labor violations and claims that senior management was involved in the scheme. In a request for comment, Power Design told Construction Dive that it had not yet been served and that Power Design believes it is in compliance with all applicable laws and regulations in the district.
  • In addition to Power Design, Attorney General Karl A. Racine’s suit also names JVA Services LLC and DDK Electric Inc., two labor brokers hired to staff Power Design work sites.
  • The lawsuit alleges the companies violated the District’s Workplace Fraud Act, which requires companies to classify workers as employees in in most circumstances, as well as the Minimum Wage Revision Act, Sick and Safe Leave Act and Unemployment Compensation Act from 2014 through 2017. It seeks monetary and injunctive relief for the affected employees and recovery of penalties to the District of Columbia, which could be $1,000 to $5,000 for each misclassified worker. Injunctive relief is a court order for a defendant to stop a specified act or behavior.

Dive Insight:

Misclassifying construction-industry employees is an offense many states are taking measures to combat. For example, Colorado’s governor, John Hickenlooper, issued an executive order in June that created a task force to investigate and find ways to address the misclassification of construction employees as independent contractors. Such misclassification not only hurts employees, but because the misclassification is an attempt to have a lower cost of doing business, it also hurts companies who correctly classify employees and therefore have higher bids.

Employee misclassification also leads to workers’ compensation insurance fraud. William Canak, workers’ comp and employment policy expert and professor at Middle Tennessee State University, estimated that up to 30% of construction workers are misclassified.

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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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Manhattan Construction Company Misclassified and Underpaid Workers, Including Site Fatality Victim (NY)

Posted by National Alliance for Fair Contracting on

By WorkersCompensation.com on July 27, 2018

New York, NY (WorkersCompensation.com) – Manhattan District Attorney Cyrus R. Vance, Jr., and New York City Department of Investigation (“DOI”) Commissioner Mark G. Peters announced the indictment of CRV PRECAST CONSTRUCTION, LLC (“CRV”) and six of its employees for misclassifying workers as lesser-skilled, underpaying them, and falsifying information about payroll and employees, including a worker who was killed at a company job site. The defendants are charged in a New York State Supreme Court indictment with Insurance Fraud in the Second and Third Degrees, Grand Larceny in the Third Degree, and Scheme to Defraud in the First Degree, among other charges.[1]

“Time and again, we’ve seen how wage theft is symptomatic of an overall disregard for workers’ wellbeing: On worksites where companies regularly defraud their employees, we have also seen them playing fast and loose with their workers’ lives and safety,” said District Attorney Vance. “As alleged in this case, the defendants devalued their workers’ livelihoods, underpaying them and insuring them for lower-risk work while simultaneously sending them to carry out complicated construction projects. Misclassifying workers as lesser-skilled is a common way that employers steal from their employees, and I thank our Construction Fraud Task Force partners for their continued commitment to protecting the workers who put their lives on the line every day.”

DOI Commissioner Mark G. Peters said: “These defendants stole from their workers on City construction projects, failing to pay the legally required prevailing wage and underpaying more than $400,000 in insurance premiums, according to the charges. In trying to skirt these laws for their own benefit, the defendants’ alleged conduct has instead landed them in handcuffs and facing prosecution. DOI thanks the Manhattan District Attorney’s Office for its partnership in this case and our many joint Construction Fraud Task Force investigations.”

The indictment follows a joint investigation led by the Manhattan District Attorney’s Office’s Construction Fraud Task Force and DOI, with additional assistance by the New York State Insurance Fund (“NYSIF”).

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US DEPARTMENT OF LABOR SIGNS AGREEMENT WITH NEBRASKA DEPARTMENT OF LABOR TO PROTECT WORKERS FROM MISCLASSIFICATION

Posted by National Alliance for Fair Contracting on

WHD News Brief: 09/01/2016
Release Number: 16-1410-NAT

Participants: U.S. Department of Labor’s Wage and Hour Division
Nebraska Department of Labor

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the Nebraska Department of Labor signed a three-year Memorandum of Understanding intended to protect employees’ rights by preventing their misclassification as independent contractors or other non-employee statuses. The two agencies will provide clear, accurate and easy-to-access outreach to employers, employees and other stakeholders; share resources; and enhance enforcement by conducting coordinated investigations and sharing information consistent with applicable law.

Background: The division is working with the U.S. Internal Revenue Service and 33 other U.S. states to combat employee misclassification and to ensure that workers get the wages, benefits and protections to which they are entitled. Labeling employees as something they are not – such as independent contractors – can deny them basic rights such as minimum wage, overtime and other benefits. Misclassification also improperly lowers tax revenues to federal and state governments, and creates losses for state unemployment insurance and workers’ compensation funds.

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