Union: Construction tax fraud costs governments $450B annually (PA)

Posted by National Alliance for Fair Contracting on

Bob Bauder
Monday, April 15, 2019 3:37 p.m.

Several hundred carpenters’ union members and public officials rallied Monday in Downtown Pittsburgh to call for an end to construction industry fraud.

Union officials said unscrupulous contractors and labor brokers rob the public of federal and local tax revenue by paying workers cash “under the table,” misclassifying them as independent contractors and failing to pay such benefits as workman’s compensation and unemployment.

The fraud costs local governments across the United States an estimated $450 billion annually in lost tax revenue, officials said.

“When you talk about tax fraud, it’s about people that are cheating,” said Bill Waterkotte, eastern district vice president of the Keystone Mountain Lakes Regional Council of Carpenters. “They’re not paying taxes. They’re paying cash. Four hundred and fifty billion (dollars), in evading taxes. That could go to building our roads and bridges, our schools, our veterans, helping the people who need help, and they’re stealing it.”

The union estimates fraud costs Pennsylvania governments about $200 million each year, but offered no specifics for the Pittsburgh region.

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Pittsburgh City Council late last year approved a resolution proposed by Councilman Corey O’Connor that created a task force to investigate the issue. O’Connor said the members plan to offer future legislative remedies to council and the mayor.

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“We are going to go after those bad workers, those people that take our tax money, that take your jobs because subcontractors and contractors are undercutting city bids. We have to stop that,” O’Connor said.

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Council passes resolution to examine construction industry fraud (PA)

Posted by National Alliance for Fair Contracting on

Ashley Murray
December 27, 2018

Allegations of widespread fraud in the construction industry led Pittsburgh City Council on Thursday to vote 8-0 to create a new task force, but there wasn’t unanimity on the nature and degree of the problem.

“Basically we know that this activity is happening and we’re losing tax revenue from it,” said the bill’s sponsor, councilman Corey O’Connor, though he did not have specific figures.

The resolution, co-sponsored by councilwoman Darlene Harris, directs the mayor to convene representatives from council, and the offices of the city controller, Allegheny County district attorney, as well as trade unions and the state’s Department of Labor and Industry. It would explore tax fraud – sometimes referred to as paying people under the table – and other “unfair” practices within the city’s construction industry.

Past approaches to construction industry fraud – and even some recent pronouncements by advocates for the task force – have referenced undocumented workers. Thursday, though, backers emphasized that the bill isn’t about immigration.

Members of the United Brotherhood of Carpenters gathered in Council Chambers Thursday to support the bill’s passing.

“We have people getting paid cash on the job sites, and that’s not fair,” said Steve Mazza, representative for the Keystone Mountain Lakes Regional Council of Carpenters, based in Collier. “I have to pay taxes. Everybody should be paying taxes. Why is that being unchecked?”

Mr. Mazza’s union claims that Pennsylvania has lost hundreds of millions of dollars in taxes because of industry fraud, though it did not detail that figure Thursday.
The scope of loss for the city is unclear.

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Pittsburgh creates construction fraud task force (PA)

Posted by National Alliance for Fair Contracting on

By Kim Slowey
Jan. 3, 2019

Dive Brief:

  • This Pittsburgh City Council voted last week to establish the Joint Task Force on Construction Industry Fraud, which will work to identify and combat “unfair trade practices, including tax fraud” among the city’s construction businesses.
  • The resolution takes particular aim at construction companies that commit wage violations that result in underpayment or nonpayment of taxes, as well as too-low pay rates that prevent some workers from being able to support their families. The task force will not focus on the practice of hiring undocumented workers, however.
  • The group will be made up of representatives from the city council; mayor’s office; Pittsburgh Regional Building and Construction Trades Council; Allegheny County District Attorney’s Office; Pennsylvania Department of Labor and Industry; and the city’s Department of Permits, Licenses and Inspections.

Dive Insight:

According to the resolution, construction is the fastest-growing industry in Pittsburgh. It states that fraud-related violations of city ordinances not only threaten the health and safety of residents and workers but “threaten the viability” of businesses that operate legitimately. The group will review existing industry practices in Pittsburgh and then make code and policy recommendations to the council and mayor.

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Northam signs executive order establishing task force on worker misclassification, payroll fraud (VA)

Posted by National Alliance for Fair Contracting on

AUTHOR – Augusta Free Press
PUBLISHED – Aug 11, 2018

Governor Ralph Northam signed an Executive Order establishing an interagency task force on worker misclassification and payroll fraud. The misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives the Commonwealth of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.

“Treating Virginia workers fairly is central to building an economy that works for everyone, no matter who you are or where you live,” said Governor Northam. “Every employer in the Commonwealth should be playing by the same rules and this task force will come up with a comprehensive plan to make sure workers aren’t missing out on the protections and benefits they would receive if properly classified.”

A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) found that one-third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs as much as 40%, placing other employers at a competitive disadvantage.

The task force will develop and implement a comprehensive plan with measurable goals, including identifying ways to hold companies working on state contracts who commit payroll fraud through misclassification of workers accountable, and identifying ways to deter future inappropriate conduct by recommending enforcement mechanisms.

Secretary of Commerce and Trade Brian Ball will chair the task force. It will include representatives from the Virginia Employment Commission, the Department of General Services, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, the Workers’ Compensation Commission, and the Office of the Attorney General.

The group will develop a work plan by November 1, 2018 and report to the Governor on its progress by August 1, 2019.

The full text of Executive Order Sixteen can be found here.

(See Article)

New Jersey Passes Laws on Sick Leave and Pay Equity; Will Tackle Worker Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

The National Law Review
Wednesday, May 9, 2018

A little more than 100 days into his tenure, New Jersey Governor Phil Murphy has made it clear that employment is one of his top priorities. In the past two weeks, Gov. Murphy has signed a Paid Sick Leave and an Equal Pay bill into law and established a Task Force on Employee Misclassification.

Paid Sick Leave

The New Jersey Paid Sick Leave Act was signed into law on May 2, 2018, and takes effect on October 29, 2018. It will require New Jersey employers of all sizes to offer their employees one hour of sick leave for every 30 hours worked. Covered employees will be eligible for paid sick leave after 120 days of employment and are then permitted to use up to 40 hours of sick leave per benefit year. Employers may set the benefit year. The benefit year does not need to be a calendar year but once set, it cannot be changed without prior notification to the New Jersey Department of Labor and Workforce Development. In lieu of tracking each hour worked and earned, employers may offer 40 hours of paid sick time at the beginning of each benefit year or utilize an existing paid-time-off policy so long as it confers equal or richer paid leave benefits than those provided for in the Act.

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The Equal Pay Act

The Diane B. Allen Equal Pay Act (NJEPA), signed into law by the Gov. Murphy last month, will take effect in less than four weeks – on July 1, 2018. New Jersey employers across industries should pay close attention to this effective date because the law places onerous requirements on them. The NJEPA contains extensive amendments to the New Jersey Law Against Discrimination (NJLAD) through its:

  • Prohibition of compensation discrimination on the basis of any protected class for “substantially similar work when viewed as a composite of skill, effort, and responsibilities”
  • Increased statute of limitations period from two to six years for claims alleging pay inequity or discrimination
  • Mandatory treble damages for successful plaintiffs

Task Force on Employee Misclassification

On May 3, 2018, Gov. Murphy signed an executive order establishing a Task Force on Employee Misclassification. Misclassification is when workers are incorrectly labeled as independent contractors rather than employees. Workers who are incorrectly classified frequently are not provided benefits and other protections available to employees, such as minimum wage, overtime compensation, family and medical leave, unemployment insurance, and workers’ compensation.

The New Jersey Task Force will be charged with a number of responsibilities to combat employee misclassification, including:

  • Examining and evaluating existing misclassification enforcement by executive departments and agencies
  • Developing best practices by departments and agencies to increase coordination of information and efficient enforcement
  • Developing recommendations to foster compliance with the law, including by educating employers, workers, and the public about misclassification
  • Conducting a review of existing law and applicable procedures related to misclassification

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Governor Murphy Signs Executive Order Establishing Task Force on Employee Misclassification (NJ)

Posted by National Alliance for Fair Contracting on

May 3, 2018

Trenton – Governor Phil Murphy today signed an executive order establishing the Task Force on Employee Misclassification. Employee misclassification can allow employers to escape their legal responsibilities to their workers, such as ensuring adequate workplace protections and providing employment-related benefits like unemployment insurance and workers’ compensation. Employers often misclassify their employees intentionally in order to reduce labor costs and avoid paying state and federal taxes.

“The exploitation of workers is not only unethical – it is illegal,” said Governor Phil Murphy. “In New Jersey, we promote fairness, fight against discrimination, and work to end unfair labor practices. I am proud to take this step forward to end a practice that creates an unfair advantage over companies that play by the rules and hurts our working families.”

“We must crack down on wage theft,” said Attorney General Gurbir Grewal. “More and more employers are misclassifying their workers as ‘independent contractors’ because they think it’s cheaper than doing things the right way. But this practice isn’t just illegal. It actually makes New Jersey’s communities poorer in the long run by denying workers the wages and benefits to which they are legally entitled, and that are essential to building a fair and prosperous economy. We are proud to join with other states in fighting this growing problem.”

“Protecting workers’ rights is an important function of government and that role cannot just be limited to private businesses, but to the State and who it hires,” said Senate President Steve Sweeney. “When someone is in effect working as employee, but deliberately misclassified as an independent contractor, that worker is losing benefits, wages and other compensation. That just isn’t acceptable. This Task Force should ensure that the State is compliant with best practices. I look forward to working with them on this important issue. Anyone working for the State of New Jersey should know that their job, compensation and responsibilities match their job classification. This is about fairness.”

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Labor Secretary to Start Building Apprenticeship Task Force

Posted by National Alliance for Fair Contracting on

Jul 25, 2017
Thomasnet.com

The U.S. Secretary of Labor Alexander Acosta has opened up nominations for the Task Force on Apprenticeship Expansion. According to a recent news release from the Department of Labor, creating the task force is the first step in implementing President Donald Trump’s executive order to expand apprenticeships.

In June, President Trump said that apprenticeships could help fill millions of open jobs, however he was reticent to dedicate additional taxpayer money to the program.
According to the Department of Labor (DoL), the current number of active apprenticeships in the United States is 505,371.

In March, Salesforce.com CEO Marc Benioff challenged the president to create five million apprenticeships over the next five years. President Trump accepted the challenge, and his proposed budget includes a $5 million increase ($95 million overall) in spending appropriated for apprenticeships.

Secretary Acosta will chair the task force, which has been charged with identifying ways to promote apprenticeships, particularly in sectors where apprenticeship programs are currently insufficient.

The task force will create a final report for President Trump that will include:
  • Recommendations on federal initiatives to promote apprenticeships.
  • Administrative and legislative reforms that will facilitate the formation and success of apprenticeship programs.
  • The most effective strategies for creating industry-recognized apprenticeships.
  • The most effective strategies for amplifying and encouraging private-sector initiatives to promote apprenticeships.

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