Investigation Recovers $246k In Back Wages for 306 Painters, Drywall Workers Denied Overtime by Misclassification as Independent Contractors

Posted by National Alliance for Fair Contracting on

Agency: Wage and Hour Division
Date: August 4, 2022
Release Number: 22-1562-DAL

​​​​​​​Department of Labor finds errant pay practices hurt workers jointly employed

NEW ORLEANS – The U.S. Department of Labor has found that the wages of hundreds of painters and drywall workers employed by a Louisiana contractor on construction projects, including work at New Orleans’ Superdome, were tackled for a loss when their employer misclassified the workers as independent contractors, a common industry violation.

Investigators with the department’s Wage and Hour Division found that PL Construction Services misclassified its workers as independent contractors. Many of the employees worked on projects involving Lanehart Commercial Painting – operating as Lanehart – including work at the Superdome. PL Construction Service paid the misclassified workers straight-time rates for all hours, including those over 40 in a workweek which violated the Fair Labor Standards Act’s overtime regulations. They also failed to maintain complete and accurate records of hours their employees worked, another FLSA violation.

The division determined that during the investigation period, a joint employment relationship existed between PL Construction Services and Lanehart for workers employed on Lanehart projects. Among other factors, they found the following conditions:

PL Construction Services employees worked almost exclusively for Lanehart.
At work sites, Lanehart supervised PL Construction Services’ workers, determined the number of workers needed and when, and kept records of hours PL Construction Services’ employees worked.
PL workers’ labor was essential to Lanehart’s operations and occurred on Lanehart’s projects.
The investigation led to the recovery of $246,570 in overtime back wages for 306 employees. Lanehart paid $199,342 to 243 employees for which the division found them jointly liable. PL Construction Services paid the remaining balance of $47,228 to 76 employees.

PL Construction Services LLC is based in St. Rose, and Lanehart Inc. is based in Baton Rouge.

“Too often we find workers denied wage protections such as the right to overtime pay and other benefits – including unemployment insurance, workers’ compensation and health insurance – by employers who misclassify them as independent contractors,” said Wage and Hour District Director Troy Mouton in New Orleans. “Our investigation shows the costly consequences employers face when they or their subcontractors fail to comply with the law. When we determine a joint employment relationship exists, the Wage and Hour Division will hold all responsible employers accountable for the violations.”

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US Department of Labor Finds Honolulu Contractor Failed to Pay Correct Wages, Fringe Benefits to 46 Employees on Federally Funded Projects

Posted by National Alliance for Fair Contracting on

Agency: Wage and Hour Division
Date: August 2, 2022
Release Number: 22-1586-SAN

Investigation recovers $156K in back wages, benefits for Tunista Services LLC’s workers

HONOLULU – A U.S. Department of Labor investigation has recovered $156,837 in back wages from a Honolulu contractor who paid 46 workers lower wages than the law allows for the type of work they performed under federal contracts awarded by U.S. Marine Corps, Navy, Army and Coast Guard in Hawaii.

The department’s Wage and Hour Division determined that Tunista Services LLC failed to pay truck drivers, material handling laborers, warehouse specialists, forklift operators, service order dispatchers, janitors and other workers the correct wage rates set by federal law for their services. Instead, the employer paid several workers lower hourly rates than required for their occupations, in violation of the McNamara-O’Hara Service Contract Act.

Tunista Services also violated the provisions in the act – which governs employee pay standards for contractors and subcontractors on federally funded contracts – when they failed to provide the required health benefits, sick leave pay, holiday pay and vacation pay.

In addition, the employer violated the Contract Work Hours and Safety Standards Act, which requires overtime pay for hours over 40 in a workweek. The employer based its overtime calculations on the lower, incorrect wage rate and failed to pay the full overtime due.

The $156,837 recovery includes $84,995 for paying incorrect occupational wages, $56,596 for underpayment of fringe benefits, $14,791 reimbursement for unpaid sick leave and $455 in overtime pay for the affected workers.

“Federal contractors who fail to pay correct wages and fringe benefits shortchange workers, reduce their labor costs illegally and gain unfair advantage over their law-abiding competitors,” said Wage and Hour Division District Director Terence Trotter in Honolulu. “We strongly encourage all federal contractors to review their own pay practices and ensure they comply with the law.”

Learn more about the division, including its search tool to learn if you are owed back wages collected by the division. For confidential compliance assistance about the Service Contract Act and the Contract Work Hours and Safety Standards Act, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Help ensure hours worked and pay are accurate by downloading the department’s Android and iOS Timesheet App for free.

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Governor Hochul Announces Major Crackdown to Combat Wage Theft

Posted by National Alliance for Fair Contracting on

Office of Gov. Hochul – July 20, 2022

Wage Theft Task Force Recovers Nearly $3 Million in Restitution Owed to Workers and New York State

Launches New Hotline to Report Wage Theft and Recover Stolen Wages – 833-910-4378 – and Develops Online Wage Theft Reporting and Tracking Tool

Governor Kathy Hochul today announced major actions to combat wage theft and protect the paychecks of hardworking New Yorkers. The Governor announced that the Wage Theft Task Force, a coordinated effort between the New York State Department of Labor, the New York State Attorney General, and District Attorneys, has recently secured felony convictions and agreements from more than a dozen businesses and 265 individuals to pay nearly $3 million in wage restitution and contributions owed to New York State since the beginning of the COVID-19 pandemic. The Governor also announced new efforts to double down on the success of the Task Force, launching a new hotline and developing a state-of-the-art online wage theft reporting system to create more opportunities for workers to report wage theft and receive what they are owed while protecting their privacy and safety.

Starting today, New Yorkers can report wage theft directly to the New York State Department of Labor by calling the new hotline at 833-910-4378, which has interpretation services available. The online reporting system will give New Yorkers the ability to report wage theft online in a variety of languages while improving the Department’s ability to track complaints and identify trends.

…

“Wage theft is a serious issue and I join the Governor, Attorney General and the Department of Labor in saying that New York will not tolerate the theft of hardworking New Yorker’s livelihoods,” said Lieutenant Governor Antonio Delgado. “The measures announced today will help us combat this issue and bring restitution to these victims.”

To further empower New Yorkers to report theft, NYSDOL has also begun developing a new, state-of-the-art Worker Protection Management System, where New Yorkers can report claims online in multiple languages and receive updates in real time about the status of their claim. The $10 million project, set to be complete in 2023, will also provide the Department with real time data, enhancing its ability to analyze and identify violation trends. This builds on the Governor’s ongoing efforts to improve transparency and increase accountability in State government.

Wage Theft Task Force

The Wage Theft Task Force initially leveraged criminal laws to achieve justice for construction workers in cases involving wage theft, fraud, and safety hazards. The Task Force has recently expanded its scope into other industries and counties in New York State. The Wage Theft Task Force includes NYSDOL, the New York State Attorney General’s Office, the New York State Insurance Fund (NYSIF), the Offices of District Attorneys across the State, and the New York City Department of Investigation. The Task Force works closely with labor unions and community-based organizations as part of efforts to support workers and recover owed wages.

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New York Construction Wage Theft Law: Prime Contractors Responsible for Subcontractor’s Failures

Posted by National Alliance for Fair Contracting on

Friday,  July 1,  2022

The scope for liability related to employee wage claims has changed dramatically for contractors and subcontractors operating in New York under a new law that shifts wage payment obligations to prime contractors.

New York Governor Kathy Hochul signed into law NY State Senate Bill S2766C, which is intended to reduce wage theft claims and amend wage theft prevention and enforcement in the construction industry within the state, on January 25, 2022, and the new law is effective retroactively to January 4, 2022.

The Legislature proposed this amendment to existing wage theft law to increase the likelihood that allegedly exploited workers in the construction industry will be able to secure payment and collect unpaid wages and benefits for work already performed by shifting the ultimate payment obligation to prime contractors.

Prior to the new law, a worker could only bring a private lawsuit for alleged unpaid wages (including overtime and fringe benefits) against their direct employer. The New York State Assembly asserted that this was a major issue in the construction industry and that subcontractors hid assets, changed their corporate identities, or took part in other alleged unscrupulous practices to avoid liability and make themselves judgment-proof from a potential wage theft action.

The New Standards
There are two sections to the new law. Section one pertains to construction industry wage theft and is codified under NY CLS Labor § 198-e. Pursuant to this new section, a construction contractor, as defined within, would assume liability for any unpaid wages, benefits, damages, and attorney’s fees related to a civil or administrative action by a wage claimant or the Department of Labor against a lower tier subcontractor.

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Contra Costa DA’s Office and U.S. Department of Labor announce partnership to combat wage theft

Posted by National Alliance for Fair Contracting on

The Press.net | June 24, 2022

Contra Costa District Attorney Diana Becton and U.S. Department of Labor Assistant District Director for San Jose Alberto Raymond have agreed to combat wage theft and protect workers’ rights.

Wage theft affects victims in various ways – and at all income levels. Some workers are denied overtime or are paid less than the minimum wage per hour. Some employers also refuse to pay bonuses, vacation pay, or reimbursement of business expenses.

According to investigations by the Department of Labor’s Wage and Hour Division in 2021, U.S. workers were denied over $230 million in back pay.

The DA’s Office will be devoting resources to prosecute criminal wage theft cases to curtail labor trafficking, unfair business practices, payroll tax evasion, and wage and hour violations. To do this, District Attorney Becton will create a Workplace Justice Unit that’s committed to a fair and equitable workplace.

Becton noted, “While the DA’s Office and the Department of Labor have had an informal relationship on human labor trafficking and wage theft cases since 2014, this (deal) marks the start of a formal five-year partnership to continue our efforts to seek justice for victims of crime.”

Wage theft is a felony punishable by up to three years in jail. Employers caught stealing from their employees may be personally liable for unpaid wages and face criminal asset forfeiture actions, according to the U.S. Department of Labor Wage and Labor Division fiscal year 2021 data.

In addition to investigating and prosecuting cases, both agencies will conduct community outreach programs to inform the public about reporting wage theft — as well as provide resources for employers to help them follow labor and payroll tax laws.

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Polis signs wage theft bill into law

Posted by National Alliance for Fair Contracting on

June 10, 2022
by Robert Davis | The Center Square

(The Center Square) – Colorado Governor Jared Polis signed a bill Thursday that increases penalties for businesses that withhold earned wages from workers without warrant.

Senate Bill 22-161 classifies wage theft as criminal theft and imposes automatic penalties of up to twice the withheld amount or $1,000, whichever is greater, against employers who violate the law. It also requires employers to pay an estranged employee’s earned wages within 14 days of receiving a written demand.

The bill was sponsored by Democrat Sens. Jessie Danielson, D-Wheat Ridge, and Sonya Jacquez Lewis, D-Boulder, and Reps. Monica Duran, D-Wheat Ridge, and Meg Froelich, D-Englewood.

“Wage theft is far too prevalent in Colorado, and it often hits working families the hardest,” Danielson said in a statement. “It’s essential that we support the folks who work hard to keep Colorado’s economy running. This law will ensure workers receive the full wages they have earned.”

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US Department of Labor Recovers $348k in Back Wages, Liquidated Damages for 144 Arizona Construction Workers Willfully Denied Overtime Pay

Posted by National Alliance for Fair Contracting on

VW Connect assessed $48K in penalties for intentional violations

Agency: Wage and Hour Division
Date: June 9, 2022
Release Number: 22-1136-SAN

PHOENIX – A federal investigation has recovered $348,380 in back wages and liquidated damages for 144 underpaid workers of an Arizona construction employer who failed to pay their overtime wages.

The U.S. Department of Labor’s Wage and Hour Division determined that VW Dig LLC – operating as VW Connect – automatically deducted 30-minute meal break periods every day even when employees worked through these periods, a violation of the Fair Labor Standards Act. The employer also failed to pay all hours worked due to improper recordkeeping that resulted in work hours often missing from payroll.

The investigation found the employer owed workers $174,190 in overtime wages earned for hours worked over 40 in a workweek. In addition to back wages and an equal amount of damages, the department assessed VW Connect with $47,926 in penalties for the willful nature of the violations.

“Manipulating timesheets to avoid paying a worker’s full earnings illegally denies them the wages on which they depend to care for themselves and their families. It also deprives them the dignity they are due,” said Wage and Hour Division District Director Eric Murray in Phoenix. “The outcome of this investigation shows that employers who violate the law can face costly consequences in the form of damages and penalties.”

In fiscal year 2021, the Wage and Hour Division recovered more than $36 million in wages owed to more than 21,000 construction industry workers. The Bureau of Labor Statistics projects more than 220,000 industry workers quit their jobs in April 2022 – the third highest number since 2012 – and 449,000 job openings in the industry, all of which makes for a job market in which employers must compete for workers.

“Employer who don’t pay workers all of the wages they’ve earned are likely to find it increasingly difficult to retain and recruit the people they need,” Murray explained. “Companies that comply with the law by paying full wages and benefits – and treating workers with the dignity and respect they deserve – will have a competitive advantage over those who cheat workers.”

Employers and workers can call the division confidentially with questions regardless of their immigration status. The department can speak with callers in more than 200 languages through the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Learn more about the Wage and Hour Division, and its search tool if you think you may be owed back wages collected by the division.

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We Need to Talk About Wage Theft

Posted by National Alliance for Fair Contracting on

Ericka Cruz Guevarra, Farida Jhabvala Romero ,Alan Montecillo, Maria Esquinca
June 8, 2022 – KQED

In California, tens of thousands of workers aren’t getting paid what they’re owed by their employers. Many of these workers are low-wage earning immigrants in industries like construction, home care, and food service.

The state actually has a system in place where people can file claims of wage theft. But the system currently has a huge backlog, leaving people waiting years before they can try and and recover their money. In some cases, workers claim their employers stole tens or even hundreds of thousands of dollars from them.

The result? Many low-wage Californians miss out on rent, food, and can even lose their homes.

(Listen to Podcast)

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Commerce Fraud Bureau to get new powers to investigate wage theft, other financial crimes

Posted by National Alliance for Fair Contracting on

Max Nesterak
May 25, 2022

Labor leaders are calling a bill that passed the state House and Senate on Sunday the most significant piece of legislation for combating wage theft since it was made a felony in 2019.

The bill (HF 3255), which is awaiting Gov. Tim Walz’s signature, gives the Commerce Fraud Bureau new powers to criminally investigate financial crimes along with more than $800,000 a year to hire five more investigators.

“This is a very big deal,” said state Rep. Zack Stephenson, DFL-Coon Rapids, who authored the bill in the House. “All across the state, white collar crimes are in desperate need of more enforcement.”

Until now, the Commerce Fraud Bureau has been restricted by law to insurance fraud investigations — a function of the department being entirely funded by a tax on insurance companies.

The new law maintains that at least 70% of the department’s work must continue to focus on insurance fraud, but allows the department to investigate all financial crimes with money appropriated from the general fund.

That puts new power behind the state’s ability to criminally investigate labor violations that are rampant in construction and hospitality — yet seldom prosecuted. Payroll fraud in the construction industry alone costs the state upwards of $136 million a year in lost tax revenue, according to one estimate by the Midwest Economic Policy Institute.

“Wage theft and tax fraud are business models,” said Adam Duininck, director of governmental affairs for the North Central States Regional Council of Carpenters. “When we see it in such a concerted manner, the only way to patrol that is with aggressive enforcement.”

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State Senate considers defining wage theft in state law

Posted by National Alliance for Fair Contracting on

Delaware Public Media | By Paul Kiefer
Published May 18, 2022

Delaware’s Department of Labor and Department of Justice are backing a bill that would criminalize wage theft by employers.

Deputy Secretary of Labor Rachel Turney says under current Delaware law, employees paid under the table or misclassified as independent contractors have no clear way to seek justice if their employer doesn’t pay them appropriately for their work.

“The goal of the bill is to provide protection to workers who are paid under the table or misclassified as independent contractors, and therefore are not covered by the workers protection laws in place,” she said.

Her office estimates it receives about 1,000 of these complaints each year, and Turney says the most they can do is refer them to agencies like the IRS, which rarely take up individual worker complaints.

Sam Noel, a spokesman for Carpenters’ Union Local 255, supports the bill, saying it would help address the increasing misclassification of workers in the construction industry.

“This really helps the industry have contractors all on the same playing field,” he said.

This bill would allow employees to bring complaints to the Department of Labor, which would hold a hearing with the employer accused of wrongdoing. Employers found not to have paid an employee correctly would be required to provide restitution to the employee and pay a fine. Those fines would help pay for two enforcement officers – one at the Department of Labor, and another at the Department of Justice.

But State Sen. Colin Bonini is concerned about that funding structure.

“I’m always loathe to create enforcement mechanisms that are self-funding based on the fines they can levy on the people they’re overseeing,” he said.

Despite those concerns, the bill cleared the Senate’s labor committee on Wednesday.

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