Labor Department announces grants to fight tax cheats

Posted by National Alliance for Fair Contracting on

WASHINGTON – The U.S. Department of Labor on Monday awarded $10.2 million to nearly two dozen states to beef up enforcement of a labor scheme that companies employ to evade their tax obligations.

The announcement of the first-of-their-kind grants comes one week after McClatchy’s five-part series that uncovered the federal government’s failure to stop companies that wrongly classify their workers as independent contractors instead of employees on federal contracts.

Labor Secretary Tom Perez said the grants, which range from $28,000 to $1.3 million, will help states identify and stop so-called worker misclassification and protect state unemployment insurance benefits.

“This is one of many actions the department is taking to help level the playing field for employers while ensuring workers receive appropriate rights and protections,” Perez said in a statement.

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(Related Link – McClatchy’s “Contract to Cheat”)

Since 2006, construction workers on city projects lost more than $275,000 in wages

Posted by National Alliance for Fair Contracting on

Wage theft is prevalent, even among construction projects paid for by the city of Seattle.

The city’s Department of Finance and Administrative (FAS) employs six people to monitor wage theft among city construction contracts. Four have been working on the issue since 2006, but last year the council approved two more employees to address an uptick in wage-theft complaints.

Since 2006 the city’s investigators were able to pay construction employees more than $275,000 in recovered wages.

“This is not a unique issue to Seattle,” said Nancy Locke, director of city purchasing, describing how wages are intentionally and unintentionally withheld from workers.

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Seattle contractor who threatened workers with deportation to steal wages sentenced

Posted by National Alliance for Fair Contracting on

A Seattle contractor who’d landed more than $1.1 million in government contracts was sentenced Friday to three months in jail for scamming workers out of pay as part of a scheme to underbid his competitors.

Dathan Williams’ thefts from his workers were uncovered following an intensive investigation that saw a Seattle police officer trained as a drywall installer and inserted into his company. Williams, 33, bragged about threatening his employees with deportation when they asked to be paid correctly.

Williams, 33, appears to have been targeted as part of a larger investigation into claims that Washington subcontractors are abusing workers and ignoring wage laws meant to keep opportunistic contractors from underbidding those paying higher wages.

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Legislation Would Go After Employers Who Misclassify Workers to Avoid Benefits

Posted by National Alliance for Fair Contracting on

A state lawmaker says Pennsylvania regulators are coming up short when it comes to enforcing a 2010 state law intended to target companies that misclassify their workers as independent contractors.

State Senator Mike Stack (D-Philadelphia) said there is room in the economy for independent contractors, but, “there is obvious abuse of the classification which denies employees rights, benefits and protections accorded under labor laws.”

Under Act 72, independent contractors are supposed to use their own tools and equipment and should not be under the direct supervision of their employers.

The law outlines penalties for misclassifying workers, but Stack said the commonwealth is not adequately enforcing the law

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How New York and Illinois Curb a Key Labor Violation While Other States Fall Short

Posted by National Alliance for Fair Contracting on

This story is part of the series called “Contract to Cheat” published by McClatchy DC. The series tracks how several states fail to prevent construction companies doing public projects from misclassifying their workers as independent contractors 2014 a practice that cheats taxpayers out of billions of dollars each year and denies workers protections.

Read the entire series on McClatchy’s site

On an overcast July afternoon, with the clock ticking on their lunch break, men in blue jeans and hard hats filed out of the four-story Fairfield Inn & Suites under construction near Interstate 270.

Jon Gould, a Carpenters Union job site investigator, stood in the parking lot of a nearby filling station and gazed at the half-finished motel. Three months earlier, on a hunch, investigators from Gould’s union had started videotaping the people building the motel.

The surveillance was taking place to answer a big question: Was Road Runner Construction, of Little Rock, Ark., the motel framing contractor, trying to get away with a practice known as misclassification? Repeated countless times nationwide, often with impunity, the practice enables dishonest companies to underbid honest competitors by categorizing employees as independent contractors-thereby dodging laws that require the payment of state and federal taxes.

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An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year

Posted by National Alliance for Fair Contracting on

Millions of Americans struggle to get by on low wages, often without any benefits such as paid sick leave, a pension, or even health insurance. Their difficult lives are made immeasurably harder when they do the work they have been hired to do, but their employers refuse to pay, pay for some hours but not others, or fail to pay overtime premiums when employees’ hours exceed 40 in a week.

This failure to pay what workers are legally entitled to can be called wage theft; in essence, it involves employers taking money that belongs to their employees and keeping it for themselves. Amounts that seem small, such as not paying for time spent preparing a work station at the start of a shift, or for cleaning up and closing up at the end of a shift, can add up.  When a worker earns only a minimum wage ($290 for a 40-hour week), shaving a mere half hour a day from the paycheck means a loss of more than $1,400 a year, including overtime premiums. That could be nearly 10 percent of a minimum-wage employee’s annual earnings-the difference between paying the rent and utilities or risking eviction and the loss of gas, water, or electric service.

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(Issue Brief #385 – Download PDF)

Number of ‘Wage Theft’ Claims is Rising

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A growing number of lawsuits have been filed over “wage theft”, where employers allegedly violate minimum wage and overtime laws, falsely claim a lower number of work hours and take employees’ tips. Worker advocates, along with some state and federal officials, say that this wrongful practice has become far too common.

The New York Times shares the story of Guadalupe Rangel, who workers seven days straight, sometimes 11 hours a day for Schneider warehouse. He often worked 70 hours per week unloading furniture and other imports from Asia to be shipped to Walmart stores, but he says he was never paid for the time-and-a-half overtime. Rangel joined a lawsuit along with hundreds of other warehouse workers. The suit was recently settled for $21 million, resulting in over $20,000 in back pay for Rangel. “Sometimes I’d work 60, even 90 days in a row,” said Mr. Rangel to the New York Times. “They never paid overtime.”

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A.G. Schneiderman Announces Conviction Of Electrical Contractors For Not Paying Prevailing Wages On Electrical Work Projects

Posted by National Alliance for Fair Contracting on

NEW YORK — Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Ronald Bartiromo, Raymond D’Auria and R3 Electrical Inc. for failing to pay legally required wages to their workers on two public works projects throughout New York City.  Ronald Bartiromo and R3 Electrical pled guilty to the felony crimes of violation of prevailing wage requirements of the New York State Labor Law and grand larceny in the second degree.  D’Auria pled guilty to the misdemeanor crime of violation of prevailing wage requirements of the New York State Labor Law.  As a condition of the pleas, Bartiromo and R3 Electrical agreed to pay $273,943.66 in restitution to underpaid workers and are prohibited from working on public works projects for five years.  Bartiromo was also sentenced to 5 years’ probation.

“Mr. Bartiromo, Mr. D’Auria and R3 Electrical, Inc. are being held accountable for stealing wages from workers who did electrical work on several public works projects throughout New York City,” Attorney General Schneiderman said. “My office will continue to take strong action, including filing criminal charges, against employers who violate New York’s labor laws, steal taxpayer dollars and violate the public trust.”

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Washington state a leader in fighting payroll fraud, but problems still occur

Posted by National Alliance for Fair Contracting on

Dathan Williams wasn’t shy when it came to bragging to his workers about how he was breaking the law.The owner of a Seattle drywall company boasted to his employees about how he shortchanged them on pay and dodged taxes to gain an edge in bidding wars for work on government contracts.

The subcontractor also told his employees – many of whom were in the country illegally – how he reported workers to immigration authorities after they complained they were being underpaid.

Unfortunately for Williams, one of his workers was an undercover Seattle police officer.In July, Williams pleaded guilty in King County Superior Court to two counts of second-degree theft and one count of filing false payroll documents. He faces up to a year in jail and a $10,000 fine when he is sentenced later this month.

The Williams case is a high-profile example of the kind of payroll fraud that labor groups and state regulators say happens too often in Washington, despite the state being viewed as a model for detecting and prosecuting offenders

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Non-Union Contractor Caught Shaving $50/hour Off Worker Paychecks on City Funded Project in NY

Posted by National Alliance for Fair Contracting on

As contractor on the Sugar Hill housing project in Harlem, MountCo construction was supposed to be paying its workers the prevailing wage (nearly $65 an hour).  The reality? Workers on the project were making closer to $15 and being forced to lie about their earnings to inspectors who were there to monitor the company because of its history of failing to do so.

Construction of taxpayer subsidized projects is big business, regulated to ensure maximum positive economic impact on the community.  The name of MountCo’s non-union game, sadly, is inflating profits by drastically underpaying workers. The city is now looking to recover nearly $300,000 in back wages owed to the workers, the New York Daily News writes.

Workers told NDN that on that day of the project’s press conference completion, they were kept in the top half of the building so they would not be seen by the press or reveal to the Mayor the problems with the contractor.  What’s worse, many of them were paid for only half days and told the reason was how little work there was to do on those top floors.

“They told us we had to work on the ninth floor or higher. We couldn’t work any lower than that. They were going to tell us when we could go downstairs,” one worker, who did not want to be identified, told The News. “They wouldn’t let us see him.”

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