Matthew Fritz-Mauer: The hollow promise of workers’ rights in DC (DC)

Posted by National Alliance for Fair Contracting on

March 4, 2020

It might seem like working people in the District of Columbia have a lot to celebrate. In fact, researchers at Oxfam not long ago named DC the most worker-friendly place in the country. Over the past few years, the DC Council has raised the minimum wage, guaranteed paid sick days, and created a paid family leave program.

But despite these accomplishments, there’s something wrong in our city: Employers frequently violate basic workplace laws, and DC is failing to protect workers’ rights. The name of the problem is wage theft, and it wreaks havoc on the lives of working people. Wage theft occurs when a worker is denied the wages or benefits to which he or she is legally entitled. Common forms include not paying minimum wage or overtime, denying paid leave, and failing to pay for all hours worked.

In too many cases, employers steal from their workers. One study estimated that low-wage workers lose 15% of their income to wage theft; another estimated that nationwide minimum wage violations alone cost low-wage workers $15 billion per year. Across the country, millions of people have their basic workplace rights violated every year.

Research commissioned by the DC Department of Employment Services (DOES) estimates that nearly 40,000 workers per year experience minimum wage violations here in DC. Those of us who work with the low-wage community hear stories of wage theft over and over again. My research, which involves detailed interviews with low-income people, found that wage theft is a persistent and devastating problem in their lives.

Wage theft makes it hard to pay rent, buy food, go to the doctor, and keep on the heat and water. Many workers feel angry, depressed and helpless over it. For some, the strain becomes too much, and they think about or even attempt to die by suicide. Wage theft weakens families and communities, strains the social safety net, and makes it hard for legitimate employers to compete against companies that cut costs by defrauding employees.

How can this be the case? In 2014, DC passed a law specifically designed to attack wage theft. The Wage Theft Prevention Amendment Act increased civil and criminal penalties, expanded the authority of DOES, incentivized lawyers to take on claims, and issued a clear statement about our city’s values. It is one of the most robust and progressive anti-wage theft laws in the country.

But that law is, in many ways, failing.

Today, workers who suffer wage theft have four options: They can go to the DC Office of the Attorney General (OAG), find a private lawyer, file a lawsuit themselves, or file a wage-theft claim with DOES. Realistically, though, DOES has to be the primary enforcer of basic workplace laws. Both the OAG and private-sector attorneys have increased enforcement activities, but resources are limited. The vast majority of people can’t get a lawyer to represent them, and filing a lawsuit on their own is too intimidating and confusing. Going to DOES should be a quick, easy and effective way to fight back against wage theft. In reality, it’s anything but.

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U.S. DEPARTMENT OF LABOR ISSUES INDUSTRY-RECOGNIZED APPRENTICESHIP PROGRAM FINAL

Posted by National Alliance for Fair Contracting on

Agency: Employment and Training Administration
Date: March 10, 2020
Release Number: 20-386-NAT

WASHINGTON, DC -The U.S. Department of Labor today published a final rule that will help expand apprenticeships in the United States by establishing a system for advancing the development of high-quality, Industry-Recognized Apprenticeship Programs (IRAPs).

IRAPs are high-quality apprenticeship programs, recognized as such by a third-party entity under standards established by the department in the new rule. Through these programs, individuals will be able to obtain workplace-relevant training and progressively advancing skills that result in an industry-recognized credential, all while getting paid for their work. An IRAP is developed or operated by entities such as trade and industry groups, corporations, non-profit organizations, educational institutions, unions, and joint labor-management organizations.

“Apprenticeships are widely recognized to be a highly effective job-training approach for American workers and for employers seeking the skilled workforce needed in today’s changing workplace,” Secretary of Labor Eugene Scalia said. “This new rule offers employers, community colleges, and others a flexible, innovative way to quickly expand apprenticeship in telecommunications, health care, cybersecurity, and other sectors where apprenticeships currently are not widely available.”

Third-party entities interested in evaluating and recognizing high-quality IRAPs consistent with the department’s standards should follow the process outlined in the final rule to become Standards Recognition Entities (SREs).

As described in the final rule, many different types of entities may become recognized SREs, including trade groups, companies, educational institutions, state and local governments, non-profits, unions, joint labor-management organizations, and certification and accreditation bodies for a profession or industry. The rule also outlines the responsibilities and requirements for SREs, as well as the department’s standards that programs must meet to obtain and maintain IRAP status and sets forth how the administrator will oversee SREs.

Once recognized by the department, SREs will work with employers and other entities to establish, recognize, and monitor high-quality IRAPs that provide apprentices with industry-recognized credentials.

IRAPs will serve as a complement to the successful registered apprenticeship program that has been in place for over 80 years. The industry-led, market-driven SRE approach outlined in the final rule will give employers and other stakeholders additional flexibility necessary to expand the apprenticeship model into new industries and to address the diverse workforce needs of different industries and occupations. The rule prohibits SREs from recognizing IRAPs in the construction sector, which has the greatest existing utilization of registered apprenticeship programs.

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Power Design to Pay $2.75 Million to Resolve Wage Theft Lawsuit (DC)

Posted by National Alliance for Fair Contracting on

D.C. Office of the Attorney General alleges national electrical contracting company misclassified more than 500 workers as independent contractors. This settlement is OAG’s largest recovery to date in a wage enforcement action.

January 23, 2020

Attorney General Karl A. Racine recently announced that Power Design, Inc., a national electrical contractor headquartered in St. Petersburg, Fla., will be required to pay $2.75 million to workers and the District as part of a settlement in a wage theft and worker misclassification case. The settlement with the Office of the Attorney General (OAG) resolves a 2018 lawsuit against Power Design and two subcontractors that staffed its worksites for allegedly misclassifying more than 500 electrical workers as independent contractors instead of employees to cut labor costs. OAG also alleged that Power Design cheated workers out of wages and benefits and failed to pay District unemployment insurance taxes.

Under the terms of the settlement, Power Design will be required to: …

  • Pay $50,000 to support apprenticeships, job training, or workforce development opportunities to District residents.
  • Implement new policies and procedures to ensure compliance with the District’s minimum wage, overtime, paid sick leave, and worker misclassification laws.

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Press Release: AG Racine Announces Two District Employers Must Pay Nearly $500K In Unpaid Wages To Workers And Penalties (DC)

Posted by National Alliance for Fair Contracting on

News Release – DC Office of the Attorney General
Jan. 2, 2020

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that the Office of the Attorney General (OAG) resolved two wage theft enforcement actions against two District employers that require them to pay nearly $500,000 in relief to harmed workers and penalties to the District. In a settlement with the Office of the Attorney General (OAG), Rock Spring Contracting, LLC, a construction company, is required to pay over $280,000 for allegedly misclassifying workers as independent contractors and depriving them of legally-mandated paid sick leave and overtime pay. …

Under the District’s Workplace Fraud Act, which applies to the construction industry, companies are required to classify most workers as employees and those who fail to do so can face significant penalties. …

OAG’s Increased Efforts to Fight Wage Theft

In 2017, OAG worked with the Council of the District of Columbia to grant the agency independent authority to investigate and bring wage theft cases, and to increase penalties on employers who violate the District’s wage and hour laws. Since then, OAG has launched more than 30 investigations into wage theft and payroll fraud and has taken action against a home health care provider, a national electrical contracting firm, KFC franchises, a cell phone store, a cafe chain, and other businesses that harmed District workers. AG Racine also recently testified before Congress and highlighted findings from an OAG report about how worker misclassification-a type of payroll fraud-hurts workers, undercuts law-abiding businesses, and cheats taxpayers. Read our latest factsheet on OAG’s work to protect District workers.

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AG Racine Releases Report on Payroll Fraud in District Construction Industry (DC)

Posted by National Alliance for Fair Contracting on

Report Details How Companies Evade Taxes and Reduce Workers’ Take-Home Pay by Illegally Misclassifying Workers as Independent Contractors

by Construction Citizen | September 20, 2019

Attorney General Karl A. Racine released a report last week demonstrating how District of Columbia construction companies hurt workers, cheat taxpayers, and undercut law-abiding competitors when they illegally misclassify workers as independent contractors. Worker misclassification is a form of payroll fraud where employers categorize workers who should be considered direct employees as independent contractors. This practice is used by unscrupulous employers to get around labor laws and reduce costs, and it is especially common in the construction industry. The Office of the Attorney General (OAG) commissioned this report as part of a broader effort to crack down on wage theft in the District.

“Companies that illegally misclassify employees as independent contractors are stealing from workers, evading taxes, and gaining an unlawful edge over competitors,” said AG Racine. “The Office of the Attorney General commissioned this study to better understand the dynamics of worker misclassification and how we can fight it – and the economic analysis shows just how much this illegal practice costs workers and the community. Indeed, my office has already taken several companies to court to stop this kind of payroll fraud, and we will continue to act to protect workers when businesses violate the District’s labor laws.”

In the District, businesses are legally required to pay employees a minimum wage, contribute toward their state and federal taxes, and provide overtime pay and other benefits. Businesses do not have the same responsibilities to independent contractors, who must pay all their own taxes, are not protected by most labor laws, and do not have access to workers’ compensation or unemployment insurance. Numerous studies have documented that employee misclassification schemes are pervasive in the construction industry.

The District’s Workplace Fraud Act, which applies to the construction industry, requires companies to classify workers as employees in most circumstances. To classify a worker as an independent contractor, construction companies must prove that an individual is free from the employer’s direction and control, is economically independent, and that their work falls outside of the core business of that company.

OAG’s new report, which includes analysis by labor economists Dr. Dale Belman and Dr. Aaron Sojourner, reveals that District construction companies that misclassify workers unlawfully avoid at least 16.7 percent in labor costs compared to companies that operate legally. They do this by failing to pay overtime, shifting tax burdens to workers, and evading other taxes and required payments entirely. When employers who misclassify workers evade taxes, the District loses out on funding for critical social safety net programs. If these companies are engaged in other forms of wage theft, their savings at the expense of workers can exceed 40 percent.

…

OAG’s Increased Efforts to Protect Workers

OAG’s efforts to fight worker misclassification are just one part of a broader push to protect District workers. Last year, OAG stepped up wage theft enforcement after working with the D.C. Council on legislation granting the agency independent authority to investigate and bring these cases and increased penalties on employers who violate the District’s wage and hour laws. Wage theft is the illegal practice of denying workers’ wages or benefits they have earned. This happens when employers withhold pay, pay less than the required minimum wage, force workers to work extra hours without pay, refuse to pay overtime, or misclassify employees as contractors. Wage theft affects millions of workers nationally and happens across job types and income levels. Workers in low-wage jobs and immigrants are especially vulnerable to this type of exploitation.

Since it gained new enforcement authority, OAG can now seek to recover stolen wages, restitution of up to three times the amount of unpaid wages, and penalties from employers, and can also bring criminal charges. So far, OAG has launched more than 30 investigations into wage theft and payroll fraud, and has taken action against a home health care service provider, a national electrical contracting firm, KFC franchises, a cell phone store, a cafe chain, and other businesses that harmed District workers. To date, OAG has obtained over $400,000.00 in judgments and settlements against businesses that have stolen wages from District workers.

How to Report Wage Theft Violations

Workers who believe that they have experienced wage theft or other wage and hour violations can submit a complaint to OAG by phone at (202) 442-9854. Workers can learn about their rights under District law and how they can get help if their rights are being violated on the OAG website.

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“Unfair competition for law-abiding companies: The increase in the proportion of construction workers who are misclassified as independent contractors impacts how business is done in the construction industry. Companies that fraudulently misclassify gain the advantage of reduced labor costs. They are in a position to submit lower bids than competitors who follow the law. As the number of companies that misclassify increases, law-abiding companies win fewer bids, and have less work. Over time, misclassification progresses from a method used by unscrupulous companies to earn additional profits to the price of survival in the industry. Reducing the use of misclassified workers provides a level playing field for law-abiding companies.” – According to Dr. Dale Belman and Dr. Aaron Sojourner whose economic analysis is cited in the report.

(PDF Copy of OAG Report on – Illegal Worker Misclassification: Payroll Fraud in the District’s Construction Industry)

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Racine slated to testify in Congress in wake of AG’s report on illegal worker misclassification in DC’s construction industry (DC)

Posted by National Alliance for Fair Contracting on

By Kevin Fasic and Anthony N. Delcollo
August 15, 2019 at 11:10 AM

DC Attorney General Karl Racine is set to testify Thursday at a U.S. House hearing on misclassification of employees as a form of payroll fraud, the subject of a report released earlier this month by Racine’s office on how the practice affects the District’s construction industry.

Racine is one of six witnesses called by the Education & Labor Committee’s Workforce Protections Subcommittee for a 10:15 a.m. hearing on “Misclassification of Employees: Examining the Costs to Workers, Businesses, and the Economy.”

The report commissioned by Racine’s office – “Illegal Worker Misclassification: Payroll Fraud in the District’s Construction Industry” – found that by illegally misclassifying employees as independent contractors, construction companies in the District can evade at least 16.7% of the cost of doing business. The report is the latest step in the attorney general’s broad effort in recent years to curb wage theft in DC.

“Here in the District we believe it is incredibly important to protect workers’ rights, including workers’ rights to fair wages, overtime pay, sick and safe leave, and to help create economic opportunity for all of our residents,” Racine said at a Sept. 10 panel event at Georgetown University. Safe leave enables workers to take job-protected time off to cover their needs if they or an immediate family member are the victim of domestic violence, stalking or human trafficking.

Racine delivered the report’s findings at a forum hosted by the Kalmanovitz Initiative for Labor and the Working Poor, within Georgetown’s School of Continuing Studies. The initiative works to develop innovative strategies and public policies to improve workers’ lives in a changing economy, according to its website.

“Our local economy clearly is growing in DC,” Racine said. “But what we don’t see often enough is the very fact that workers, oftentimes immigrant workers, are being treated poorly and are having their wages taken from them.”

By treating employees as contractors, companies are able to skirt paying payroll taxes and Social Security, overtime, sick leave and other benefits that would otherwise be due. About two-thirds of the savings from misclassification is taken from workers and the remaining third from society at large in the form of unpaid taxes, according to the report. The authors of the study are Dale Belman, a professor at Michigan State University’s School of Human Resources and Labor Relations, and Aaron Sojourner, an associate professor at the University of Minnesota’s Carlson School of Management.

Within DC’s construction industry, “we have things such as a lot of undocumented workers,” Sojourner said at the Georgetown event. “They are not in a good position to go to their boss and go, ‘You know, you owe me an extra $4 an hour. I’ve done the calculations – if you classified me properly, this is what I should be getting.'”

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D.C. Commits to $15 Minimum Wage by 2020

Posted by National Alliance for Fair Contracting on

July 13, 2016

by KIM SZARMACH

Mayor Muriel Bowser signed legislation on June 27 that had been unanimously approved by D.C. Council to raise D.C.’s minimum wage to $15 per hour by 2020. The minimum wage was increased to $11.50 on July 1 in accordance with a 2013 D.C. amendment, but the wage will rise faster from year to year because of the new Fair Shot Minimum Wage Amendment Act of 2016.

The legislation also increases base-pay for tipped workers, though many advocates have argued in favor of one minimum wage for all. “We believe that D.C. should follow the model of more and more jurisdictions around the country,” testified DC Fiscal Policy Institute Senior Analyst Ilana Boivie at a May hearing about the bill, “to eliminate the subminimum wage for tipped workers altogether, to address the severe income stability and other challenges these workers face.” District employers are responsible for making up the difference if their employees’ tips do not add up to at least minimum wage.

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Labor Department investigating subcontractor on Trump’s Old Post Office project

Posted by National Alliance for Fair Contracting on
Drew Hanson, Digital Editor
Updated Jun 27, 2016, 10:18am EDT

The Labor Department is investigating whether a subcontractor working on Donald Trump’s Old Post Office hotel underpaid employees working on the downtown D.C. project, according to The Washington Post.

A Labor spokesperson told the Post the agency is looking into whether Brentwood-based glass specialist The Craftsmen Group was paying wages below those required by federal law on government construction projects.

The investigation was first reported last week by Politico. Workers on the Pennsylvania Avenue construction site, including one Craftsmen employee, told Politico that they and others were not receiving wages mandated by the Davis-Bacon Act.

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Employers Of District Of Columbia Employees Have One Month Left To Provide Wage Notices To Current Employees

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Monday, April 27, 2015

The District of Columbia’s Wage Theft Prevention Amendment Act of 2014, which became effective on February 26, 2015, requires in part that employers provide written wage notices to their D.C.-based employees.  Employers have until May 27, 2015 to satisfy this requirement with respect to their employees who were employed as of the Act’s effective date of February 26, 2015.

Specifically, the law requires written wage notices as follows:

  1. New Employees:  Employers are required to provide a written wage notice, both in English and in the employee’s primary language, to all new employees at the time of hiring (with receipt of the notice to be acknowledged in writing by the employee and a copy retained by the employer);
  2. Current Employees:  Employers are required to provide a written wage notice, both in English and in the employee’s primary language, to all current employees (who were employed as of February 26, 2015) by May 27, 2015 (with receipt of the notice to be acknowledged in writing by the employee and a copy retained by the employer);
  3. Upon Change:  Employers are required to provide a written wage notice, both in English and in the employee’s primary language, whenever there is a change to any information on the wage notice (with the notice to be acknowledged by the employee and a copy retained by the employer).

 

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D.C.’s New Wage Theft Law Imposes Additional Notice, Posting and Recordkeeping Requirements on Employers

Posted by National Alliance for Fair Contracting on
Friday, January 23, 2015

Last October, we reported on D.C.’s soon-to-be-enacted D.C. Wage Theft Prevention Amendment Act. This Act, which amends several existing D.C. wage and hour laws, includes new notice requirements and retaliation protections, increases employer liability for wage and hour violations and introduces a new administrative hearing process – all changes that employers with D.C.-based employees need to be aware of.

The Act becomes effective on February 26, 2015.  Previously, the Act was slated to go into effect on January 14, 2015, but an emergency amendment pushed back that date.  There is a chance it is pushed back again and we will update this post accordingly if that happens.  An overview of the key provisions follows below.

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