Gov. Carney signs wage theft and other labor protection bills into law

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Delaware Public Media | By Paul Kiefer
Published October 10, 2022

Gov. John Carney signed a bill into law on Friday defining wage theft as a crime and setting financial penalties for violators.

The new wage theft law is one of the most detailed in the country, targeting an array of strategies used by employers to avoid paying taxes or underpay workers. Its sponsor, State Sen. Jack Walsh (D-Christiana/Newark), says wage theft, including misclassifying workers as part-time or contractors, is widespread and often leaves workers without access to key benefits.

“Having them work off-the-clock, paying them under the table – which presents problems down the road because they can’t access worker’s compensation or unemployment,” he said. “Basically, they’re misclassifying people, 1099-ing them, when they’re actual employees and should be treated as such.”

Delaware’s Department of Labor is responsible for investigating wage theft allegations and can refer cases to the Department of Justice for prosecution.

The law also sets financial penalties, including fines between $20,000 and $50,000 for retaliating against employees who report wage theft.

Carney also signed a bill into law on Friday that holds employers liable for damages if they do not provide a paycheck within one pay period after an employee is laid off or discharged, or after the employee resigns or quits.

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Governor Newsom Signs Executive Order Regarding Workers’ Compensation Presumption For Certain COVID-19 Related Claims (CA)

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May 15, 2020

Under the California Workers’ Compensation Act (“the Act”), employers must carry workers’ compensation insurance for employee injuries or illnesses which “arise out of and in the course of” employment. The Act, first passed in 1911 and amended over the years by the Legislature, provides a comprehensive system for administering claims, including the provision of disability benefits and the payment for associated medical expenses for work-related injuries.

Now comes the COVID-19 pandemic and a panoply of emergency orders by governors across the country. On May 6, 2020, Governor Newsom signed Executive Order #N-62-20 which creates a presumption that any COVID-19-related illness of an employee shall be presumed to arise out of and in the course of the employment for purposes of awarding workers’ compensation benefits if certain conditions are met.
Those conditions include the following:

  1. The employee tested positive for or was diagnosed with COVID19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction;
  2. The day referenced in subparagraph (a) on which the employee performed labor or services at the employee’s place of employment at the employer’s direction was on or after March 19, 2020;
  3. The employee’s place of employment referenced in subparagraphs (a) and (b) was not the employee’s home or residence; and
  4. Where subparagraph (a) is satisfied through a diagnosis of COVID-19, the diagnosis was done by a physician who holds a physician and surgeon license issued by the California Medical Board, and that diagnosis is confirmed by further testing within 30 days of the date of the diagnosis.

Thus, the Governor has taken the extraordinary step of presuming a workplace injury without specific evidence of job-causation. While the scope and legality of the new Executive Order may be subject to challenge, it is incumbent upon the California employer to review and enforce workplace safety, in all areas, and to specifically protect against the risk of employee exposure to a communicable disease, thereby avoiding added liability and costs associated with job illness or injury claims.

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Wage theft: An underreported crime

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Catholic News Service |Mark Pattison
February 21, 2020

A rising tide lifts all boats, according to the popular economic adage.

But what if the reverse also is true? What happens when wages are depressed, and illegally so?

The Catholic Labor Network, based in Washington, is testing that theory right now through its Mid-Atlantic Construction Wage Theft Project. It has sent a man to construction sites in Maryland and the District of Columbia to talk to workers to learn who hired them and how much they’re getting paid.

Ernesto Galeas, who has gone to the job sites, said a growing number of builders are going through labor brokers to obtain workers. The brokers get their fee – and, according to Galeas, the workers get about $10 an hour with no overtime, no Social Security, no worker’s compensation and no health insurance. …

In a February phone interview with Catholic News Service, Galeas said: “In every job that I visit, most of them have labor brokers in drywall, carpentry, siding, plumbing, electricians. I would say that of 10 jobs, eight of them are under labor brokers.”
While labor brokers were more common in new-home construction, it has spread to commercial development, he added. …

The attorney general’s office in the District of Columbia levied fines this winter totaling roughly $3.25 million against three firms found to have violated the city’s wage-theft law. Some of that money will go to workers as back pay. Two of the three companies specialize in drywall hanging and electrical work.

D.C.’s Workplace Fraud Act, which applies to the construction industry, requires companies to classify most workers as employees. Those who violate the law can face significant fines. Maryland has a similar bill, hence the Catholic Labor Network’s focus there with its wage-theft initiative. …

California passed the Private Attorneys General Act, which allows workers to stand in the shoes of their state’s labor department and seek civil penalties for wage theft; they also generate millions in new revenue for state enforcement agencies, expanding their capacity to root out wage theft. Such legislation also has been proposed in New York, Oregon, Maine, Massachusetts, Vermont and Washington. …

A 2017 study by the Economic Policy Institute found wage theft “causes many families to fall below the poverty line, and it increases workers’ reliance on public assistance, costing taxpayers money. Lost wages can hurt state and local economies, and it hurts other workers in affected industries by putting downward pressure on wages.”

In examining the 10 most populous states, which hold a bit more than half the U.S. population, wage theft comes to more than $8 billion a year. “If the findings for these states are representative for the rest of the country, they suggest that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year,” the report said.

Just how much is that? David Cooper, a senior analyst at the Economic Policy Institute and co-author of the report, told CNS that “when you look at the amount of wage theft that takes place, it’s significantly more than the value of property theft.” The report quotes FBI statistics from 2015 that show the combined value of money and property stolen in robberies, burglaries, larceny and motor vehicle theft in the United States was $12.7 billion.

“The magnitude,” Cooper said, “is a lot larger than people think.”

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Hennepin County’s first labor-trafficking case ends in guilty plea (MN)

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Prosecutors say they’re keeping tabs on other cases in the construction industry where contractors are exploiting immigrant workers

Riham Feshir
Minneapolis
November 18, 2019 7:40 p.m

A Twin Cities contractor accused of exploiting immigrant workers was supposed to face criminal charges in a first-of-its-kind trial in Hennepin County this week.

But Ricardo Batres instead pleaded guilty Monday to labor trafficking, and prosecutors say other cases in the construction industry are coming.

Batres, 47, admitted he took advantage of employees’ federal immigration status to force them to work for him. In one case, he bailed one of his workers out of immigration custody, but told him the man would need to pay off his debt. He also he lied on his workers compensation insurance papers to save money.

Batres took the deal, pleading guilty to labor trafficking and insurance fraud, after acknowledging that the evidence against him was strong.

“The insurance fraud and other things are not very good things,” said Hennepin County Attorney Mike Freeman after the hearing. “But what’s really bad is when you’re trafficking in human beings.”

Batres’ case marked the first time his office prosecuted someone under the state’s labor trafficking statute. But it won’t be the last, Freeman said.

“We are looking at other cases now,” he said. “We spent most of our time and energy, all of us, making sure this one worked. The industry is watching for a change, and they don’t like this. It makes the industry look bad.”

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Area DA’s pledge crackdown on wage theft, public works violations (NY)

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October 18, 2019

NEWBURGH – County district attorneys in the Hudson Valley, along with representatives from labor and construction associations, Thursday afternoon, explained the detriments associated with construction and wage fraud that has become a growing concern for public projects, subject to an RFP bidding process for which private contractors are eligible to apply.

In New York, as of 2018, $35.3 million were returned to 35,000 workers directly related to wage and workers compensation fraud.

Orange County District Attorney David Hoovler and Dutchess DA William Grady toured the construction underway at the Newburgh campus of Montefiore St. Luke’s Cornwall Hospital on Thursday.

Hoovler said his office has found a steady increase in the county over the last four years and he outlined a number of ways these different fraudulent practices appear that they have discovered.

“Prevailing Wage Fraud is where you don’t pay the proper wage; or, rather than paying the proper wage, you misclassify someone. Let’s just say a laborer is supposed to make $20 per hour, but a painter has to make $40 per hour. You have people painting; but, you classify them as a laborer. So, you should be paying them $40, but you’re saying you’re only paying them $20. That’s a form,” said Hoovler.

Worker’s Compensation, not having the proper Worker’s Compensation, or Worker’s Compensation at all. “It’s very dangerous if someone gets hurt on the job site. Other liability insurances, that contractors don’t carry, not having them; and then, finally, not paying the proper taxes,” he said.

Hoovler explained that these cases will use prosecution as a last resort. Their first priority is to get these contractors educated and then to get them compliant. A main incentive for these fraudulent behaviors is due to trying to rig the RFP process, where the lowest bidder must be taken. Wage fraud and lack of insurance allows these contractors to submit substantially lower bids.

When it comes to projects that are related to public health and safety, following appropriate practices is of the utmost importance because of the real danger shoddy construction, unqualified workers and lack of insurance could result in.

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Labor Union Says Workplace Violations Widespread in N.H. (NH)

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By SARAH GIBSON * APR 16, 2019

A local labor union is urging lawmakers to support legislation to combat what it says is a growing problem with workers compensation and wage theft in New Hampshire.

Members of the New England Regional Council of Carpenters say companies are using a loophole to underpay workers and underreport employees, by misclassifying these employees as independent contractors.

At an event organized by the union Monday, Rudolph Ogden, a deputy commissioner at the N.H. Department of Labor, told NHPR it’s not just carpenters who are getting shortchanged.

“For 20 years people have talked about misclassification and they said it’s all in construction and many said it’s all drywallers,” he said. “Now we’re seeing that it’s not just in construction; it’s in a variety of industries.”

When a company pretends its employees are independent contractors, it doesn’t have to provide workers comp if they’re injured, and it doesn’t pay as much in business taxes.

“We can’t compete with a company that doesn’t pay its workers and that doesn’t pay workers’ compensation,” said Richard Pelletier, of Auburn, N.H. His company, Universal Drywall, was fined for misclassification for projects in Massachusetts, but he says he’s since become a union contractor.

Pelletier and other representatives from union contractors said they do most of their business in Massachusetts because they’re so often undercut by companies in New Hampshire that reduce overhead costs by misclassifying workers and paying many under the table in cash.

The union is backing Senate Bill 151, a Democrat-sponsored bill that would make it easier for the DOL to issue stop work orders, but some in the industry fear it would slow down building projects.

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DC Suit of Florida Company is a Primer on Misclassification (DC)

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by Jim Kollaer | January 18, 2019

The recent lawsuit filed by the District of Colombia attorney general against Florida Company Power Design, Inc., labor brokers JVA Services, LLC and DDK Electric Inc., that alleges 535 workers were misclassified as Independent Contractors, or 1099 workers, provides a primer on the way that some construction companies create vehicles to avoid taxes, the payment of overtime, the provision of worker’s compensation, or medical benefits. The lawsuit demands a jury trial where the defendants will have the chance to defend themselves, but the charges detailed give a full picture of how to set up and execute a plan to use independent contractors to act as subcontractors on specific projects for a specific company.

Generally, the process that the attorney general alleges representatives of Power Design used to set up the labor brokers in business and then use those labor brokers to provide manpower for their projects, specifically in the DC area, is being repeated across the country every day. This happens specifically in the construction industry, but it also is being used in various iterations by companies in a broad range of other industries and services as well.

The details of the lawsuit are very specific in how the companies were set up, legalized on a Friday and working on Power Design projects on a Monday. Companies were allegedly set up under names and with owners who had no experience in running a company but who were coached and given contracts and employment documents allegedly by Power Design. They, in turn, provided workers who allegedly worked for Power Design as independent contractors for sub-par wages and with none of the protections provided to Power Design’s jobsite superintendents and foreman on the same jobs.

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Miami-Dade County helps victims of wage theft (FL)

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By Layron Livingston – Reporter
Posted: 6:28 PM, January 22, 2019

MIAMI – You got the job. You did the work. But what do you do when you don’t get paid?

Wage theft is a real issue impacting workers in a wide array of industries, from restaurants and retail to construction and the corporate world.

“I think you have a lot of employees who are being promised payments, and sometimes, that promise may be fulfilled, but in many times, it’s not,” Bryant Acevedo said.

Acevedo is a public information officer with the Miami-Dade County Office of Consumer Protection.

“Do you try to sue? What do you do? I think there are a lot of people who don’t even know where to start,” he said.

Acevedo said the consumer protection office’s Wage Theft Program helps workers investigate and recover unpaid wages for free.

The office was able to successfully conciliate $361,742 worth of unpaid wages in 2017.
“Wage theft is where you have an employee who is simply not being paid [or] compensated for their work,” Acevedo said.

Types of complaints handled by the Office of Consumer Protection Wage Theft Program include:

Unpaid wages
Underpaid wages
Fewer hours than worked
Work completed after notice of separation
Work completed during pay period of termination
Rate lower than agreed upon
Unpaid vacation/sick time
Unpaid commissions
Bounced paychecks
Promised payments

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Illegal Labor Practices in the Philadelphia Regional Construction Industry: An Assessment and Action Plan (PA)

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Authors: Russell Ormiston, Stephen Herzenberg
Publication Date: January 11, 2019

This brief, buttressed by the companion national literature review by Professor Russell Ormiston of Allegheny College, presents multiple sources of complementary evidence that point to a single, simple conclusion: US and Pennsylvania labor law and labor standards are routinely violated by many contractors in the Southeast Pennsylvania regional construction industry. These violations threaten to transform growing shares of the construction sector-an industry that still provides significant numbers of well-paid jobs to highly skilled non-college workers-into low-wage, low-skill jobs, further undermining the region’s middle class and increasing already-gaping inequality.

Labor standards violations victimize workers and their families, taxpayers, law-abiding contractors, and construction customers including public sector entities.

* Workers get cheated of the pay they have earned and need to support their family.

* Local businesses suffer because lower-wage workers, some from outside the region, consume less.

* Taxpayers lose because worker victims of wage theft pay less in taxes. Taxpayers also lose in some cases because irresponsible contractors win public contracts awarded to low bidders and then use “change orders” to increase project cost beyond the original bid.

* As well as losing income, workers and their families may suffer because of injuries suffered on the job. Such injuries are more common among contractors who violate labor standards and, in some cases, rely on informal labor markets essentially outside the purview of labor law.

* Law-abiding contractors lose business and profits-and pay higher unemployment insurance taxes and workers compensation premiums-because their competitors underpay. Law-abiding contractors also face pressure to begin violating standards and cheating workers themselves-in a potential “if you can’t beat ’em, join ’em” downward spiral that spreads destructive competition.

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Alaska governor signs comp reform bill (AK)

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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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