Five Orlando Residents Indicted For Scheme To Facilitate Evasion Of Payroll Taxes And Workers’ Compensation Requirements In Construction Industry

Posted by National Alliance for Fair Contracting on

U.S. Attorney’s Office, Middle District of Florida
Thursday, October 24, 2024

Jacksonville, Florida – United States Attorney Roger B. Handberg announces the return of two indictments charging Eduardo Anibal Escobar (44), Carlos Alberto Rodriguez (45), Adelmy Tejada (56), Rene Mauricio Escobar (53), and Juana Nelida Escobar (45), all residents of Orlando, with conspiracy to commit wire fraud and conspiracy to commit tax fraud. Each wire fraud count carries a maximum penalty of 20 years in federal prison and each tax fraud count carries a maximum penalty of 5 years in prison. The indictments also notify the defendants that the United States intends to seek forfeiture of a total of at least $19 million as well as five residential properties located in Orlando, which are proceeds of the alleged wire fraud offenses.

According to the indictment, the defendants established companies that purported to supply labor for construction contractors. Florida law requires any business that engages in construction work to secure and maintain workers’ compensation insurance. The defendants applied for workers’ compensation insurance policies to cover a few employees and a minimal payroll. The defendants then entered into agreements with construction work crews, often consisting of undocumented aliens, pursuant to which the defendants submitted paperwork to construction contractors to obtain work for the work crews, falsely representing that the workers were the companies’ employees. The workers then performed construction work under the supervision and direction of the contractors.

The contractors wrote payroll checks to the defendants’ companies for this work and provided the checks to work crew leaders. The checks were deposited into bank accounts in the name of the defendants’ companies and the defendants withdrew cash, and sometimes wrote checks, for the workers’ pay and provided the cash and checks to the work crew leaders. However, before turning over the payroll, the defendants deducted a 6% to 8% fee for their services. The funneling of payroll from the contractors to the work crews in this way allowed the contractors and the work crews to disclaim responsibility for ensuring that required payroll taxes were paid, that adequate workers’ compensation insurance was provided, and that the workers were legally authorized to work in the United States.

View Article

 

NJDOL Uses Expanded Powers to Stop Worker Exploitation at Job Sites

Posted by National Alliance for Fair Contracting on

August 17, 2022

NJDOL Uses Expanded Powers to Stop Worker Exploitation at Job Sites
Authority Extended Three Years Ago Helps Curtail Wage, Benefits Violations & Misclassification

TRENTON – In the three years since Governor Murphy signed a law expanding NJDOL’s powers to stop work on a job site when there is strong evidence workers are being exploited, the department has issued 71 stop-work orders, through which agents found nearly $1 million in back wages owed to 235 workers.

The law gave NJDOL’s Division of Wage and Hour and Contract Compliance the power to immediately halt work at any public or private work site – both construction and non-construction sites – when an initial investigation finds evidence that the employer has violated any state wage, benefit or tax laws.

“With the authority to issue stop-work orders as soon as we identify a violation, the NJDOL gained the ability to shut down a job when it finds workers are being exploited,” said Labor Commissioner Robert Asaro-Angelo. “The legislation signed by Governor Murphy in the Summer of 2019 has given NJDOL a powerful enforcement tool to uphold its mission of protecting our workforce, strengthening our businesses, and promoting the dignity of work.”

The most common violations leading to stop-work orders are: employers not having workers’ compensation insurance or misclassifying employees as independent contractors. Other examples include employers who fail to pay prevailing wage or overtime; those who have outstanding judgements against them; or those whose workers were not paid, were paid late or were shorted, or were paid in cash off the books. Often, these unscrupulous employers have not made their required contributions to the state unemployment trust fund, from which unemployment payments are drawn.

Prior to the law’s enactment, the NJDOL had little recourse to stop or prevent violators from shirking these policies. Work stoppages were rarely utilized because they could be applied only in cases when an employer amassed a history of violations. This made stopping out-of-state violators doing work in New Jersey particularly difficult, as they often left the state before the department could enforce state regulations.

Stop-work orders have been used to shut down work sites of all types, such as construction jobs, restaurants, an internet radio station, and medical offices. Typically, stop-work orders are resolved in a matter of a few days, and are often resolved on the spot when the order is delivered to a business – as was the case in August 2021 when the NJDOL issued stop-work orders to four separate businesses for wage violations, with each business paying the back wages owed to their workers immediately to avoid closure.

(Read More)

Governor and lawmakers seek penalties against dishonest construction industry employers (TN)

Posted by National Alliance for Fair Contracting on

Posted: 11:58 AM, Feb 25, 2020
By Ben Hall

NASHVILLE, Tenn. (WTVF) – The state is looking to crack down on dishonest employers in the construction industry.

Governor Bill Lee has proposed a bill (SB 2189) that would penalize employers who misclassify workers as independent contractors to avoid paying workers compensation insurance and then change their company name in order to avoid paying fines after they are caught.

Senator Sara Kyle (D – Memphis) has proposed a bill (SB 2404) that would shut down construction sites when employers do not immediately cooperate with state investigators.

The bills follow a NewsChannel 5 investigation which showed the dark side of Nashville’s building boom.

Some employers cheat workers out of overtime pay and cheat taxpayers out of millions of dollars by not paying for workers’ compensation insurance.

“The dishonest ones, we need to run out of the state of Tennessee,” Senator Kyle said.
Governor Lee’s proposal is sponsored by the Republican leaders of the House and Senate.

“We’re thrilled,” said Victor White with the Carpenter’s Union. “It’s a pure pleasure to see this isn’t partisan. The bills are being submitted from both sides of the aisle.”

(Read More)

Construction middlemen put workers in danger by cheating workers comp insurance providers: DA (NY)

Posted by National Alliance for Fair Contracting on

By SHAYNA JACOBS
NEW YORK DAILY NEWS
SEP 05, 2019 | 8:21 PM

A labor broker whose company pairs workers with construction gigs put endangered their employees by scamming workers compensation insurance companies in an “extensive fraud scheme,” Manhattan prosecutors said Thursday.

Labor broker Salvador Almonte, 38, and insurance broker Steven Asvazadourian, 40, denied the employees coverage partly by lying about the size of Almonte’s work force, Manhattan DA Cy Vance Jr.’s office said.

That drastically cut Almonte’s workers compensation insurance premiums, saving him millions of dollars.

But it also put the workers at risk of not being covered for on-the-job accidents or fatalities. More than a dozen of Almonte’s workers were injured and one died while he was playing games with their worker’s comp, Vance’s office said.

New York law requires nearly all employers to carry worker compensation insurance.

But not only did Almonte fail to buy the proper coverage – he declined to cooperate with the state board that decides workers’ claims, prosecutors say.

Almonte allegedly claimed to state officials his annual payroll for two carpenters and two cleaners was $70,000 per year. But in reality, he had dozens of employees, and his payroll for a typical two-week period was $110,000.

Almonte and Asvazadourian pleaded not guilty Thursday to charges including insurance fraud and scheme to defraud in Manhattan Supreme Court. They were released without bail.

Almonte is also under investigation by the IRS for failure to pay taxes.

(Read More)

Construction workers least likely to have health insurance, report finds

Posted by National Alliance for Fair Contracting on
March 27, 2018

 

Dive Brief:

  • Of the 20 professions least likely to have health insurance, 11 of them are in the construction industry, according to MarketWatch
  • The average uninsured rate for fulltime workers in the U.S. is 12%, but the percentage of certain categories of construction workers without health insurance is much higher, including roofers (50.5%); drywall hangers, finishers and ceiling tile installers (49.5%); plasterers and stucco masons (49.1%); fence installers (45.7%); carpet, tile and floor installers (45.2%); painters and paperhangers (43.1%); construction trade helpers (42.8%); installation, maintenance and repair helpers (40.5%); cement masons, concrete finishers and terrazzo workers (38.7%); brick masons, block masons, stonemasons and reinforced iron and rebar workers (38.6%); and construction laborers (37.5%)
  • At least some of the workers who reported not having health insurance coverage could be classified as independent contractors, which means that they are operating as a business and not entitle to benefits from another employer.

Dive Insight:

In most states, companies are required to carry workers’ compensation insurance so that if a worker is injured on the job, medical bills, partial salary, rehabilitation costs and training for a new trade, if necessary, will be paid regardless of whether the injured person has health insurance. However, is the worker is classified as an independent contractor or contract worker, then he or she is not covered by this benefit.
And, according to the Workers Defense Project, the southern U.S. is the region most likely to have construction workers laboring as independent contractors.
As part of its study, the Workers Defense Project reported that only 5% of the 1,435 workers it interviewed in six southern states
said workers’ compensation would cover the cost of their work injuries, and 57% said they earned less than $15 an hour.