VA Governor Signs Executive Order Establishing Inter-Agency Task Force on Worker Misclassification

Governor Terry McAuliffe has signed Executive Order 24 establishing an interagency task force on worker misclassification and payroll fraud.

“Every Virginian who works hard and follows the rules should get the pay and benefits that they deserve,” said Governor McAuliffe “This executive order will begin a process to ensure that employers throughout the Commonwealth follow the same rules when it comes to benefits and pay for their employees.”

The text of executive order number 24 is as follows:

 Importance of the Issue

The misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives the Commonwealth of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.

A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) found that one third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs up to 40%, placing other employers at a competitive disadvantage.

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Self-Sufficient Construction Workers

This study explores the impact of prevailing wage laws (PWLs) on tax revenues and government assistance. The analysis has resulted in the following key findings:

Prevailing wage laws support the local economy.

  • Prevailing wage laws build local middle-class jobs by paying a living wage and protecting the use of in-state contractors.
  • Prevailing wage laws drive economic development through increased consumer demand. Workers making a decent living spend locally, driving the need for additional employment in local businesses.
  • Prevailing wage laws are they best deal for taxpayers. Prevailing wage projects are done right the first time, on time and within budget. Workers receiving the prevailing wage pay more in taxes (protecting the tax base) and are less dependent on government assistance subsidized by taxpayers.

Prevailing wage laws contribute to government budgets.

  • Construction workers earn an average income (from wages) of $29,984 per year in non-PWL states and $32,064 per year in PWL states.
  • Better wages mean a stronger tax base, helping policy makers balance budgets without the need to raise taxes.
  • While construction workers earn 8.0 percent more in PWL states than their counterparts in non-PWL states, they contribute 35.7 percent more in after-credit federal income taxes.
  • Construction workers in PWL states account for 75.4 percent of all federal income tax revenues after credits and deductions, 71.8 percent of after-credit state income taxes, and 77.4 percent of property taxes contributed by blue-collar construction workers.

Taxpayers subsidize the low-wage, low-skill, low-quality system in non-PWL states.

  • Construction workers in non-PWL states account for just 24.6 percent of after-credit federal income tax revenues. By contrast, they receive disproportionately more government assistance: they get 33.0 percent of all Earned Income Tax Credit (EITC) assistance and 31.8 percent of all food stamp benefits paid to blue-collar construction workers.
  • Due to lower rates of health insurance and retirement coverage, the absence of a PWL also increases construction worker reliance on government programs during times of illness, injury, and old age. This can be, for example, emergency room care subsidized by the taxpayer.
  • Construction workers in non-PWL states receive $0.603 in non-health, non-retirement government assistance per dollar of federal income tax contributions compared to $0.580 per dollar for PWL workers. The comparable figures are $0.543 per dollar in Indiana and $0.272 per dollar in Illinois.
  • Higher percentages of construction workers in non-PWL states have no health insurance coverage (45.0 percent to 40.9 percent) and no pension plan at work (77.8 percent to 72.2 percent).
  • Higher percentages of construction workers in non-PWL states live in public housing (2.2 percent to 1.8 percent) and receive food stamps (12.3 percent to 10.7 percent) at the expense of the taxpayer.

Prevailing wage laws are the best deal for taxpayers. A PWL keeps construction costs down by promoting a high-skilled, high-quality construction workforce that completes jobs on time, the first time. A PWL also supports in-state contractors and builds local middle-class jobs while driving economic development. Ultimately, prevailing wage laws protect worker incomes and raise tax revenues while reducing reliance on government assistance. Prevailing wage laws should be enacted or strengthened in states across America to protect the middle class and support strong budgets.

16th Annual NAFC Conference – September is Fast Approaching, Register Today While Space is Still Available!

The National Alliance for Fair Contracting will be holding its 16th Annual Conference this year in the lakeside city of Chicago, IL, September 17-19, 2014.

The NAFC Conference provides a national forum for those committed to combating noncompliance of state and federal public contracting laws and draws attendance from contractors, labor unions, fair contracting organizations, attorneys and various officials from local, state and federal governments around the nation.

This year’s conference will be hosted at the Sheraton Chicago Hotel and Towers. NAFC Chairman Rocco Davis and the rest of NAFC’s Board of Directors are diligently planning content and speakers to ensure this will be our most successful conference to date.

Register Now

Executive Order Will Make It Harder For Federal Contractors To Violate Workers’ Rights

A new executive order from President Obama will make it harder for companies to win federal contracts if they violate their workers’ rights and withhold their wages, the White House announced Thursday.

Under the new rules, companies that apply for federal contracts larger than half a million dollars will have to disclose any major labor law violations they or their subcontractors have committed in the previous three years. Agencies will prioritize companies with clean records over those that abuse their workers’ rights when weighing contract bids. Each executive branch agency will have a specific bureaucrat in charge of determining whether a company’s lapses “rise to the level of a lack of integrity or business ethics,” according to a White House fact sheet on the rules.

The package of reforms will also prohibit companies that do business with the government from requiring their workers to agree to arbitration processes for workplace harassment or civil rights complaints, guaranteeing that workers who are sexually harassed or discriminated against can get their day in court.

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With One Case Before State Supreme Court, 2nd IN Judge Rules “Right-to-Work” Unconstitutional

An Indiana Judge has ruled that the state’s “Right-to-Work” law is unconstitutional, the second such blow to the legislation since its passage in 2012.

Lake County Circuit Judge George Paras decided against the state in United Steelworkers vs. Zoeller on July 17th, ruling that the law was “null and void in its entirety” and the state is “permanently enjoined” from enforcing it.  The law is already before the state Supreme Court as a result of a challenge from the International Union of Operating Engineers (IUOE) Local 150.  Oral arguments in that case are set to be heard on September 4th.

Following the decision, Indiana Attorney General Greg Zoeller said he would ask for a stay to prevent the decision from immediately taking effect.  He also argued that the law’s fate is still truly in the hands of the state Supreme Court.  From his statement:

“Strong opinions exist on both sides about involuntary union dues, but the attorney general’s office has a duty to defend the laws the legislature passes from legal challenges plaintiffs file.  If a trial court finds a law unconstitutional, then the appropriate action is to stay its ruling pending the appeal.”

The IUOE Local 150 case was originally decided last fall – in favor of the union – by Lake County Superior Court Judge John Sedia. He stayed the verdict to allow it to go to the Supreme Court.

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US Labor Department files suit against Northwest Title Agency to recover $230,688 in unpaid wages and benefits for 10 employees on HUD project

WHITE BEAR LAKE, Minn. — An investigation by the U.S. Department of Labor’s Wage and Hour Division has determined that White Bear Lake-based Northwest Title Agency Inc. failed to pay $230,688 in prevailing wage rates and fringe benefits to 10 workers, in violation of the Service Contract Act. The employees worked on real estate closings for U.S. Department of Housing and Urban Development-owned projects in Minnesota.

“Contractors that do business with the federal government have an obligation to pay their employees the required contractual rates and benefits,” said Theresa Walls, the Wage and Hour Division’s district director in Minneapolis. “When employers fail to do so, the department will not hesitate to pursue legal action, including debarment, to ensure employees working on federally funded projects are properly paid.”

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California Colleges Reaping the Local Hiring Benefits of Hard-Fought Project Labor Agreement

A Project Labor Agreement (PLA) covering up to $500 million of construction at Riverside City, Moreno Valley and Norco colleges has surpassed its local hiring goals. The projects are partially funded through California’s Measure C bonds with the state and federal government providing matching funding.

The use of a PLA was heavily contested, but building trades union advocates and their mission of ensuring local hire ultimately prevailed:

Since the agreement was adopted in 2010 on a 3-2 vote, 65 percent of workers have come from Riverside and San Bernardino counties and 54 percent of participating businesses have been local, according to a presentation prepared by Padilla & Associates, which administers the agreement for $1.6 million.

The five-year agreement requires contractors to pay union-level wages and benefits, sets a local hiring goal of 50 percent and requires apprenticeship programs. Workers from Riverside County get first priority followed by workers from San Bernardino County.

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Mass. to Expand Its Already Powerful and Effective Wage and Misclassification Task Force

Six years after Massachusetts Gov. Deval Patrick created the Joint Task Force on the Underground Economy (JTF) via executive order, the highly successful program will become statute thanks to language in the state’s newly enacted minimum wage law.

Recent reports show that in 2013 alone the JTF recovered $15.6 million in back wages, unemployment insurance premiums, penalties and fines following over one thousand investigations.  Since its inception, the JTF has recovered over $56 million.

Executive Office of Labor and Workforce Development (EOLWD) Secretary Rachel Kaprielian said in a statement:

“Companies and individuals who willfully avoid the law by misclassifying employees … or engage in fraudulent employment practices of the underground economy put workers’ safety at risk, place legitimate businesses at a disadvantage and burden taxpayers.”

A new council will take the reigns from the JTF, adding eight agencies to those that have been on board since 2008.  Gov. Patrick is currently in the process of selecting these new agencies.  The new council will be chaired by the Secretary of Labor and Workforce Development and will have broadened powers.


US Labor Department investigations result in more than $415,000 in back wages for workers on Detroit Palmer Park Square HUD project

DETROIT — U.S. Department of Labor investigations have resulted in over $415,000 in back wages for more than 90 employees performing construction work on the federally funded Palmer Park Square affordable housing in Detroit. The investigations, conducted by the department’s Wage and Hour Division, were part of a multiyear strategic enforcement initiative aimed at combating widespread labor violations on federally funded construction projects in the Detroit area, such as affordable housing construction projects funded by the U.S. Department of Housing and Urban Development.

The investigations found that Malino Construction and several project subcontractors violated provisions of the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act and the Fair Labor Standards Act. The companies failed to pay prevailing wages, fringe benefits and overtime to construction workers on the project, failed to keep accurate time and payroll records for employees, and provided falsified, certified payroll records to the government.

Due to the extent and willful nature of the violations, Detroit-based Malino Construction, the prime contractor on the project, has been debarred from bidding on federal contracts for up to three years

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Unionized Ironworkers Aid Non-Union Jobless

HUDSONVILLE, Mich. –  Proving once again that unionists jump to the aid of all workers – union or not – the Ironworkers are trying to find jobs for 280 non-union colleagues left high and dry without pay when a large non-union Michigan contractor suddenly shut its doors last month.  And the union hopes they’ll eventually become members, too.

The crisis arose when Lamar Construction Co., a large, long-time nonunion contractor headquartered in Hudsonville in west Michigan , abruptly closed July 9, throwing about 280 workers onto the jobless rolls.

Lamar, established in 1938, shut down after a bank cut off its credit line, MLive reported.

The company employed about 170 workers in Michigan and also operated in Kentucky and Colorado.  Lamar’s statement said it would continue operating its structural steel erection business, but nothing else.  That prompted quick offers of help for workers from the Iron Workers International Union and the anti-union Associated Builders and Contractors.

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