$10.2M awarded to fund worker misclassification detection, enforcement activities in 19 state unemployment insurance programs

WASHINGTON – The U.S. Department of Labor today awarded $10,225,183 to 19 states to implement or improve worker misclassification detection and enforcement initiatives in unemployment insurance programs.

“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,” said U.S. Secretary of Labor Thomas E. Perez. “Today’s federal grant awards will enhance states’ ability to detect incidents of worker misclassification and protect the integrity of state unemployment insurance trust funds.


2014 Worker Misclassification Grants

State Regular High Performance Bonus  Total
California $499,792 $499,792
Delaware $27,672 $27,672
Florida $31,792 $31,792
Hawaii $500,000 $500,000
Idaho $500,000 $500,000
Indiana $500,000 $500,000
Maryland $494,600 $400,099 $894,699
Massachusetts $499,800 $499,800
New Hampshire $330,468 $330,468
New Jersey $342,222 $496,399 $838,621
New Mexico $499,970 $499,970
New York $500,000 $500,000
Oregon $500,000 $500,000
South Dakota $500,000 $500,000
Tennessee $499,260 $499,260
Texas $500,000 $775,529 $1,275,529
Utah $500,000 $327,973 $827,973
Vermont $500,000 $500,000
Wisconsin $499,607 $499,607
Totals $8,225,183 $2,000,000 $10,225,183


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Labor Department announces grants to fight tax cheats

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

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

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

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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OSHA announces new requirements for reporting severe injuries and updates list of industries exempt from record-keeping requirements

WASHINGTON – The U.S. Department of Labor’s Occupational Safety and Health Administration today announced a final rule requiring employers to notify OSHA when an employee is killed on the job or suffers a work-related hospitalization, amputation or loss of an eye. The rule, which also updates the list of employers partially exempt from OSHA record-keeping requirements, will go into effect on Jan. 1, 2015, for workplaces under federal OSHA jurisdiction.

The announcement follows preliminary results from the Bureau of Labor Statistics’ 2013 National Census of Fatal Occupational Injuries*.

“Today, the Bureau of Labor Statistics reported that 4,405 workers were killed on the job in 2013. We can and must do more to keep America’s workers safe and healthy,” said U.S. Secretary of Labor Thomas E. Perez. “Workplace injuries and fatalities are absolutely preventable, and these new requirements will help OSHA focus its resources and hold employers accountable for preventing them.”

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(*Copy of BLS News Release)


Sep 18, 2014 | Press Release

WASHINGTON, D.C.- Today, Representative Mark Pocan (D-WI), a member of the House Education and Workforce Committee, along with Education and Workforce Committee Ranking Member George Miller (D-CA), and Senator Patty Murray (D-WA) introduced the Promoting Apprenticeships for Credentials and Employment Act (PACE Act), a new bill that would support greater development of registered apprenticeship programs. The PACE Act would help prepare more highly skilled workers for in-demand industries and occupations through heightened awareness of and participation in registered apprenticeship programs.

The PACE Act would better integrate apprenticeships into postsecondary education programs and expand apprenticeship opportunities to new areas, particularly those professions dominated by women. As such, this legislation would promote new career pathways and greater economic security for women and their families.

“This legislation provides workers and job seekers with better access to employment, education, training, and support programs to help them secure good, well-paying jobs,” said Representative Mark Pocan. “It will also improve opportunities for businesses by ensuring hard-working Americans have the skills necessary for today’s most in-demand industries and occupations. Business leaders want this. Hardworking Americans need this. Everyone benefits when our middle class thrives.”

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Orange County District Attorney
Press Release

September 25, 2014

SANTA ANA – A former general contractor was convicted and sentenced today for defrauding his employees by taking their wages totaling over $80,000 in loss and keeping the money for himself from a state public works contract. Sourin Babayan, 65, Glendale, pleaded guilty to the court to 17 felony counts of taking and receiving a portion of a worker’s wage on public works project and six felony counts of dissuading a witness from prosecuting a crime. He was sentenced to two years in state prison and ordered to pay $80,200 in restitution.

At the time of the crime, Babayan worked as a sub-contractor and owned SDB Construction (SDB). DJM Construction (DJM), a general contractor who was awarded a project by the State of California, for the improvement of a state developmental hospital in Costa Mesa.

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

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

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)