WHD News Brief: 08/04/2016
Release Number: 16-1603-NAT

Participants: U.S. Department of Labor’s Wage and Hour Division
Pennsylvania Department of Labor & Industry

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the Pennsylvania Department of Labor & Industry signed a three-year Memorandum of Understanding intended to protect employees’ rights by preventing their misclassification as independent contractors or other non-employee statuses. The two agencies will provide clear, accurate and easy-to-access outreach to employers, employees and other stakeholders; share resources; and enhance enforcement by conducting coordinated investigations and sharing information consistent with applicable law.

Background: The division is working with the U.S. Internal Revenue Service and 31 other U.S. states to combat employee misclassification and to ensure that workers get the wages, benefits and protections to which they are entitled. Labeling employees as something they are not – such as independent contractors – can deny them basic rights such as minimum wage, overtime and other benefits. Misclassification also improperly lowers tax revenues to federal and state governments, as create losses for state unemployment insurance and workers’ compensation funds.

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Gov. Brown Signs Senator Mendoza Bill to Prevent Wage Theft from California Workers

By Christopher Simmons
July 26, 2016

SACRAMENTO, Calif. /California Newswire/ – A measure, SB 1342, authored by Calif. Senator Tony Mendoza (D-Artesia) that would protect workers by paving the way for a statewide mechanism at the local level to fight wage theft, was signed by Governor Brown today. The bill will go into effect on January 1, 2017.

“I thank Governor Brown for signing SB 1342,” said Senator Tony Mendoza. “This bill protects hard-working Californians by clarifying the ability of cities and counties to investigate non-compliance with local wage laws.”

“As cities and counties in California move to raise the minimum wage, we must ensure that our low-wage workers, who already face many challenges, receive the pay that they have earned,” added Senator Tony Mendoza.

Fifteen cities in California have passed minimum wage ordinances going beyond the State-mandated $10 an hour. In many cases however, employers do not obey these laws. For example, San Francisco City and County have passed ordinances to raise the local minimum wage to $12.25 an hour. Additionally, they have set a precedent by creating an Office of Labor Standards Enforcement to uphold these laws and address the shortfall in local wage enforcement.

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MOU aligns federal departments in effort to ensure full pay, benefits for workers


WHD News Release: 08/22/2016
Release Number: 16-1726-DAL

DENVER – Officials from the U.S. Department of Labor and the U.S. Department of Housing and Urban Development signed a Memorandum of Understanding to help stop the misclassification of workers in Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming.

The first MOU of its kind represents a new effort on the part of the agencies to work together to protect employee rights and level the playing field for responsible employers by reducing the practice of misclassification.

In Fiscal Year 2015, the department’s Wage and Hour Division recovered more than $74 million in back wages for more than 102,000 workers in industries, such as janitorial, food, construction, daycare, hospitality and garment. The division regularly finds low-wage workers are victims of misclassification.

The agreement will help both agencies communicate and cooperate more effectively and efficiently in areas of common interest, including cross training staff and providing employers and employees with information about the law. By doing so, the two agencies seek to protect the wages, safety, and health of America’s workforce by sharing information.

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What good is affordable housing if the people who build aren’t paid decently?

July 27, 2016
Kevin Duncan, Pueblo, Colo.
The writer is a professor of economics at Colorado State University-Pueblo.

To the editor: Like climate change, construction prevailing wage standards have been studied and an academic consensus exists, but myths persist. (“Affordable housing at an impasse,” editorial, July 22)

Peer-reviewed economists have found that prevailing wages produce more local, middle-class job opportunities and less spending on fuels, materials and public assistance for blue-collar construction workers. They do not significantly raise total development budgets.

In California, labor makes up just 20% of total construction project costs. Any savings from exploitative working conditions are offset by lower productivity on the job site.

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DOL obtains ‘double damages’ for intentional misclassification

Compensation Management News
August 22, 2016

An employer and its staffing company will pay $1.1 million in back wages and another $1.1 million in damages to resolve U.S. Department of Labor (DOL) findings that they intentionally misclassified workers as independent contractors.

Force Corp., a construction company, created AB Construction to provide it with much of its labor. Force Corp., however, prepared and controlled the payroll and payment procedures for both companies, DOL said in a press release.

During an investigation, the department determined that Force Corp. intentionally misclassified most of its employees to avoid paying them overtime and other benefits. In addition, it used a combination of payroll checks and cash to pay the workers straight time when they should have received overtime pay, DOL said. The department also determined that the employer kept inadequate and inaccurate time and payroll records.

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Berkeley Makes History With Wage Theft Ordinance

AUGUST 16, 2016

Last year, at the start of spring, 21 construction workers were hired by a local contractor to hang drywall for a 79-unit apartment complex in downtown Berkeley, California. The workers spent five months on the project, but when they finally wrapped it up, they still hadn’t received a dime from their employer.

They filed complaints with their local trade unions, which were able to pass the message up to the Labor Enforcement Task Force and Joint Enforcement Strike Force, two coalitions of state and municipal agencies that have appraised $4.2 million worth of unpaid wages in California since 2012. Their investigation led California Labor Commissioner Julie Su to place a lien on the contractor for $60,000, the total amount the workers were owed, three months after they left the job site.

For Todd Stenhouse, a spokesperson for the wage advocacy nonprofit Smart Cities Prevail, the state’s response marks a turn for the best in what might have been a tragic finish for those workers. But successes like this represent a drop in the bucket when it comes to the hunt for unscrupulous contractors.

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Electionomics: Fixing The Sham Of Misclassified Workers

07/27/2016 01:07 pm ET
Julie Gutman Dickinson

What if millions of American workers were being denied health insurance, job security and the most basic legal protections, from overtime pay to workers compensation to the right to join a union? What if tens of billions of dollars in taxpayer revenues – money desperately needed to address everything from crumbling roads to education to health care – were never making it to local, state and federal treasuries? What if thousands of companies were violating the law with impunity?

That is exactly what is happening in the U.S. today, thanks to a rampant practice known as worker misclassification – illegally labeling workers as independent contractors when in fact they are employees under the law. In some cases it’s occurring in plain sight, in others it’s more hidden – but regardless of the circumstances, it is taking an enormous toll on the country.

In a 2015 report, EPI described the advantages to employers of misclassifying workers. “Employers who misclassify avoid paying payroll taxes and workers’ compensation insurance, are not responsible for providing health insurance, and are able to bypass requirements of the Fair Labor Standards Act, as well as the 1986 Immigration Reform and Control Act.” If this weren’t enough, the report continues, “misclassified workers are ineligible for unemployment insurance, workers’ compensation, minimum wage, and overtime, and are forced to pay the full FICA tax and purchase their own health insurance.”

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One of the biggest crime waves in America isn’t what you think it is

Jeff Spross
August 15, 2016

In dollar terms, what group of Americans steals the most from their fellow citizens each year?

The answer might surprise you: It’s employers, many of whom are committing what’s known as wage theft. It’s not just about underpaying workers. They’re not paying workers what they’re legally owed for the labor they put in.

It takes different forms: not paying workers the federal, state, or local minimum wage; not paying them overtime; or just monkeying around with job titles to avoid regulations.

No one knows exactly how big a problem wage theft is, but in 2012 federal and state agencies recovered $933 million for victims of wage theft. By comparison, all the property taken in all the robberies of all types in 2012, solved or unsolved, amounted to a little under $341 million.

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Ensuring a Fair Day’s Pay

Kim Cullen
Jul 28, 2016

As employees join the “Fight for 15” and attempt to raise the minimum wage, many workers across the country are fighting just to collect last week’s paycheck. Now, following the example of other cities, counties, and states, Philadelphia ischanging the way it operates to make it easier for employees to collect the money they have earned and to deter employers from engaging in a practice known as wage theft.

Wage theft occurs when an employer does not pay an employee correctly. It takes many forms: failure to pay employees for hours they have worked, payment that is less than the minimum wage, failure to pay employees their proper overtime rate, and more. A recent report from Temple University’s Sheller Center for Social Justice estimates that in any given workweek, Pennsylvania employees lose between $19 and $32 million dollars due to wage theft. In the Philadelphia area alone, tens of thousands of wage theft cases occur every week. To address this reality, the Philadelphia City Council unanimously approved an ordinance that will increase the city’s capacity to enforce the state and federal wage laws that are designed to protect employees from wage theft.

The ordinance makes two important changes to Philadelphia’s current regulatory scheme. First, the ordinance creates a Wage Theft Coordinator position within the city government. The Coordinator will receive, review, and adjudicate new wage theft complaints. While adjudicating, the Coordinator will examine the evidence-which could include records of hours worked and rates of pay-and determine if an employer has violated any wage laws. If the employer is found guilty and refuses to comply with the judgment, the Coordinator will have the authority to take further action by filing a complaint in court.

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BOSTON – A Lunenburg construction company and a Framingham company it used to avoid its legal responsibilities as an employer have been ordered to pay a total of $2,359,685 in back wages and liquidated damages to 478 employees and take other corrective actions to prevent future violations of federal labor law. Under a consent judgment they will also pay $262,900 in civil money penalties due to the willful nature of their violations.

An investigation by the department’s Wage and Hour Division found that Force Corp., AB Construction Group Inc. and employers Juliano Fernandes and Anderson Dos Santos misclassified the bulk of their employees as independent contractors to avoid paying them overtime wages and other benefits to which they were entitled under the Fair Labor Standards Act. In addition, the defendants used a combination of payroll checks and cash/check payments to pay their employees straight time when overtime pay was required, and kept inadequate and inaccurate time and payroll records.

“American workers go to their jobs each and every day and work hard to help their employers turn a profit,” said U.S. Secretary of Labor Thomas E. Perez. “To be cheated out of wages and denied other workplace protections by an employer who deliberately flouts the rules compounds the struggles too many middle class Americans already face. Workers who play by the rules deserve nothing less than to be paid what they are owed.”

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