TWO MASSACHUSETTS FIRMS FALL SHORT ON $2.4 MILLION OWED OVER IC MISCLASSIFICATION (MA)

Posted by National Alliance for Fair Contracting on

Staffing Industry Analysts
September 18, 2019

Two Massachusetts construction companies and their officers have fallen short on payments required under a 2016 consent judgement over Fair Labor Standards Act violations that included misclassifying workers as independent contractors, the US Department of Labor reported. Now, labor officials are asking the court to hold them in civil contempt.

The consent judgment required them to pay $2.4 million in back wages and liquidated damages to 478 employees. However, they have paid only $477,900 and currently owe nearly $1.8 million plus interest to affected employees, according to the department.

“These employers conceded that they unlawfully kept the wages of 478 employees and committed themselves to paying those employees under a consent judgment and order of the court. In violation of that order, the employers have unlawfully kept $1,179,842.55 of their employees’ hard-earned wages,” said Maia Fisher, regional solicitor of labor for New England.

“After numerous attempts to resolve the employers’ continued failure to comply with the court order, the US Department of Labor now asks the court to hold the defendants in contempt and impose all sanctions required, including imprisonment if necessary, to ensure compliance with the court’s original order,” Fisher said.

Named in the original 2016 consent judgement and order are Force Corp., AB Construction Group Inc. and employers Juliana Fernandes and Anderson dos Santos.

(See Article)

Opinion: Standing Up For Good Jobs in Our Community (MA)

Posted by National Alliance for Fair Contracting on

By Staff
September 13, 2019

By Lou Antonellis, Harry Brett, Bob Butler, Peter Gibbons and Brian Kelly

Workers in Massachusetts are fortunate to have a number of excellent protections enshrined in state law. A great example of one of these protections is the prevailing wage law. Unfortunately, a loophole exists that allows unscrupulous contractors the ability to exploit workers and avoid paying them a fair wage for their labor. This loophole has allowed greedy contractors to skirt the law and lower standards for workers in a difficult and sometimes dangerous industry by utilizing off-site prefabrication facilities. By keeping the fabrication away from the construction site, these bad contractors are underbidding the law-abiding local contractors and cheating working people out of a fair wage.

The members of the union building trades, who we are proud to represent, are a well-trained, professional workforce who spend hundreds of hours training in state-certified apprentice programs. Many of them are trained right here in Dorchester and are qualified to design, fabricate and assemble products and equipment installed at the project site. Furthermore, our members are OSHA-trained and certified.

That’s why the union building trades are so deeply invested in fighting to close this loophole. Our members live in your community. We’re your neighbors, youth soccer coaches and karate instructors. We work, learn and play alongside you and your family everyday, and we’re committed to our region’s future. We don’t want to see these bad actors driving wages and standards down in our towns.

Thankfully, Representative Tackey Chan (D-Quincy) has proposed an excellent solution in the form of H.1599, known as the Off-Site Fabrication Bill, which would close this loophole and end a practice that allows bad contractors to undercut good ones.

We’re calling on the leadership of the Joint Committee on Labor and Workforce Development to move H.1599 out of committee so the Legislature can consider it for a vote in this current session. Both California and New Jersey have enacted similar laws, strengthening worker protection and ensuring that standards for their communities are being upheld. We can’t let our communities fall behind and allow these bad contractors to continue exploiting this loophole.

By passing H.1599 our elected leaders are taking a stand to ensure the quality of construction for our public works projects, as well as the fair wages and working conditions for the women and men working on both the construction site and in fabrication facilities.

Everyone who works deserves fair treatment, a safe working environment and a fair wage for their labor. Passing H.1599 would ensure that workers in off-site fabrication facilities have the dignity they deserve. Let’s take a stand together for strong communities that value hard work. Let’s level the playing field for our local, law-abiding contractors. Please join our members and call your state senator and state representative today to urge them to move H.1599 out of committee and call a vote.

For more information or to join the fight to close this loophole, please visit www.smw17boston.org.

Lou Antonellis is the Business Manager of IBEW Local 103
Harry Brett is the Business Manager of Plumbers Local 12
Bob Butler is the Business Manager of Sheet Metal Workers Local Union 17
Peter Gibbons is the Business Manager of Sprinkler Fitters Local 550
Brian Kelly is the Business Manager of Pipefitters Local 537

(See Article)

Standing up to tax fraud in the construction business (MA)

Posted by National Alliance for Fair Contracting on

May 29, 2019
By Steve Joyce
Special to the Reporter

Today, one in five contractors in the construction industry commits tax fraud, resulting in $2.6 billion is lost in federal and state income. That’s why it’s more urgent than ever to combat construction industry tax fraud, an unjust and immoral affront to the people of Massachusetts.

Construction tax fraud often manifests itself through dishonest bookkeeping and worker exploitation. Approximately 1.2 million workers are paid ‘off the books’ in the US annually. Without employment records to hold them accountable, contractors have been known to minimize or steal wages at the completion of a job.

And when a contractor does bother to go through the with paperwork, they frequently misclassify workers as “independent contractors.” The workers do the same job as a fulltime employee, but shoulder tax obligations that the employer should be paying. Nearly 300,000 construction workers are misclassified in this manner each year.

These practices allow contractors to sidestep jobsite safety, skirt around workers compensation premiums, and skip out on payroll taxes and critical benefits like Social Security, overtime, unemployment, and retirement.

In Massachusetts, denied payments and overtime to workers and minimum wage violations cost employees $700 millionannually. In a 2018 fair labor report, the Massachusetts attorney general reported restitution and penalties of $9.6 million as a result of wage theft, worker misclassification, and exploitation of young workers. Construction alone resulted in 61 citations, and generated $1.5 million in restitution and penalties.

Honest employers pay the price of these schemes, too. When shady contractors illegally skip taxes and shortchange workers, the prices they offer look like a 30% savings on labor costs. Businesses that do their work by the book, follow the rules, and pay their fair share of taxes can’t bid competitively with artificially low prices in the marketplace. Cheap, cheating contractors are just like a bag of chips that costs a dollar less but is twice as full of air.

In Massachusetts, recent estimates show that $16.5 million is recovered annually in lost payroll taxes and unemployment insurance. Funds like these contribute to tax pools that eventually help pay for things like public services, meaning when taxes go unpaid, the public is cheated. Workers, business owners, and the people of our state lose out when funding for schools, roads, bridges, first responders, veterans, and Medicaid and Social Security are harmed.

…

Steve Joyce is the political director of NERCC and a member of Carpenters Local 327. For more information on the New England Council of Carpenters, visit nercc.org or stoptaxfraud.net.

(Read More)

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Personal Liability for Prevailing Wage Violations in Massachusetts (MA)

Posted by National Alliance for Fair Contracting on

JD Supra
June 18, 2019

Owners of a Massachusetts waste collection, recycling and removal company recently were held personally liable for their failure to pay their employees at prevailing wages. See Donis v. American Waste Services, LLC, 95 Mass.App.Ct. 317 (2019). Under Massachusetts law, wage violations are subject to triple damages and payment of attorney’s fees.

The waste services company entered into contracts with several Massachusetts towns that required compliance with prevailing wage laws at hourly rates of $20 — $24. However, the company paid workers $16 — $17 an hour, or at flat day rates. The company tried several unsuccessful defenses: (1) the towns did not always provide the company with current rate schedules (rejected because the company could obtain them elsewhere); (2) the flat day rates paid to employees properly compensated employees because employees did not always work eight hours (rejected because the company did not keep adequate time records); and (3) employees should not be able to recover for claims under both a prevailing wage claim and a Massachusetts Wage Act claim (rejected because employees can bring both claims).

This case stands as a reminder that companies and their officers must follow prevailing wage laws and failure to do so can result in personal liability for three times the amount of money a company fails to pay its employees.

(Read More)

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Harvard Labor & Worklife Program Releases Report Detailing State Labor Standards Enforcement Practices to Address Misclassification (MA)

Posted by National Alliance for Fair Contracting on

Report details increasing role of state agencies in enforcing misclassification laws and providing worker protections, crucial in era of lax federal enforcement.

by Construction Citizen | June 28, 2019

Researchers from the Harvard Labor & Worklife Program, a program of Harvard Law School, released on Wednesday a report detailing the expanding and increasingly inventive role of state-level agencies regarding enforcement of worker misclassification laws and upholding workers protections. The report, Confronting Misclassification and Payroll Fraud: A Survey of State Labor Standards Enforcement Agencies is published in the midst of a decades-long trend of employers increasingly misclassifying workers as independent contractors. More urgently, within the past two years, the federal government, through the United States Department of Labor and the National Labor Relations Board, has been increasingly rolling back worker protections and enforcement.

Confronting Misclassification and Payroll Fraud, published by Harvard Law School and available at the above link, has found a growing number of innovative practices at the state agency level to combat misclassification and payroll fraud. Among its many findings and recommendations, the report shows:

  • States have focused considerable attention in recent years to addressing misclassification and payroll fraud.
  • Increasingly, states are shifting to more proactive, strategic enforcement models.
  • A number of states have adopted variants of the “ABC” test, a clear and straightforward method of determining whether workers are employees or independent contractors.
  • Many states have established inter-agency task forces to coordinate efforts among agencies charged with enforcement of violations in the areas of wage and hour laws, unemployment insurance, income tax, and workers compensation insurance.

The report also provides recommendations for proper enforcement best practices on a state agency level, including:

  • State agencies should engage in ongoing coordinated, strategic, and proactive enforcement to combat misclassification;
  • Agencies should work closely with unions, community-based organizations, and other stakeholders to help identify and pursue bad actors;
  • More states should adopt legal reforms that have proven useful, including adoption of the ABC test as well as measures to enable joint employer liability;
  • New enforcement strategies are needed as payroll fraud shifts from misclassification to off-the-books or under-the-table cash compensation;
  • Increased publicity by agencies about wrongdoing companies can serve as a powerful deterrent against future misclassification violations;
  • State agencies should work to develop more meaningful metrics to evaluate their effectiveness.

“Employers who misclassify are cheating their workers and gain an unfair advantage over businesses that play by the rules,” said Massachusetts Attorney General Maura Healey. “I am grateful to the Harvard Labor & Worklife Program for shining a light on this issue. My office will remain committed to combatting wage theft in all its forms.”

(Read More)

(See PDF of Full Report)

REGISTRATION IS NOW AVAILABLE – 2019 NAFC National Conference, September 22-24, 2019 – Boston, MA

Posted by National Alliance for Fair Contracting on

June 2019

It is time to register for this year’s 2019 NAFC National Conference to be held on September 22 – 24, 2019, at the Sheraton Boston Hotel in the heart of downtown Boston, Massachusetts. NAFC’s National Conference is attended by several hundred participants from across the nation, including representatives from labor organizations, responsible contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

PLEASE NOTE THE NEW FORMAT FOR THE 2019 NAFC NATIONAL CONFERENCE – AND REVIEW THE SCHEDULE OF EVENTS BEFORE MAKING YOUR TRAVEL RESERVATIONS

The 2019 NAFC Conference has been extended. We have added additional workshops on Sunday afternoon (Sept. 22nd – the day of arrival) and extended the Conference to include a full day session on Tuesday (Sept. 24th – the final day). Please review the Schedule of Events drop-down menu to ensure that your travel reservations allow you to attend the complete lineup of plenary speakers, panels, workshops and networking opportunities. In addition, please use the Registration & Hotel Reservation drop-down menu to register for the Conference and reserve your hotel. Conference registration and hotel reservations must be made online through NAFC’s 2019 Conference website. Paper Conference registrations and hotel reservations will not be available this year.

The 2019 NAFC National Conference will be the largest and most successful Conference to date. NAFC President Rocco Davis, the Board of Directors and staff have put together a lineup of dynamic speakers and comprehensive workshops to assist you in leveling the playing field in publicly funded construction and promoting responsible and efficient construction at the local, state and federal levels. National experts on construction industry issues will present the latest research and programs which promote the high road construction market, joint apprenticeship plans and pathways for underserved communities and veterans in the construction industry. Leading fair contracting practitioners will describe innovative tools and strategies to ensure enforcement and compliance with the wide variety of laws which regulate public construction, including prevailing wage laws.

Stay tuned for further details and contact NAFC’s Administrator with any questions you may have.

(Conference Details & Registration)

*Disclaimer: Registration fees will be refunded upon cancellation if notice is provided to NAFC by September 6, 2019. Participation in the NAFC Conference is subject to the approval of NAFC’s Board of Directors.

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Springfield can be the first to end construction tax fraud [Guest viewpoint] (MA)

Posted by National Alliance for Fair Contracting on

Posted May 6, 12:46 PM
By Tim Craw

I’m proud to work in Springfield. The people here are tough, hardworking, and innovative. It’s no surprise that the city is known as ‘The City of Firsts.’

Now, Springfield has the chance to be the first city to stop the epidemic tax fraud taking place in the construction industry. Criminal contractors are cheating the public, honest businesses, and local workers by neglecting to pay their fair share of employment and payroll taxes. It costs the American people $80 every second, and up to $2.6 billion a year in lost federal and state income.

Tax fraud is often committed through underhanded bookkeeping and worker exploitation. Frequently, developers and contractors will use labor brokers to do the dirty work of hiring employees off the record. Approximately 1.2 million workers are paid ‘off the books’ each year in the U.S., allowing contractors to avoid rules around safe jobs sites, deny benefits and workers compensation, skip out on payroll taxes, and even withhold or minimize workers’ payments. Other times a contractor might use ‘on the books’ methods, but cheat by requiring the worker to carry tax and other employment obligations. Nearly 300,000 construction workers are misclassified as ‘independent contractors,’ even though they work a full-time employee’s job.

In Massachusetts, illegal practices like these, particularly wage theft, denied overtime, and minimum wage violations, result in $700 million in losses to employees annually. The Massachusetts Attorney General reported in a 2018 fair labor report that wage theft, worker misclassification, and exploitation of young workers resulted in restitution and penalties of $9.6 million.

The contractors who skip taxes and shortchange workers can gain up to a 30% savings on labor costs, putting honest employers at a disadvantage. They do business the right way but aren’t able to issue as competitive bids, and are cheated of potential work.

The public is also affected by this problem, because when taxes go unpaid, tax pools receive less funding. Public services such as schools, roads, bridges, first responders, and Medicaid and Social Security suffer. The Massachusetts Joint Enforcement Task Force on the Underground Economy and Employee Misclassification reported that in 2014 alone, $16.5 million was recovered in lost payroll taxes and unemployment insurance. The money being pocketed through tax fraud schemes should be helping keep our state safe or close the gap in funding for our schools. These improvements could all be made without creating more debt.

…

Tim Craw is a Council Representative with the New England Council of Carpenters and a member of Local 336.

(Read More)

Carpenters: Industry plagued by tax fraud (MA)

Posted by National Alliance for Fair Contracting on

Picketers aim illuminate illegal employment practices

By Mike LaBella
April 11, 2019

HAVERHILL – More than a dozen union carpenters, including members of New England Regional Council of Carpenters Local 339, stood at the corner in front of City Hall for several hours Thursday morning to illuminate what they claim is rampant tax fraud tainting the construction industry.

They held picket signs and banners bearing statements such as, “Tax fraud impacts me,” and “Construction industry tax fraud costs taxpayers over $80 per second and $2.6 billion per year.”

Organizers said the event was intended to educate the public on the magnitude of illegal construction employment practices, discuss their impact on Haverhill and Massachusetts, and call for a unified front against what they called an insidious activity. Similar events took place Thursday in Lynn, Framingham and Portland, Maine, they said.

…

Local 339 issued a statement saying that each year, labor brokers and contractors cheat their tax obligations by misclassifying their hires, such as classifying a carpenter as a laborer, and paying an estimated 1.2 million workers “off the books,” (also known as “under the table”), thereby robbing taxpayers of up to $2.6 billion through lost federal income, employment taxes, and state income taxes.

Union member Adam DiGiovanni of Haverhill said he is reaching out to city officials in hopes they will support the creation of an ordinance that would penalize an employer for engaging in unfair wage practices on large construction projects that involve taxpayer money, including projects that receive tax credits.

“Other communities have passed these kinds of ordinances, including Springfield, Quincy and Lynn,” he said. “There needs to be oversight as right now it’s a free for all.”

He said that such an ordinance would typically speak to large-scale commercial construction projects valued at $10 million or more, and typically not the “local home-builder market.”

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Union-backed budget amendment would combat construction wage theft in Massachusetts (MA)

Posted by National Alliance for Fair Contracting on

By Shira Schoenberg
Posted Apr 24, 4:55 PM

A union-backed amendment expected to be included in the Massachusetts House budget would increase the attorney general’s ability to enforce wage and hour laws in the construction industry.

Rep. Dan Cullinane, D-Boston, introduced an amendment that would spend $500,000 to create a specialized unit in the attorney general’s office to investigate and enforce wage violations in the construction industry.

“This underground economy is real,” Cullinane said. “Bad companies are stealing wages from workers, bad companies are pocketing taxpayer dollars by falsifying payroll records.”

Historically, the construction industry has had frequent occurrences of wage theft.

Attorney General Maura Healey, in a February report, said her office issued 165 civil citations against 66 construction companies in 2018 for wage violations. These companies paid fines of more than $1.23 million and restitution of $1.47 million for 1,030 employees.

Wage theft can include things like failing to pay overtime, failing to pay the required wage for public projects or not accurately documenting how many hours someone works.

(Read More)

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Your Turn: Project labor agreement needed in Worcester Red Sox deal (MA)

Posted by National Alliance for Fair Contracting on

By Frank Callahan
March 14, 2019

The city of Worcester, the Worcester Red Sox and Madison Downtown Holdings, a private developer, are building a $240-million downtown project that includes a new, $90-million, 10,000-seat stadium for the Boston Red Sox Triple-A Minor League affiliate team. Most see this as good news for the community. And it can be if the stakeholders embrace the use of a project labor agreement to ensure safety, equity and fairness for the workers who build the stadium.

Unfortunately, some contractor lobbying groups who advocate to pay workers lower wages are engaged in a cynical campaign aimed at ensuring the prosperity generated by this large proposal isn’t shared with the actual workers doing the work. They also don’t care if the project is done in the safest way possible, or with the best-trained workers possible.

Every fan sitting in that stadium over the decades that will follow its opening deserves to know that Worcester built its stadium in the safest way possible with the best-trained workforce. That’s just one reason why the union building trades are speaking up for a project labor agreement to ensure the safety of workers and the public in Worcester.

Project labor agreements, also called community workforce agreements or project stabilization agreements, emerged in the early 20th century as basic pre-hire agreements between the owner or contractor and the local building trades unions.

By the 1980s, these agreements were common in both the public and private sectors. Modern PLAs are negotiated on a case-by-case basis, and include sophisticated provisions that keep jobs running smoothly, promote efficiencies, and nurture the development of a skilled workforce. Most importantly, they prevent worker exploitation, wage theft and other illegal or unsafe acts that can harm local workers on a non-PLA job site.

For years, wealthy special interests have tried to undermine workers’ rights and advance narratives around the concepts of unions being outdated and unneeded. Despite the anti-worker spin promoted by organizations like the Merit Construction Alliance, public support for unions is growing. Meanwhile, union membership and the need for PLAs are also both on the rise in Massachusetts.

The building trade unions have been creating economic prosperity and a pathway to the middle class for workers throughout Central Massachusetts for generations. Right now, many Worcester area families could benefit from a good, union job in the construction industry.

Sadly, efforts are afoot in Worcester to lower safety, wage and training standards for working people on the new stadium project, putting Worcester workers at risk of losing life or limb, and in the position of earning less for the same work that is done elsewhere in the state. That simply would not be fair.

(Read More)