Feds, Florida reach deal on construction industry rip-off

BY NICHOLAS NEHAMAS
01/13/2015 7:39 PM

 

Taxpayers were cheated.

Workers were swindled out of a fair shake.

Law-abiding businesses were forced to cut corners or go belly up.

A year-long investigation by Miami Herald and McClatchy Newspapers published in September found all this and more in Florida’s construction industry during the recession.

Publicly available documents and interviews with workers around Florida showed that contractors broke state law and cheated on their taxes in order to get work on the federally financed projects that were the lifeblood of the building industry between 2009 and 2013.

Now the U.S. Department of Labor has announced an agreement with the state Department of Revenue to crack down on the accounting trick that bad actors use to evade taxes and cheat their employees.

The problem, known as “worker misclassification,” happens when companies treat their workers as independent contractors instead of permanent employees. The companies don’t withhold income tax or file payroll taxes on those workers. They don’t pay unemployment taxes.

Labor Department Sharpening Focus on Misclassification

Wednesday, November 19, 2014
By K. W. Mitchell

In combating employee misclassification, the Labor Department is taking strategic misclassification enforcement to the next level by placing greater priority on measures that are tactical and swift, a department official said.

“To carry out our job, we must be prudent and strategic in our enforcement actions,” said David Weil, administrator of the Labor Department’s Wage and Hour Division.

“We need to create ripple effects that impact compliance far beyond the workplaces where we physically conduct investigations, or the organizations to which we provide outreach directly,” Weil said Oct. 31 in a blog post.

Additionally, the division needs to be persistent in discovering ways to “make our investigation of one employer resonate throughout that particular sector and influence the behaviors of employers across that entire industry, to promote compliance across networks of business organizations,” Weil said.

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US Labor Department signs agreement with New Hampshire Department of Labor to reduce misclassification of employees

WHD News Release: [11/12/2014]

WASHINGTON – Officials from the U.S. Department of Labor and the New Hampshire Department of Labor  has signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as something other than employees, such as independent contractors or other nonemployee statuses.

Under this agreement, both agencies will share information and coordinate law enforcement. The memorandum of understanding represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The New Hampshire Department of Labor is the latest state agency to partner with the Labor Department.

“Misclassification of employees deprives workers of rightfully-earned wages and workplace protections and undercuts law-abiding businesses,” said U.S. Secretary of Labor Thomas E. Perez. “Which is why combating misclassification is one of several important strategies to promote shared prosperity to help ensure that our economy works for everyone.”

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