Owners of construction companies pay more than $108K in overtime back wages following US Labor Department investigation

Some employees misclassified as independent contractors

Date:  January 29, 2015

U.S. Department of Labor

Wage and Hour Division

Release Number: 14-2338-DAL

NEDERLAND, Texas — Specialty Painting & Wall Covering Inc. and M & S Enterprise have paid 22 painters and sheetrock installers $108,783 in overtime back wages after an investigation by the U.S. Department of Labor’s Wage and Hour Division. The investigation revealed violations of the Fair Labor Standards Act’s overtime and record-keeping provisions and found that workers at M & S Enterprise were misclassified as independent contractors.

The division’s Houston District Office investigated both construction companies that are jointly owned and operated and employ workers who perform painting, sheetrock installation and finishing projects. Workers of Specialty Painting & Wall Covering were paid for up to 40 hours per week with a check from that company. When workers at Specialty worked more than 40 hours in a week, they were paid for the overtime hours with a separate check from M & S Enterprise at their straight-time rate with no taxes withheld. Workers of M & S Enterprise were misclassified as independent contractors and were paid straight time for all hours worked, including overtime hours.

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Texas House Panel finds that worker misclassification “compromises free markets” and promotes “lawlessness”

By Scott Braddock
January 23, 2015


A report from a bipartisan panel of Texas lawmakers says companies that pretend their employees are independent subcontractors are undermining free markets and encouraging illegal immigration, among other serious problems. The practice of worker misclassification happens when an employer intentionally skirts the law by paying workers as independent subcontractors when they meet the legal definition of employees and should be paid as such.

Preventing workers from being paid as employees denies them basic protections and costs taxpayers millions each year because employers are avoiding payroll taxes on that labor. Employers who follow the law are investing in a sustainable workforce, which is undermined by worker misclassification. Many of those ethical employers have urged lawmakers to do more to contain what they’ve called “a cancer” in the heart of the construction industry.

So, the Texas House Business and Industry Committee this past year took an in-depth look at the issue, including testimony from construction industry leaders, labor advocates and others who are united in combating misclassification.

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El Paso City Council: Contractor’s payment on hold due to violations

By Aileen B. Flores / El Paso Times
POSTED:   12/09/2014 10:29:06 PM MST

El Paso City Council on Tuesday took action against companies that allegedly underpaid employees in the construction of Sun Metro’s bus operations and maintenance facility on the East Side.

Council voted unanimously to withhold $35,400 in payment to the contractor, Urban Associates, until an investigation is complete into one of the subcontractors, Beltran Electrical Contractors, Inc. The investigation regards possible violations of prevailing wage rates.

The contractor has 15 days to resolve the issue. If the problem is not resolved between the subcontractor and the workers, then the dispute must be submitted to arbitration, city documents show. Council also approved to report the case to the U.S. Department of Labor.

Urban Associates was awarded a $27.4 million contract in 2012. The company then subcontracted Beltran.

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Bill Filed to Crack Down on Worker Misclassification in Texas Construction Industry

By Scott Braddock on Mon, 12/08/2014 – 12:49pm 

Far too often, construction companies cheat taxpayers and their workers by pretending their employees are independent subcontractors when, by law, they should be paid as employees. It’s a practice known as worker misclassification. Some ethical contractors have called it a “cancer that is eating at the heart of our industry.”

If a person is paid as a subcontractor, that individual is on the hook for payroll taxes and benefits like health insurance. When they’re injured, uninsured workers are often dropped off at county hospitals and the rest of us end up paying more in health costs and local property taxes.

Construction Citizen’s Special Report, “Thrown Away People,” outlined many of the problems presented to society by the degradation of the employer – employee relationship. The McClatchy Newspaper chain this year followed up with a powerful series called “Contract to Cheat,” which took another in-depth look at the problem.

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City may refuse licenses to companies convicted of wage theft

Maria Garcia

POSTED: 06:28 PM MDT Oct 20, 2014 
UPDATED: 06:37 PM MDT Oct 20, 2014

EL PASO, Texas – The City of El Paso is preparing an ordinance meant to deter companies from stealing wages from workers. The City Council on Monday unanimously voted to direct the City Manager to draft a wage theft ordinance that would mirror the City of Houston’s law.

Houston’s ordinance forbids any person or company from obtaining or renewing any City license or permit for five years if the company has been convicted of wage theft and exhuasted all appeals. Barring persons from city licenses essentially bans them from working within the City. The ordinance also bars the city from hiring people or firms criminally convicted or assessed civil penalties or judgments related to wage theft, again provided appeals are exhausted and a civil judgment in favor of the worker goes unpaid.

The Paso Del Norte Civil Rights Project, in 2011, did a study of how many workers have been victims of wage theft and say the problem is rampant. For example, they say as many as 67-percent of low wage workers aren’t paid the overtime they’re owed.

AISD Adopts Davis-Bacon Prevailing Wage Schedule, Plans to Conduct Living Wage Floor Study

In a split vote at its June 16 meeting, Austin ISD’s board of trustees adopted the federal Davis-Bacon prevailing wage schedule as the schedule AISD uses to pay construction workers, and the board pledged to conduct an additional study to determine a living wage for workers.
Pipe fitters, laborers and representatives from Austin Interfaith and AISD employees union Education Austin urged the board to adopt Davis-Bacon and stop using what they called an outdated wage rate schedule, while others called Davis-Bacon “flawed” and asked the board to postpone the vote.

Kayvon Sabourian, an attorney with the Austin nonprofit Equal Justice Center, has said the state allows school districts two options-adopting federal wage rates or conducting a wage rates study. The board in January approved a consent agenda item to put its own study in place, and AISD currently uses wage rates based on a study conducted in 2005, he said.

Sabourian told the board he has represented construction workers whose prevailing wage rates have been violated on AISD projects.

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DOL Wage and Hour Division announces upcoming Prevailing Wage Seminars

The Wage and Hour Division is pleased to announce the following Prevailing Wage Seminars for 2014:
Manchester, NH March 4-6, 2014
Phoenix, AZ March 18-20, 2014
Chicago, IL April 1-3, 2014
San Diego, CA April 22-24, 2014
Houston, TX May 7-9, 2014
Atlanta, GA June 3-5, 2014

If you wish to attend one of these seminars, please send an email to WHDPWS@dol.gov Your email should include your name, title, organization, mailing address, email address, and location of the seminar that you wish to attend. There is no fee for attending any of these seminars, however, space is limited. Upon receipt of this information, we will advise you whether your request can be accommodated.

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Targeted worker misclassification law takes effect in Texas

Construction companies across Texas that work on public projects are on notice now that the targeted worker misclassification crackdown passed by the legislature in 2013 has taken effect.

HB 2015 “Worker Classification” was signed into law on June 14, 2013, and became effective on January 1, 2014.  This law is considered by many to be a good first step in the fight against the problem that is especially rampant in residential and commercial construction.  But, advocates for workers and for a fair marketplace understand that much more needs to be done in the years to come if the playing field is going to be leveled so that ethical companies will be able to compete.  While putting these penalties in place on public projects will help in the commercial sector, nothing at all will change in residential construction.

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Austin Council Standing Up For Prevailing Wages

 J.W. Marriot developer, White Lodging, is in hot water for breaking a City of Austin contract by underpaying workers.The company received $3.8 million in tax breaks. Now council is giving them two options, pay the lost wages or pay back the city millions.Workers Defense Project spokesperson Patricia Zavala says they blew the whistle on the company. City auditors checked the numbers and found at least 13 employees were underpaid. Then the city ordered the developer to pay back the laborers in February, and then it was extended in March, then June.

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