Members of the United Brotherhood of Carpenters (UBC) and participants in other employer sponsored health care plans in the U.S. can rest a little easier now that implementation of the “Cadillac tax” on those benefits has been delayed until 2020. This provision was included in the $1.1 trillion omnibus spending bill that was signed into law by President Obama. The House of Representatives passed the bill on a 316-113 vote, while the U.S. Senate passed it 65-33.
It is hoped that this delay in implementing the Cadillac tax, which would impose a 40% excise tax on the portion of group health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage, will lead to a full repeal down the road.
“When people take a closer look at the so-called Cadillac tax, they see how unfair it is for employers and employees,” said UBC General President Douglas J. McCarron. “We have been working hard with law makers and this two-year delay helps us on our way to a full repeal.”
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Ashland subcontractor On-Time Construction Services, Inc. and its owner Jonatas Vicente De Brito Barcelos have been cited $117,082 in restitution and penalties for intentionally violating the Massachusetts prevailing wage law and failing to submit true and accurate payroll records, Attorney General Maura Healey announced Monday.
The allegations stem from a project at the Acushnet Police Station for which On-Time was a subcontractor, according to a release from the AG’s office that began an investigation last July into the situation.
The investigation revealed that at various times between March and August of last year, On-Time failed to pay three workers the correct prevailing wage rate, according to the AG’s office. One worker was not paid any wages until after the investigation commenced. On-Time also certified on a weekly basis to the awarding authority that its workers were paid the prevailing wage rate even though they were not. Under the Massachusetts Prevailing Wage Law, contractors and subcontractors engaged in public construction projects must pay their employees a special minimum wage, according to the AG’s office.
Since the investigation began, On-Time has paid $78,987 in restitution to the employees.
By Kristen LinnartzPublished: July 13, 2016, 12:38 pm Updated: July 13, 2016, 1:48 pm
LUDLOW, Mass. (WWLP) – Attorney General Maura Healey announced on Tuesday that a Ludlow contractor has agreed to pay more than $27,000 in restitution and penalties for violating the Massachusetts prevailing wage law.
SSR Construction, Inc. and its owner Peter Slivka accepted two civil citations and agreed to pay $27,387.20 in restitution and penalties to resolve allegations that they were not paying their workers the required prevailing wage rate and failed to submit true and accurate certified payroll records to the awarding authority on a weekly basis.
“Contractors working on public projects must pay their workers a fair wage,” said Attorney General Healey. “The prevailing wage law protects workers and we will continue to enforce the law and hold accountable companies who fail to adequately compensate their workers.”
The Attorney General’s Fair Labor Division started investigating Slivka and SSR Construction in January of 2014 after receiving a complaint that they were not paying their workers the required prevailing wage rate. During their investigation, they found that between September 4, 2013 and December 6, 2013 SSR Construction performed work on a project to renovate the City Hall in Westfield and failed to pay its workers the correct prevailing wage rate. It also didn’t submit true and accurate certified payroll records to the awarding authority on a weekly basis.
Through the settlement with the Attorney General’s Office, four employees will receive restitution payments.
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New Law Will Strengthen Wage Law Compliance on Large Construction Projects
BERKELEY, Calif. /California Newswire/ — Last night, the City of Berkeley approved a first-of-its-kind local ordinance aimed at preventing wage theft on local construction projects, Smart Cities Prevail announced today.
Authored by Councilmember Laurie Capitelli, co-sponsored by a majority of the Council and supported by construction industry trade associations and workers’ rights groups, the measure requires that developers and builders certify that all contractors performing work on large projects have complied with state wage and hour laws as a condition of winning a certificate of occupancy from the city.
“Enforcing wage laws is especially difficult in the construction industry, because unscrupulous contractors who cheat workers in order to win bids on large projects find ways of disappearing after the work is done,” said Smart Cities Prevail Policy Director Scott Littlehale. “By expanding transparency and accountability BEFORE a project is complete, Berkeley has taken an important step towards preventing wage theft and leveling the playing field for honest construction businesses competing for this work.”
“This measure links our city’s responsibility for determining whether a construction project is completed with the principle of ensuring those who did the work are paid the wages they earned,” added Berkeley City Council Member Laurie Capitelli. “Whether as workers, businesses or taxpayers, we are all impacted by wage theft in some way. But we are not powerless to stop it, and that’s why I hope that other communities will soon join Berkeley in taking action.”
Research shows that wage theft annually costs California taxpayers at least $8.5 billion in tax revenue, and costs workers billions more in lost income. Because state enforcement resources are limited, workers only file claims in a fraction of cases and less than 20 percent of adjudicated claims are ever paid. The problem is especially pervasive in lower wage occupations, including California’s construction industry.
*Editorial Note: above text based on press release, as provided by the news source: Smart Cities Prevail and was not created by CaliforniaNewswire.com.
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Despite an emerging academic consensus that shows state prevailing wage laws have no discernible impact on project costs, lawmakers in Indiana weakened the state’s law – called Common Construction Wage – between 2012 and 2015. In 2013, the threshold for coverage was increased from $250,000 to $350,000, meaning that workers were no longer paid a prevailing wage rate on projects costing between $250,000 and $349,999.
Indiana’s southern border with Kentucky is thus a good case study on the local impact of weakening prevailing wages. There are 13 southern Indiana counties that border 14 northern Kentucky counties.
After weakening prevailing wage, employment in the heavy and civil engineering sector declined in Indiana’s southern-most counties but grew across the river in Kentucky border counties. After the Common Construction Wage threshold was raised, southern Indiana’s public works construction sector had an employment loss of 885 workers (21.2 percent). Meanwhile, public works construction employment increased by 770 workers (20.7 percent) in the Kentucky border counties.
The average monthly earnings of employees in heavy and civil engineering construction careers also declined after prevailing wage was weakened in the Indiana counties but increased across the river in the Kentucky counties. After adjusting for inflation, the county-level earnings of public works construction employees declined by $439 per month for the average Hoosier worker. At the same time, average earnings increased by $610 per month for comparable workers across the border in the Kentucky counties.
In this integrated regional economy along the Ohio River, the evidence suggests that out-of-state contractors from Kentucky with lower-paid construction workers were the real beneficiaries of Indiana weakening its prevailing wage law.
After Indiana weakened its prevailing wage law, higher-paid public works construction workers in the state’s 13 southern-most counties were replaced by lower-paid workers across the border in 14 Kentucky counties. The redistribution of jobs and earnings to Kentucky construction workers has an adverse impact on income tax revenues and sales tax revenues in Indiana.
Naples Business Owner Arrested for $700,000 Workers’ Compensation Fraud Scheme
Press Release, Florida Department of Financial Services
5-20-16
Florida Chief Financial Officer Jeff Atwater today announced the recent arrest of Raimundo Hernandez-Argueta, owner of Naples construction company Complete Framing Professionals (CFP). Following a joint investigation by the Department of Financial Services’ (DFS) Division of Insurance Fraud and Division of Workers’ Compensation, Hernandez was arrested on fraud charges for allegedly misrepresenting information regarding CFP’s employee operations and payroll when applying for a workers’ compensation policy. By doing so, Hernandez avoided at least $700,000 in workers’ compensation premium payments.
Investigators later discovered that Hernandez obtained a policy through Florida United Business Association providing coverage for four employees, each with an annual wage of $50,000. Hernandez paid $26,910 for this one-year policy. However, job site inspections documented 108 employees during that time frame and more than $5.5 million in total earnings, grossly lower than what was reported to the company’s insurance carrier.
As a result of his misrepresentations, Hernandez was able to illegally avoid paying more than $700,000 in workers’ compensation premium dues.
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Gilbert Charles, of Pinckney, is a U.S. Army veteran who served in the 1980s and moved to the skilled trades. His son, Matt, has followed in his father’s footsteps as a veteran and now as an apprentice learning how to become an electrician.
By Gilbert Charles
As we near Veterans Day, we will hear from many political leaders how grateful they are for our service. Some will express concern about veterans who return home and their opportunity to find a good job to support their families.
As a U.S. Army vet who served in the 1980s — and as the father of an Army veteran who served in Afghanistan — I always appreciate those thoughts. But I’m also concerned about efforts in the Legislature that would cut the pay of many Michigan veterans working in the construction industry.
I returned to Michigan after my service, and looked around for a good job, one that would let me build on my training, provide fairly for my family, offer decent health care benefits and a path to retirement. I found that job, training in an apprentice program and becoming a journeyman electrician as a member of IBEW Local 252. A portion of my paycheck each week goes to the apprenticeship program, to ensure those veterans and others who come after me get the training they need to do their job well and safely.
That turns out to have been a good investment. Now my son Matt is following in my footsteps. He’s in the Local 252 IBEW-NECA apprenticeship program, earning while he learns, at no cost to taxpayers. We know a lot of veterans in the industry. A recent report by the State of Michigan showed that about 9 percent of veterans are in the construction industry, compared with about 6 percent of state workers overall. And many were attracted to the fair pay and good training made possible by the state’s prevailing wage laws.
It’s exciting to see my son work in major, complex construction jobs at the University of Michigan — jobs that demand the skills I’ve gained over the years. But it’s not clear that good paying jobs in the skilled trades professions will be available to future vets.
A handful of politically powerful special interests want to cut the pay and benefits going to skilled trades workers by eliminating prevailing wage policies, even though research shows taxpayers won’t save a dime.
Prevailing wage policies say that taxpayer-supported jobs have to pay the going rate of pay in the region — usually the union-negotiated wage. Any company can bid, union or nonunion. But they have to pay a fair wage rate. It helps keep out-of-state companies from coming in with cheaper, less skilled workers to do the minimally acceptable job that meets minimum standards.
It’s in the state’s best interest to attract veterans such as Matt into the skilled trades, where there is a shortage of workers today. But without prevailing wage policies, the job will be a lot less attractive — in fact, many skilled-trades workers, including veterans, won’t enter the profession, or will go to another state. (Other Midwest states have prevailing wage policies, it’s mostly low-paying states in the South that don’t). Union apprenticeship programs will also disappear, and taxpayers will have to pay for those programs.
So this November, don’t just thank Matt and I for our service. We know you appreciate that. Take another step. Tell your lawmakers to support good jobs for veterans by supporting prevailing wage laws. That way Michigan veterans can return confident they will be able to get good training and support their families by taking jobs in the skilled trades
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Partnership description: The division and bureau 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 IRS and 28 other states to combat employee misclassification and to ensure that workers get the wages, benefits, and protections to which they are entitled. Mislabeling employees as independent contractors can deny them of basic rights such as minimum wage, overtime and a host of other benefits. Misclassification also reduces federal and state tax revenues, and prevents contributions to state unemployment insurance and workers’ compensation funds.
Quotes: “The Wage and Hour Division continues to attack this problem head on with a combination of a robust education and outreach campaign and a nationwide, data-driven, strategic enforcement across industries. Our goal is always to strive toward workplaces with decreased misclassification, increased compliance, and more workers receiving a fair day’s pay for a fair day’s work.”
Quote: “When corporations misclassify their workforce, they make it much more difficult for workers facing wage theft, civil rights abuse or other unfair treatment on the job. This agreement will create a new tool to help protect the rights of Oregon workers cheated on the job.”
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Workers-comp premium scams by employers may steal more money than bogus work injury claims. At least that’s what many experts say. And the problem could be growing. This is especially true in urban centers with deep underground economies.
Firms in the dangerous construction trades are among the largest offenders. The Coalition met recently with a new and unexpected anti-fraud ally: the United Brotherhood of Carpenters. It’s the voice of organized labor in the building trades. Premium-avoidance schemes leave workers exposed without state-required benefits. Federal, state and local governments also lose untold millions in unpaid taxes.
Shady businesses lowball their workforce and payroll size — two important factors in setting comp premiums. The firms misclassify workers as subcontractors, then pay them in cash under the table. A dishonest employer illegally can duck hundreds of thousands of dollars in workers-comp premiums and taxes in a year.
Workers also are cheated out of workers-comp benefits, wages, overtime, unemployment benefits and Social Security. Honest employers lose business because cheaters use the illicit savings to underbid them for contracts. And, workers comp insurers lose premiums.
The Coalition’s recent meeting with the carpenters union revealed disturbing examples of premium-avoidance schemes: A building at the University of Connecticut … Florida hospital … construction at the Atlanta airport … and a building at the Walter Reed military hospital complex in suburban Washington, D.C.
The carpenters’ proposals for comp insurers show how partnerships can help move anti-fraud efforts forward more decisively:
Work together on best practices for conducting audits and investigations into premium-avoidance schemes;
Adopt procedures to red-flag suspected premium fraud; and
Cooperate with stakeholders on investigations.
Workers-comp insurers already do much of this, yet premium cons remain virulent. What’s needed is stepped-up alertness and action by all parties. This becomes a force-multiplier that identifies more schemes, and boosts the entire anti-fraud effort.
Fraud fighters and their allies must team up to educate state policymakers about stopping costly comp scams — premium avoidance and false injury claims. Fraud fighters can speed up progress by enlisting non-traditional allies such as the carpenters union. The more influential allies that join anti-fraud efforts, the stronger our efforts against comp scams will become.
Source: Fraud Wire
Graphic: Fraud Wire
Image: Bernard Pollack
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An earlier version of this article incorrectly stated that business groups oppose a measure that would make wage complaints public. In addition, Rep. Jessie Danielson’s home town was incorrectly identified. She is from Wheat Ridge.
John has been working in the U.S. as a drywall hanger in northern Colorado and other states for most of the past 12 years.
The tight construction market here has made it easy for him to get work for $10 or $14 or even $16 an hour. But wages are paid in cash, the hours are long, there are no breaks or overtime, and often pay is short.
For these reasons, John (who asked that his real name not be used to protect himself and his coworkers) is one of a handful of undocumented laborers who have reluctantly come forward, signing affidavits and filing complaints with the Colorado Division of Labor and Employment, detailing the job sites where they’ve worked, the labor brokers who’ve hired them, and instances in which overtime hasn’t been paid.
The problem has become so prevalent that unions representing construction workers have begun a campaign in Colorado and across the West to stop the practice.
In addition, the U.S. Department of Labor has launched a nationwide wage fraud investigation involving 22 states, including Colorado.
In Colorado’s over-heated job market, construction companies are desperate for workers and complaints of wage abuse and other workplace problems have surged 25 percent at the Colorado Department of Labor and Employment.
Though the fraud takes different forms in different states, in Colorado here’s how it often works, according to wage advocates and regulators.
A subcontractor hires a labor broker as an independent contractor, something that is legal here as long as the labor broker registers as a limited liability company (LLC) with the Colorado Secretary of State. This can be done in a matter of minutes online.
Once the labor broker registers as an LLC, it exempts the subcontractor from any liability for the labor broker’s workers, according to the Colorado Department of Labor.
In documents provided to the Daily Camera, the Denver-based Southwest Regional Council of Carpenters union identified 12 subcontractors in the metro area it believes routinely use labor brokers with LLC certificates to recruit undocumented workers and some two dozen independent labor brokers who bring laborers in from Nebraska, Texas, North Dakota, South Dakota, Nevada and Utah and move them from one construction site to another.
Several of the sites identified by the workers and the union are in Boulder County, including a public housing project for senior citizens in Longmont and a $91 million hotel project at the corner of 28th Street and Canyon Boulevard in Boulder.
General contractors and project owners say the rising complaints and labor protests are simply a ploy by unions to punish those contractors and owners who’ve selected non-union subcontractors.
Union leaders agree that the use of labor brokers makes it difficult for union contractors to compete.
But David Kersh, executive director of the Los Angeles-based Carpenters/Contractors Cooperation Committee who is leading the regional fight against wage fraud, said the issue goes beyond union/non-union friction.
“You’re talking about a lot of money in taxes that are not being paid,” Kersh said during a visit to meet with regulators last week in Colorado “These contractors are enabling that — millions and millions of dollars are going underground. At the same time, middle class workers and their families are being hurt.
“It’s ironic,” he said. “All of these construction unions are pro-development. We share an interest with the development community. But this is wrong.”
In an effort to bring public attention to the issue, the unions are distributing fliers around job sites, identifying subcontractors and labor brokers at the sites whom they believe are engaging in wage fraud, based on affidavits from workers and photos of cash payrolls.
According to interviews with two undocumented workers — one of whom worked on the Spring Creek Project last month — and a former construction superintendent whose former company uses labor brokers extensively, the use of undocumented workers and payroll fraud has exploded during this most recent construction boom.
General contractors and their subcontractors, desperate for help and largely off the hook legally for any wage fraud conducted by labor brokers, can easily look the other way, according to regulators.
John spent several weeks working on the Longmont Housing Authority’s Spring Creek project hanging drywall for Westminster’s United Builders Services (UBS). But he ultimately quit, he said, because one of the labor brokers who recruits workers for UBS failed to pay him several hundred dollars in wages, and deducted rent charges from his pay in violation of his original verbal agreement with the broker.
After getting into a fight with the broker, John said he was angry and shaken, and agreed to file an affidavit and complaint with the Colorado Department of Labor and Employment.
“The whole time I worked for UBS or their subcontractors, I never got breaks or was paid for overtime. I don’t think it’s fair that they abuse the people,” he said in his affidavit.
UBS did not respond to repeated requests for comment.
Boulder’s Daneuve Construction is the general contractor overseeing the Longmont Spring Creek project. But Daneuve Vice President David Garabed said he wasn’t aware of any wage issues.
And because it is a public project that requires workers to receive what are known as “prevailing wages,” Garabed said the wage fraud being alleged would be difficult if not impossible to pull off.
“We have to present certified payroll every week,” Garabed said, referring to paperwork that workers sign verifying they’ve been paid the prevailing wage. “I would be very surprised if anything like that were occurring.”
But the former UBS superintendent. who asked not to be identified because he fears retaliation from the labor brokers, told the Daily Camera that labor brokers are trained by subcontractors to fill out the prevailing wage forms themselves, forging workers’ names. The superintendent said he witnessed the training sessions.
Unless a general contractor walked out onto the job site, verified each worker’s identity and asked how much he or she was being paid, there would be no way to verify whether the workers were receiving the prevailing wage.
The cheapest guys in town
The superintendent quit working for UBS because of his concerns about the use of labor brokers. wage fraud and the difficulty subcontractors operating legally have competing against the low-cost labor brokers, he said.
A drywall hanger on a legal payroll makes roughly $28 an hour. Those working off-the-books are typically paid less than half of that.
Now working on his own, the superintendent said the use of cash pay makes it extremely difficult for companies that are paying for workers compensation and unemployment insurance, as well as safety equipment, as required by law, to compete.
“By the time we add in all of our costs and bid the job, we cannot win, thanks to these guys,” he said. “Every time one of these labor brokers bids a job, we end up being way over.”
“This is not a new problem,” he said. “But everybody avoids talking about it because, one way or another, these (undocumented workers) are cheap. Unfortunately, they are the cheapest guys in town. And everyone benefits.”
Gustavo Maldonado is a wage advocate with the carpenters’ union.
In the past year, Maldonado has delivered to various regulators numerous affidavits from workers, photos documenting cash payments, and long lists of elusive labor brokers who work with little more than a cell phone and a $40 business registration from the Colorado Secretary of State.
Maldonado said he has contacted the Colorado Department of Labor and Employment, the U.S. Department of Labor, the Department of Homeland Security and numerous Colorado lawmakers.
But he said he has seen no action, to date.
Cher Havind, a spokeswoman for the Colorado Department of Labor, said the agency cannot discuss specific labor complaints it is investigating. But the agency did conduct 2,365 audits last year across its workers compensation, unemployment and wage and hour divisions, with 40 percent of those, or 946 resulting in enforcement actions.
“Construction right now is like a cancer,” Maldonado said. “This cash pay is growing and growing. GCs (general contractors) know exactly what’s going on. But it’s as if nobody cares.”
Michael Gifford, executive director of the Colorado chapter of the Associated General Contractors, said he wasn’t aware of any abuse of undocumented workers or concerns about the use of cash pay. But he said a similar wave of protests in 2010 resulted in a state investigation and a report that found no evidence of the practice.
Deluged with complaints
At the Colorado Department of Labor and Employment, wage complaints are up 25 percent in the past year, driven in part by a new law making it easier for low-wage workers to get help from the state, by the overall labor shortage, and by workers such as John, who are coming forward out of frustration and fear.
Julie Yakes is manager for self-insurance and coverage enforcement for the Workers Compensation Division at Colorado’s labor department. She said tracking labor brokers and subcontractors who engage in wage fraud is difficult in Colorado because there is no effective regulation of the construction industry.
Little legal oversight, transparency
When workers are paid in cash illegally, three types of laws essentially are broken: Those requiring that workers compensation insurance premiums are paid, those requiring that unemployment insurance premiums are paid, and those requiring that breaks be given and overtime be paid.
But general contractors have no responsibility if a worker recruited by an independent labor broker isn’t paid properly or isn’t covered by insurance, according to Yakes. General contractors are liable only if a subcontractor with a direct contract with the general contractor failed to cover its own employees.
In addition, the state labor department is prohibited from making public any records of worker complaints against companies, providing little transparency about the state of the labor market and providing little incentive for so-called bad actors to stop the wage fraud.
Colorado Rep. Jessie Danielson, D-Wheat Ridge, has sponsored a bill this session that would make those wage complaints public once they’ve been resolved.
“The way the law is interpreted now, no one can access this information, even under the Colorado Open Records Act,” Danielsen said. “Most businesses are decent companies that treat their hard-working staffs well. But I am very concerned. I am seeing an increase in these cases across the state. What we need is more transparency so that we can deter this kind of behavior. Those companies that do proudly pay their workers are up against bad actors who make more money and cheat their own work forces. That is not good for business.”
Protests continue
In Boulder, a labor protest at the hotel site has been underway for three months now, fueled by union concerns that UBS, the same drywall contractor identified by John and others, has been selected for the project.
Millender-White, the general contractor overseeing the hotel development, did not respond to requests for comment for this article.
But earlier this year, Millender’s Adam Mack said his company has used UBS on numerous projects without incident. He said the labor protests were simply the result of a union seeking to roil the waters because his company has selected a non-union subcontractor.
While the protests continue, Boulder-based attorney Brandt Milstein said he and other labor attorneys are being overwhelmed with complaints about wage fraud among low-wage workers.
“My experience is that immigrant workers are fairly consistently exploited,” Milstein said. “It’s nothing new in Colorado. But the rates of wage theft among low-wage workers we’re seeing now is alarming.”
Source: Boulder County Business – Jerd Smith, Business Editor
Photo: Kira Horvath, Staff Photographer – Boulder County Business
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