Tag Archives: misclassification

USDOL: NY Construction Workers to Receive $727K, Resolving Wage Violations.

NEW YORK CITY CONSTRUCTION COMPANY, US LABOR DEPARTMENT REACH AGREEMENT ON BACK WAGES OWED TO WORKERS

NEW YORK – The U.S. Department of Labor has obtained a consent judgment in federal court requiring a New York City design and construction company and its owners to pay $726,989 in back wages and liquidated damages to 184 employees and take other corrective actions to resolve past overtime and recordkeeping violations of the federal Fair Labor Standards Act.

Design Development NYC, Inc., had misclassified almost all of its employees as independent contractors, an investigation by the department’s Wage and Hour Division found.

The misclassified employees worked in numerous jobs, including carpenters, draftspersons, drivers, electricians, laborers, painters, and plumbers and tilers. The company also wrongfully considered three employees as exempt from the FLSA’s overtime compensation requirements, paying them a fixed weekly salary without regard to hours worked.

As a result, misclassified employees and non-exempt employees – some of whom worked 70 hours per week or more – did not receive proper overtime pay when they worked more than 40 hours in a workweek. The FLSA requires that employees receive one-and-one-half their regular rates of pay when they work more than 40 hours in a workweek and that employers maintain adequate and accurate records of employees’ wages and work hours.

“This resolution commits this company to positive and effective steps to prevent future violations,” said Mark Watson Jr., the Wage and Hour Division’s northeast regional administrator.

“Our goal is to ensure that employees receive the hard-earned wages due them and that law-abiding businesses can compete fairly in the marketplace,” said Jeffrey S. Rogoff, the regional solicitor.

The company and owners, Michael Daddio and Earl Brian, neither admit nor deny the allegations; they have agreed to a consent judgment, entered in the U.S. District Court for the Eastern District of New York, which requires them to comply with the FLSA by determining employees’ overtime exemption status properly and recording employees’ work hours accurately, among other requirements. They will also submit complete samples of time and payroll records for all employees to the division for its review, and supply current and new employees with written notification of their rights under the FLSA in languages the workers understand.

The division is committed to providing employers with the tools they need to understand and comply with the variety of labor laws the division enforces. It offers useful resources ranging from an interactive E-laws advisor to a complete library of free, downloadable workplace posters. In addition, the division’s Community Outreach and Resource Planning Specialists conduct ongoing outreach activities to educate stakeholders, including employers, employees, business and labor groups and professional associations, among others, with accessible, easy-to-understand information about their rights and responsibilities.

The division’s New York City District Office conducted the FLSA investigation. Trial Attorney Frances Y. Ma of the department’s New York Regional Solicitor’s Office handled the case for the division.

For more information about the FLSA, contact the division’s toll-free helpline at 866-4US-WAGE (487-9243) or its New York City District Office at 212-264-8185. Information also is available at http://www.dol.gov/whd.

SOL & WHD News Release:
05/03/2017
Media Contact Name:
Ted Fitzgerald
Email: fitzgerald.edmund@dol.gov
Phone Number:
(617) 565-2075

Media Contact Name:
James C. Lally
Email: lally.james.c@dol.gov
Phone Number:
(617) 565-2074
Release Number:
17-0470-NEW

Photo credit: ILO in Asia and the Pacific via Foter.com / CC BY-NC-ND

Texas Stories: Symptom of Bigger Workers’ Comp Debates

Today’s post comes from guest author Rod Rehm and Emily Wray Stander from Rehm, Bennett & Moore.

We have been listening with interest to a recent National Public Radio (NPR) series about construction workers and businesses in Texas. The series about this industry confronts many of the issues that are being debated by society these days, whether in the judicial, executive or legislative branches.

To add some context, these topics include employing immigrant workers; paying a living wage; calling an employee an independent contractor; and ensuring workplace safety, workers’ compensation, and payroll taxes are all done, practices that specifically are not happening in Texas, according to the stories. A notable quote from the first piece is “Texas is the only state in the nation without mandatory workers’ compensation, meaning hospitals and taxpayers usually end up shouldering the cost when uncovered construction workers are hurt.” And we think the information from the second piece is quite telling that the business owner “asked that NPR not use his last name because the IRS might take an interest in his business, designs and builds landscapes in the Dallas-Fort Worth area.” Because he treats his crew as “self-employed contractors,” meaning that the IRS would likely see his interpretations of tax law as illegal. From the story: “This is a key distinction. If Trent were to classify his workers as employees, he’d have to pay taxes, Social Security, unemployment and overtime. But by saying his workers are actually independent contractors – in essence, business owners – he’s off the hook.”

We think listening to these two pieces, at less than 15 minutes total, is a good opportunity to experience an applied illustration of what happens to the vulnerable when such protections as workers’ compensation are effectively dismantled for profit-taking and political reasons. Respected colleague Jon Gelman in New Jersey recently wrote a blog post that focuses on the first NPR report and “how bad it is for workers who get injured in Texas.”

Although things are allegedly always more extreme in Texas, attacks on the vulnerable aren’t limited to that state, unfortunately. Ms. Cathy Stanton, president of the Workers’ Injury Law and Advocacy Group (WILG), and a respected colleague from Pasternack Tilker Ziegler Walsh Stanton & Romano in New York, recently wrote an extremely useful article about “Emerging Trends in Legislative Attacks on Injured & Ill Workers.”

In Nebraska, the anti-worker, pro-business Nebraskans for Workers’ Compensation Equity and Fairness group is backing LB 584 that would dramatically limit protections that workers have when it comes to being injured through a concept called evidence-based medicine/utilization review. In addition to our firm writing numerous blog posts about this legislation, EBM/UR is #8 in Ms. Stanton’s list of “trends throughout the country which would negatively impact existing Workers’ Compensation benefits.” And according to this article, politicians in Tennessee are looking to gain some brownie points with business and insurance by overhauling the workers’ compensation courts to the detriment of injured workers. Iowa workers and attorneys have to contend with #6 on the list, restricting doctor choice, while a bill in Nebraska’s legislature is in the works to do the same if passed.

We agree with what Ms. Stanton writes: “All workers need to be aware of these trends because the likelihood of legislation being introduced in their state against their interests is strong. Employee immunity has remained untouched, but workers’ benefits are consistently under attack as a result of the collective lobbying efforts of the insurance industry and large corporations.   Unfortunately the great compromise is turning out to be one sided as workers are forced to endure multiple obstacles and hurdles to be entitled to fewer and more restricted benefits.”

So we would encourage you to join us in educating yourselves about how workers’ compensation “reform” can lead to stories like NPR’s cautionary tales about the construction industry in Texas and to explore what’s going on in your state legislature. Finally, get involved in your state’s political process to advocate for workers!

Misclassification Fraud Across the Country

North Carolina Governor Bev Perdue Signed Executive Order 125

Today’s post comes from guest author Leonard Jernigan from The Jernigan Law Firm.

“Misclassification” is a poorly chosen word to describe fraudulent conduct by employers who misclassify the status of their employees. For example, a roofing company may have 30 roofers doing the actual work but these workers are classified as “independent contractors” instead of employees. Why would they do that? At the end of the year these workers are sent a 1099 tax form that reports the wages paid, but the employer does not make any deductions for Medicare or unemployment, and doesn’t pay for workers’ compensation insurance. If you have a roofing company and you properly classify your employees, you are at a competitive disadvantage in bidding on jobs. Honest businesses are hurt by misclassification, and taxpayers are hurt because they pick up medical bills and other expenses created when one of these “independent contractors” gets hurt.

Another form of misclassification is when a construction company with 85 employees reports to its workers’ compensation insurance company that 75 of these people are staff workers, which results in a significantly reduced premium. Obviously, a construction worker is at greater risk of injury than an office worker. Again, the honest company who accurately reports the status of its employees is at a competitive disadvantage with the dishonest employer.

New York, New Jersey, Massachusetts, Virginia, Michigan, Florida, California, Texas and the vast majority of states across the country have been looking into this issue for several years and they have been aggressively prosecuting dishonest employers who try to game the system. North Carolina has finally joined these states. On August 22, 2012, Governor Beverly Perdue issued Executive Order 125, which created a task force to study this issue and try to get different agencies to communicate with each other and share information to identify employers who are failing to pay employee taxes. Hopefully, this task force will figure out how to enforce existing law. This blog will follow the progress of this task force. Stay tuned.

Kit Case, Causey Wright's Paralegal & Media Manager

Corrupt Employers Just Keep Cooking the Books

Today’s post comes from guest author Leonard Jernigan from The Jernigan Law Firm.

As you have seen me mention several times on this blog, the failure of many employers to play by the rules continues to plague the nation’s workers’ compensation system. In one type of fraud, known as misclassification, employers incorrectly designate workers as outside consultants or independent contractors.

When workers are misclassified, insurance companies do not consider them employees. The injured workers are then denied workers’ compensation benefits. Additionally, the insurance companies are not paid insurance premiums and are not adequately reserved for the risk of injury by those workers.

The following video excerpt is of an interview I did a while back with Sam Gold, director of the National Association of Injured Workers (NOIW) and producer of Injured On The Job. We discuss this continuing problem and the need for it be addressed by regulatory agencies so that workers’ and their families are protected from fraudulent employers.