Contractor Found to be Equally Responsible for Sub’s Hiring Fraud

A recent decision following an investigation by the New Orleans District Office Wage and Hour Division of the US Department of Labor tied a Louisiana general contractor to the employment of drywall installers hired by a subcontractor for work on several residential and commercial projects.  The workers were misclassified as independent contractors and denied overtime wages for the time they worked each week over 40 hours.  The subcontractor, Escapade Acoustic Drywall from Lafayette, and the general contractor, Lloyd N. Moreau LLC of Pineville were found to have a joint employment relationship and are both being held responsible for the workers’ back wages.

A press release from the US Department of Labor earlier this month explains the problem with the growing practice of worker misclassification / payroll fraud.

“The practice is a serious threat both to workers entitled to good, safe jobs, and employers who obey the law. Too often workers are deprived of overtime and minimum wages, and forced to pay taxes that their employers are legally obligated to pay. Honest employers have a difficult time competing against scofflaws.”

This determination could become case precedent for the class action suit currently pending in Austin against contractor Greater Metroplex Interiors (GMI) for underpaid wages to workers hired by subcontractor Capoera Construction.  That suit claims that GMI had joint employer status with Capoera, and is therefore equally liable for paying the wages owed to Capoera's workers.

This is not the first time that the owners of Escapade Acoustic Drywall, Mauro and Keren Aguirre, have been charged with payroll fraud violations. A press release from the Attorney General’s office in Baton Rouge reported that the owners of the company were arrested on September 10, 2009 on charges of felony theft and worker’s compensation premium fraud, for their under-reporting of employees and income during 2007 and 2008.

In this latest case, both Escapade Acoustic Drywall and Lloyd N. Moreau LLC have agreed to pay the $203,000 in overtime wages owed to the workers, and to pay the required time and one-half salary for all weekly hours above 40 worked from this point forward.

For more information about the Fair Labor Standards Act and other federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243), or find information and links to local Wage and Hour Division offices on their website.