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DOL and IRS to Share Data on Employers Who Commit Payroll Fraud

Last week, Secretary of Labor Hilda L. Solis and IRS Commissioner Doug Shulman signed a “memorandum of understanding” between the US Department of Labor and the Internal Revenue Service (IRS).  The agreement is part of a continued effort to put and end to the practice by unethical employers of misclassifying their employees as independent contractors in order to avoid paying workers’ compensation insurance fees, overtime pay, federal payroll taxes and unemployment insurance for those workers.

Representatives of state labor agencies from Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington also signed agreements with the DOL’s Wage and Hour Division.  Similar agreements are pending between the DOL and Hawaii, Illinois, Montana and New York.

According to a press release from the DOL,

“The memorandums of understanding will enable the U.S. Department of Labor to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.”

The press release quotes Secretary Solis as saying:

“We're here today to sign a series of agreements that together send a coordinated message: We're standing united to end the practice of misclassifying employees.  We are taking important steps toward making sure that the American dream is still available for all employees and responsible employers alike.”

Commissioner Shulman stated:

“This agreement takes the partnership between the IRS and Department of Labor to a new level.  In this new phase of our relationship, we will work together more efficiently to address worker misclassification issues, and better serve the needs of small businesses and employees.”

The new agreements will allow the agencies to share information about violators in order to punish them more aggressively and provide more incentive for them to pay their employees fairly.  An article by the Associated Press posted on NPR’s website quotes Patricia Smith, attorney for the DOL:

“In the past, a company might pay a single fine to a state agency for not making proper unemployment insurance payments.  Under the new agreements, a state can share the information with the Labor Department, which also can seek fines and penalties for federal wage violations.  The violation also would be reported to the IRS, which can go after the company for unpaid taxes.”

Unscrupulous contractors who commit payroll fraud by misclassifying workers may soon find themselves facing more penalties when caught than they may have faced in the past.

A copy of the signed Memorandum of Understanding between the IRS and the DOL is attached below.


Comments

Anonymous's picture

I work for carol & her husband Fredrick Bennett they are married he runs the business while she used her name as Johnson builders, Myself with a total of 40 employees work for them, they were working for a development company called J M J Developer from South Padre Island Texas, over the last 2 weeks. Mr Bennett claimed that he had throat cancer. he stopped caring about the people that made him money, what he did was collect all he could, from the developer. and didn't pay his employees they both owed us over 20,000.00 in back pay, his checks kept bouncing he owes vendors, small business that cash his checked, I don't even know how these two can sleep at night. we have people that worked hard for them. they don't give a shit if we eat or even have a roof over our heads. they skipped town left owing everybody over 200,000.00 ask them if they care! as of now this is their address e-mail cjohnson-builders.com address - 2211 Rayford Road, Ste 111 - 214, spring Texas 77386 fax 3 281-465-8342 please send them their award!

Administrator's picture

The below comment was posted by a person who worked for Carole Johnson Builders, LLC. Read more about the story:

Unpaid Construction Workers Protest in Houston

Interview with Houston Wage Theft Victim

Carole Johnson Builders, LLC Wins Worst Employer Award

Administrator's picture

We would like to hear from anyone who worked for Carole Johnson and Fredrick Bennett such as the person who left the comment below. If you currently work or have previously worked for either Ms. Johnson or Mr. Bennett on any construction job, please let us hear from you by clicking on “Contact Us” under “About Us” in the menu on the left side of this screen, and share your experience with us. Your stories will help bring those who break the law to justice. -Construction Citizen Editor

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