Last month a panel of civic leaders, employers, attorneys and workers participated in a forum discussion titled “Wage Theft – Its Impact on the Local Economy and in the Community”.  The free event, hosted by Rice University’s Center for the Study of Women, Gender and Sexuality and by the Fey y Justica Worker’s Center (formerly the Houston Interfaith Worker Justice Center), was held on the 3rd floor of the Fondren Library at Rice University.  The diverse panel offered different perspectives on how wage theft impacts the local Houston economy, responsible businesses, social  programs, and the community as well as what can be done to eliminate this unethical practice.

Simply put, wage theft is a practice in which employers cheat workers out of wages and benefits owed.  According to Houston’s Down With Wage Theft Campaign:

“Wage theft depresses family income and as a consequence limits spending, lowers business sales, leaves taxes unpaid, public services undermined and economic growth diminished..."  Read more » about Wage Theft Forum at Rice University

El Paso has become the second city in Texas where an employer has been arrested and indicted on charges of wage theft. The Texas Observer reports that El Paso is the only city in the state that has an active wage theft task force. It includes the police and sheriff's departments as well as the County Attorney and District Attorney's offices.

From the Observer:

“It’s huge because we’re finally treating the stealing of someone’s wages the same way we treat someone stealing from Target or Albertsons or [any] store,” says Jed Untereker, an attorney with Paso del Norte Civil Rights Project who represented the employee.

The lawmaker who had filed a bill to ban "living wage" ordinances around Texas has decided that was a bad course of action. Representative Kenneth Sheets, R-Dallas, withdrew his bill after hearing objections from Republicans and Democrats alike.

Some on the left argued it was "draconian." This is from the liberal Burnt Orange Report:

"The draconian bill was aimed at metropolitan areas such as San Antonio and Travis County, where living wage agreements are already on the books. The Austin City Council is considering one that would be added to economic incentive packages. These agreements require projects to pay a living wage to construction workers if they are receiving incentives.

Basically, Sheets doesn't think that local governments should have the control to use their tax dollars in support of their community values. Sounds just a bit like that "Big Government" Republicans are always railing against."

A federal grand jury in Kansas City, Kansas has charged a construction company, its owners, and four of its crew leaders with harboring illegal aliens and money laundering, charges which could bring the defendants up to 20 years in federal prison each and fines up to $250,000 per convicted count.  Advantage Framing Systems, Inc. of Spring Hill, Kansas, company owners James and Kimberly Humbert and Charles Stevens II, and four framing crew leaders for the company – Jose Ramon Caro-Corral, Angel Arguello-Plata, Dennis Ericson Portillo and Jorge Uriel Delgado-Ovalle are all charged with committing these crimes as part of a scheme to hire illegal workers in order to gain a competitive advantage over other contractors and boost their own profits.

A press release by the United States Attorney’s Office for the District of Kansas explained how the company allegedly conducted business:

“The indictment alleges James Humbert, Kimberly Humbert, Charles Stevens and the company itself were responsible for hiring undocumented workers for the purpose of lowering the company’s operating costs.  The wages the company paid did not include the employer’s share of Social Security payments, workers compensation, or unemployment insurance benefits paid to lawfully employed workers in the construction industry.  They placed themselves at a competitive advantage to other builders who did not employ undocumented workers.   Read more » about Framing Company Charged with Hiring Illegal Aliens To Cut Costs

Major Texas homebuilders came out against the state's moves toward cracking down on worker misclassification during a legislative hearing on Wednesday. The Leading Builders of America, which represents Perry Homes, David Weekley Homes, and others, argued that putting new regulations in place for the industry would lead to higher home prices and stifle job creation.

Steve Henry, speaking for the Leading Builders of America, the trade group that represents Perry and Weekley, said the crackdown on payroll fraud would not only lead to increased home prices, but it would also increase litigation, deter the creation of small businesses and stifle job creation. Andrew Turner, representing the same trade group, said it is a "confusion of an already confusing area of the law." He said the Workforce Commission already has the ability to deal with misclassification. “It’s not fair to single out this industry,” he said. He said that if the legislation were passed, more people would have to be paid as employees instead of independent subcontractors. Read more » about Sparks Fly at the Capitol Over Misclassification Crackdown

In the second installment of his excellent series on the Texas construction industry, NPR Correspondent Wade Goodwyn highlights the difference between contractors who play by the rules, like Marek Brothers Systems in Houston, and companies that misclassify their employees.  The former is out front with how they do business, and the latter doesn't even want their name used on the radio or in print.

From the report:

At Baylor College of Medicine in Houston, Marek's workers are building the interior for the hospital's newest wing.  Workers ride around on what are called “motorized man lifts”, which allow them to work high in the air, power tools in hand.

Baylor Hospital is the kind of client that hires Marek's companies – an owner that must have its building done to exacting specifications.  But these days that’s unusual, according to Stan Marek.   Read more » about NPR: Texas Contractors Say Playing By The Rules Doesn't Pay

Construction industry leaders, associations, labor unions and others testified before lawmakers in Austin on Wednesday that the state needs to aggressively go after companies that misclassify their employees to avoid paying payroll taxes.

The bill was laid out and the latest version does the following:

• Leaves the current common law test definition in place for independent contractor.
• Imposes a penalty of $100 for those in construction that misclassify their worker for the first time.
• Imposes up to a $1,000 penalty per employee, for each subsequent violation (this amount will be determined by the Texas Workforce Commission on a case-by-case basis).
• Allows an employer to appeal a violation and get the violation removed or get the penalty reduced based on certain criteria.

   Read more » about Business and Labor Come Together in Worker Misclassification Hearing

The state of Utah is fighting worker misclassification in the construction industry by scrutinizing employment records of companies who hire limited liability corporations, or LLCs.  Some dishonest contractors avoid paying their workers as employees by having each of them register as separate LLCs, claiming on paper at least that each worker is a company owner or independent contractor.

Two years ago the state legislature created an enforcement council consisting of representatives from the state’s Labor Commission, Department of Commerce, Tax Commission, Department of Workforce Services and the Utah attorney general.  The council meets monthly to share information about construction companies in order to identify and stop worker misclassification, or payroll fraud.  The 2013 legislature has now authorized the continuation of the Worker Classification Coordinated Enforcement Council for the next three years.

The Utah Division of Occupational and Professional Licensing (DOPL) is in charge of enforcing state licensing rules for construction companies.  This week, an article in the Salt Lake Tribune explained how these rules provide one way for contractors who commit payroll fraud to be caught.  The article states:

“Changes in 2011 tightened definitions of employees and owners for licensed construction companies, set new reporting rules and provided for state auditing to verify financial responsibility.  Licensing disclosure rules give officials a crucial glimpse into how companies operate, as well as a squeeze point when their practices are out of bounds.”   Read more » about Not An Employee, LLC

A lawmaker from Dallas wants cities to be barred from requiring contractors to pay a "living wage" when awarding incentive packages. The Austin American Statesman reports:

State Rep. Kenneth Sheets, R-Dallas, said a group of minority contractors told him they would have difficulty paying the $11-an-hour living wage to the laborers they hire, making those contractors less likely to get a piece of the publicly subsidized projects. Sheets filed legislation last month that would bar cities from mandating any wage requirements as part of economic incentive packages, such as the ones Austin has offered to Apple and the developer of a downtown Marriott hotel now under construction, and is considering offering to National Instruments. Read more » about Wage Requirements for Incentives Under Fire at the Capitol

“Operation Dirty Money” conducted by Florida’s Workers’ Compensation Fraud Task Force has resulted in yet another arrest of a key offender in the check-cashing fraud scheme which contributes to payroll fraud and wage theft in that state.

According to a press release from the office of Florida Chief Financial Officer Jeff Atwater, Domenick Pucillo was arrested in New Jersey on Tuesday and charged with “filing a false and fraudulent document, forgery, uttering a forged instrument and operating an unlicensed money service business”.  He will be prosecuted by the Florida state attorney’s office in Miami-Dade County, and may face up to 45 years in prison.

Last year, Pucillo and his business partner, Evelio Suarez, set up a check-cashing company in Florida under the name I &T Financial Services, LLC.  As previously explained on Construction Citizen, these types of companies are often only shell companies created for the purpose of cashing checks for dishonest contractors who can then Read more » about New Jersey Man Caught With Hand In Florida’s Workers’ Comp Cookie Jar