When the private sector does not address a major issue, the public sector will often step into the vacuum and do it. The construction industry has been slow to embrace the principles of social responsibility and sustainable value, focusing instead on whatever it takes to be lowest bidder. As a consequence of this, government is adopting policies that reshape the rules for the industry.

In Texas political races all over the state, candidates are being grilled about what they think of sweeping education reforms passed by the legislature last year.  While there is pretty much universal agreement that the big reductions in standardized testing were a positive step, there is controversy about changes to graduation requirements that create multiple paths to a high school diploma.  The idea, essentially, is that not all kids will go to college so the state will now promote both college readiness as well as career readiness.

The business community is not monolithic, so there are some such as the Greater Austin Chamber of Commerce and the Texas Association of Business as well as some minority rights groups which want to roll back those reforms.   Read more » about Education Reforms Emerge As a Point of Contention in Texas Political Contests

This article by Professor Leonard T. Jernigan Jr. originally appeared in the North Carolina Workers’ Compensation Journal on January 9, 2014.  Reprinted with permission.

Employer Fraud Cases (9):$44,962,492.00 + Employee Fraud Cases (1): $1,500,000.00 = Total: $46,462,492.00

Every year we hear about fraud in Workers’ Compensation cases, and the public believes the fraud is employee driven.  However, in 2009 I began tracking the Top Ten Fraud Cases, and 100% of the Top Ten between 2009-2012 involved employers or shady characters posing as legitimate businesses.  The amount of employer fraud is staggering.  In 2013 one employee fraud case did crack the Top Ten, so the record is now 49-1 (employer fraud v. employee fraud) over the past five years.

  1. Florida: Owners of Diaz Supermarkets in Miami-Dade are Accused of $35 Million Fraud (4/16/13) - John Diaz and his wife Mercedes Avila-Diaz owned and operated four supermarkets in the Miami-Dade area.  They have been arrested and accused of workers’ compensation fraud and other fraudulent transactions totaling $35 million.  One business they operated had no coverage for employees for ten years.

  Read more » about $46 Million Stolen: 2013′s Top Ten Workers’ Compensation Fraud Cases

New regulations affecting federal contractors are scheduled to go into effect on March 24, 2014.  The regulations involve federal contractors’ affirmative action and recordkeeping obligations for veterans and disabled workers.

The agency issuing the regulations is the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP).  OFCCP regulates federal contractors.

Application to Construction Contractors

In general, contractors and subcontractors who hold a Federal or federally-assisted construction contract in excess of $10,000 are subject to regulatory requirements under one or more of the laws enforced by OFCCP.   Read more » about Federal Contractors Take Notice – New OFCCP Regulations

The Florida Department of Financial Services Divisions of Workers’ Compensation and Insurance Fraud have released a joint report summarizing their efforts and activities in combating workers’ compensation fraud for the period of July 1, 2012 through June 30, 2013.

Highlights of the report include:

  • Workers’ compensation premium fraud continues to be a high priority.  Cases involve construction industry contractors using shell companies and check cashing stores to launder money for cash pay to workers in order to avoid paying proper premiums.
     
  • The report’s authors write: “This scheme allows these uninsured contractors an unfair advantage when competing with legitimate companies who abide by state statute and obtain and maintain workers’ compensation coverage on all their employees.”

  Read more » about Florida Report on Workers' Compensation Enforcement

Construction companies across Texas that work on public projects are on notice now that the targeted worker misclassification crackdown passed by the legislature in 2013 has taken effect.

HB 2015 “Worker Classification” was signed into law on June 14, 2013, and became effective on January 1, 2014.  This law is considered by many to be a good first step in the fight against the problem that is especially rampant in residential and commercial construction.  But, advocates for workers and for a fair marketplace understand that much more needs to be done in the years to come if the playing field is going to be leveled so that ethical companies will be able to compete.  While putting these penalties in place on public projects will help in the commercial sector, nothing at all will change in residential construction.   Read more » about Targeted Worker Misclassification Law Takes Effect in Texas

Now that the City of Houston is moving forward with a policy to crack down on employers that steal the wages of workers, the pressure will be on to make it work.  It'll be no small task because, as you well know, those that engage in these crimes against hard-working Texans are pretty slippery characters.  And that's probably being kind about it.  Laura Perez-Boston at the Fe y Justicia Worker Center tells us exactly what the law is designed to do:

“The ordinance establishes a process housed in the Office of the Inspector General through which employees can bring wage claims forward.  Companies with a documented record of wage theft – either final adjudication from a court of competent jurisdiction or a criminal conviction – will be included in a publicly listed database on the City’s website and will be ineligible for city contracts or sub-contracts.  Additionally, any company with a criminal conviction of wage theft will be ineligible to receive occupational permits and licenses.”   Read more » about Houston Must Aggressively Enforce Its Wage Theft Ordinance

Our readers know all too well that the problem of payroll fraud, or worker misclassification, has become a cancer for the construction industry and that quite a few states have made moves to try to deal with the problem.  Now, it appears there may be a legitimate effort in Washington to try to deal with it at a federal level.

From McClatchy News:

“Senator Bob Casey, D-PA, estimates the payroll theft has cost taxpayers tens of billions of dollars.  He introduced legislation November 12 that would make misclassification a violation of the Fair Labor Standards Act, would assign penalties for each case of payroll fraud and would create rights for employees to know what their status is and require employers tell workers their status.  ‘I think a lot of people would be stunned to learn that under current federal law it is not a violation of the Fair Labor Standards Act to engage in this kind of misclassification, this kind of fraud,’ Casey said in an interview after the hearing.  ‘It should be illegal and it’s unfortunately not unless you violate some other law.’”

Casey and other lawmakers last week heard from business owners and workers who have been harmed by the practice during a Senate hearing.   Read more » about Some in Congress Push for Misclassification Crackdown

Today, Wednesday, November 20th, 2013, Houston City Council made history passing the first municipal ordinance cracking down on wage theft in Texas and only the second in a major metropolis in the U.S. South. The measure passed unanimously.

In passing the Wage Theft Ordinance, Council sends a clear message that intentionally cheating workers of their pay - especially under city contracts - will not be tolerated in Houston.

The ordinance establishes a process housed in the Office of the Inspector General through which employees can bring wage claims forward. Companies with a documented record of wage theft - either final adjudication from a court of competent jurisdiction or a criminal conviction - will be included in a publicly listed database on the City’s website and will be ineligible for city contracts or sub-contracts. Additionally, any company with a criminal conviction of wage theft will be ineligible to receive occupational permits and licenses.   Read more » about Houston City Council Passes Historic Wage Theft Ordinance

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