Agents of the government of northern California’s Butte County have taken steps to deter contractors working in the swimming pool and roofing industries from cheating the workers’ compensation system and to level the playing field for those who abide by the law.  Pool permits will now have to include proof of workers’ compensation coverage for all who are to work on the projects, and the California State License Board (CSLB) will now be notified when anyone claims exemption from workers’ compensation coverage in all reroofing permits, which may result in more site visits by CSLB to see if the exemption claims are legitimate.

According to the news distribution website PR Newswire (registration required), the California Professional Read more » about California County Cracks Down on Cheating Contractors

If you are being forced to use a Project Labor Agreement to construct a public building as the result of President Obama’s executive order, you might want to take a close look at this study.

A newly released report by the National University System Institute for Policy Research in San Diego found that

“PLAs are associated with higher construction costs.  We found that costs are 13 to 15 percent higher when school districts construct a school under a PLA.  In inflation-adjusted dollars, we found that the presence of a PLA is associated with costs that are $28.90 to $32.49 per square foot higher.”   Read more » about The Impact of PLAs on School Construction Costs

Channel 4’s investigative news team from WSMV has been digging around on several issues surrounding the construction industry, specifically around the $585 million Music City Center in Nashville, Tennessee.  Recently they uncovered that one of the drywall subcontractors, Stallings Drywall from North Carolina, a sub for Bell, Clark and Roswell is cheating on this publically funded project by misclassifying the workers as independent contractors and not paying taxes, unemployment, workers’ comp or social security.

In the report, Dr. William Canak, a Middle Tennessee State University sociologist, talks about the statewide problem:   Read more » about Nashville’s Underground Economy Exposed

Following the June passing of Alabama’s new illegal immigration law, HB56, many Hispanics have left the state to seek work elsewhere, causing a potential shortage of construction workers needed for rebuilding areas destroyed by the April tornados, according to an article by staff writer Patrick Rupinski in The Tuscaloosa News last week.  The article tells how a worker in the Hispanic ministry at a local Catholic church called to check up on a man she had not seen lately and that he told her that he had moved to Texas, like many other Hispanics who are now leaving Alabama.  Rupinski writes:

“Some Hispanics left after the April 27 tornado rendered them homeless. But a potentially larger exodus of Hispanics began after the Alabama Legislature passed a law in June that bans hiring people who are in the country illegally.”   Read more » about Construction Crisis in Alabama Heightened by Immigration Law

The first investigative report by David Schecter at WFAA in Dallas/Fort Worth drew quick reaction from other subcontractors and from legislators in Austin.  In a follow up report which aired Friday evening, Schecter talks with several specialty subcontractors, with the chairman of the Senate Business and Commerce Committee and with a key member of the House about the issue of non payment of taxes by some subcontractors who misclassify their workers as independent contractors as a way to avoid payment of payroll taxes, unemployment taxes and worker’s comp insurance.   Read more » about WFAA Follow Up Report on Misclassification in Texas Construction

WFAA News 8 TV in Dallas/Fort Worth aired an investigative report last night by David Schecter about the plight of worker misclassification in the Texas construction industry, and the lack of law enforcement by local and state entities.

Mansfield Independent School District’s $39 million Center for the Performing Arts currently under construction contracted with AB Rebar for part of the project.  Owner Macario Mireles was able to offer the lowest bid for the work because he pays his employees as independent contractors and does not pay payroll taxes, unemployment tax, or workers’ compensation insurance on behalf of them.   Read more » about Investigation Reveals School Construction’s Worker Misclassification

Home builder and general contractor Reynaldo Orozco has been sentenced to 18 months in prison and ordered to repay $504,047 in unpaid employment tax for filing a false tax return for his Miami business, Rock Construction Builders Inc.

According to a press release from the United States Attorney's Office for the Southern District of Florida, court documents state that from 2004 through 2007, Orozco issued corporate checks from his business to nonexistent subcontractors, then cashed those checks himself at local check cashing stores to generate large amounts of cash which he then used to pay his employees without reporting those wages on quarterly employment tax returns and without withholding taxes Read more » about Prison Awaits Contractor Caught Paying Unreported Cash Wages

The Associated General Contractors of America (AGC) have issued a plea for action against the Environmental Protection Agency’s proposed revision to their Construction General Permit regarding new regulations for stormwater runoff from construction sites.  An AGC newsletter released yesterday states:

“The proposed changes to the current permit would greatly increase its complexity and the cost of complying with its terms and conditions, putting you and your company at a new and unprecedented level of risk of non-compliance, including fines of up to $37,500 per day. The proposed permit would rigidly prescribe the stormwater controls that you had to put in place, require you to sample and test runoff for compliance with a new limit on turbidity, leave you liable for non-compliance with that limit even if you have implemented all of the prescribed measures, and require you to self-report any non-compliance to a publicly accessible database within 24 hours.”

In the following video, AGC’s Mike Kennedy explains some of the details of the new EPA rule.   Read more » about EPA’S Stormwater Runoff Regs Could Rain on Industry Recovery

Last March, Construction Citizen covered a protest held by workers who had been cheated out of wages by Carole Johnson Builders LLC, a subcontractor on a Houston construction project.  We were able to interview of one of the foreman who had worked for the subcontractor on the project and who had not been able to collect the wages he was owed.

Bobby Herndon worked for Carole Johnson Builders LLC and was told that he would be paid wages by the hour.  He was not paid overtime for the hours he worked each week over 40, and in fact the Carole Johnson Builders LLC did not even pay for all of the hours Herndon worked.  When asked how much money he was still owed of the money he had earned, the pain and hurt from the injustice is evident in the following video as he answers “twenty-four hundred dollars.”   Read more » about Interview with Houston Wage Theft Victim

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.”   Read more » about Contractor Found to be Equally Responsible for Sub’s Hiring Fraud