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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.

Governor Perry signing the billNow that the dust has settled from the regular session of the Texas legislature, there is some good news to report on the issue of worker misclassification. The broad crackdown on the practice that's been called "a cancer" didn't materialize, but an important first step was taken. 

As Construction Citizen has reported, and garnered national attention for, the largest home builders fought tooth and nail to keep a comprehensive worker misclassification crackdown from happening. That bill pushed by Sen. John Carona, R-Dallas, would have aggressively gone after companies that misclassify their workers with a special focus on construction. But Read more » about Targeted Misclassification Crackdown Signed by Governor Perry

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A man in a wheelchair is protesting, with tape over his mouth.“If a piece of the building falls to the ground and breaks, they have insurance for that,” said a middle-aged man in a wheelchair in Houston. I sat in a small portable building behind a church, listening through an interpreter as the man, I’ll call him Miguel, told the story of how his spinal cord was injured when he fell on the job building homes along the Gulf Coast. “But, if I fall off a roof and I break, they don’t have insurance for me,” he said. I paused a moment before asking him any more questions, letting that sink in.

The Living Hope Wheelchair Association in Houston was founded to help men with these injuries who have no workers’ compensation. They’re under-funded, barely getting by thanks to the donations of churchgoers and caregivers. A small group of volunteers help these men and women with their most basic needs. And they know how to stretch a dollar. With meager donations, they’re able to buy things like catheters and diapers the injured workers need on a daily basis. As one volunteer showed me their supply, which he was proud of, I couldn't help but feel sorry for them. These are the kinds of things people would rather not have to talk about even if they have to use them. What struck me hardest is the fact that these people are hidden. People don’t talk about them because they've been used and abused. “A democracy can’t survive very long when it throws away its workers,” the volunteer said with an almost revolutionary tone in his voice. Read more » about A Special Report: Thrown Away People

Florida legislators have once again stepped up efforts to crack down on payroll fraud by naming another special prosecutor to investigate and punish workers’ compensation fraud.

Last month, the Palm Beach Post reported that Palm Beach County (containing the cities of West Palm Beach and Boca Raton) is now the latest county to assign a full-time special prosecutor charged with pursuing worker misclassification and workers’ compensation fraud.  The article explains the role of State Attorney Dave Aronberg in procuring the $143,720 for this effort:

“Aronberg, a former state senator, pushed for the money for the new initiative with the help of Florida Department of Financial Services leaders when he visited the state’s capitol during the recently ended legislative session.”

Aronberg is quoted by the Palm Beach Post:

“Workers compensation fraud has far-reaching effects, from costing Florida taxpayers millions to jeopardizing the health and recovery of workers who are injured on the job, to putting legitimate construction companies at an unfair disadvantage against competitors who cut corners and violate the law.”   Read more » about Florida Fights Workers' Compensation Fraud

Yellow Hard HatAs experts and industry leaders get a look at the specifics of the federal immigration reform bill being pushed in the United States Senate, the devil is beginning to emerge from the details. A headline that got our attention here at Construction Citizen was this from the Engineering News Record, or ENR: “Construction Debates Cap for Hardhats.” The piece lays out the raw numbers of what's in the bill versus what the industry needs. And the numbers don't add up.

From the ENR report:

Since mid-April, when the Senate’s bipartisan “Gang of Eight” unveiled an immigration bill stuffed with compromises and trade-offs, the construction sector has focused on the “W” visa, a proposed guest-worker designation that would limit to 15,000 the number of immigrants allowed to work in construction each year. Read more » about Construction Industry Concerned About the Details of Immigration Reform

While lawmakers in Texas this year took a pass on a broad crackdown on companies that misclassify their workers, other states are ramping up their efforts.

In Connecticut, for example, the state issued Stop Work orders to nearly 30 companies found to have been misclassifying their workers. The Connecticut Department of Labor says that they issued these Stop Work orders and slap penalties on companies that misclassify workers as independent subcontractors "with the intent of avoiding their obligations under federal and state employment laws covering such matters as workers' compensation, unemployment taxes and payroll reporting.

The civil penalty for misclassification in Connecticut is $300 per worker for each day the employer does not carry workers' compensation as required by state law.

While those numbers are significant, here's the real windfall from the state's efforts to deal Read more » about Connecticut Comes Down Hard on Companies That Misclassify Workers

The Peach State is moving forward with its plans to ensure, as much as possible, that workers are not undocumented immigrants. The law has been in effect for three years now and this latest move tightens the screws on employers even further.

A major piece of the law, The Illegal Immigration and Enforcement Act, is the requirement that all employers with more than 10 workers on payroll must use the E-Verify system. Previously, employers with over a hundred employees had to do this. If they don't, they cannot obtain a business license in Georgia. This applies to all new hires and employers are not required to verify the immigration status of those workers who were with them prior to July 1, 2013.

Attorneys in Georgia have been blasting emails to employers to offer their help with this, saying in part:

The IIEA went into effect on July 1, 2011, but the E-Verify requirement was phased in over time. Effective January 1, 2011, the IIEA required all employers with 500 or more employees to attest to their registration and participation in E-Verify as a condition of obtaining a local business license. Read more » about Georgia's Immigration Crackdown is a Reminder to Use Employees Instead of Likely Misclassified Subs

Florida legislators have made a bold move in the battle against payroll fraud with the passing of Florida House Bill 217 titled “Money Services Businesses”.  Aimed directly at the bandits who run check cashing stores to enable dishonest contractors to avoid paying workers’ compensation and payroll taxes, the bill is now on its way to Governor Rick Scott for his signature into law.  The details of the bill were explained in a press release from the Florida Office of Financial Regulation (OFR).

“The new legislation will require check cashers to log any checks cashed in excess of $1,000.  In addition to the check amount, each business will be required to submit traceable information such as payor, payee, fee charged, type of identification presented and payee’s workers’ compensation insurance policy number, if the check was made out to a business.  The bill also provides that multiple checks accepted from any one person in one day, which total $1,000 or more, must be aggregated and reported in the database.”

Readers of Construction Citizen have already been informed about how these check cashing store / workers’ comp fraud schemes work, but here it is again.  A dishonest contractor will submit a bid for a job using a company name which lists only a few employees – just enough to obtain a small workers’ compensation policy.  The contractor will then take checks paid to that company by the general contractor to a check cashing store to cash them so that most of the workers can be paid in cash. Read more » about Check Cashing Payroll Fraud Scheme Thwarted in Florida