California Concrete Company Owners Charged with 15 Felony Counts

Thomas Bernhardt, the owner of a northern California concrete company and his wife Rachel Bernhardt, who processed the company’s payroll, were charged last week with 15 felony counts of payroll tax evasion and workers' compensation insurance fraud. 

T.B. Concrete of Granite Bay, a town about 30 miles east of Sacramento, performed concrete work for retail construction since its inception in 1999.  A joint investigation begun in 2008 by the office of California Attorney General Edmund “Jerry” Brown and the state’s Employment Development Department and the Department of Insurance revealed that the Bernhardts misclassified 111 workers in order to avoid reporting the wages they paid to approximately 85% of the company’s workforce.  Not only did they claim that employees were independent contractors to avoid paying state income tax and incurring a tax liability of over $230,000, but some of the employees who performed concrete work were classified as clerical workers to the Department of Insurance in order to avoid paying the higher workers’ compensation premiums. 

The California Professional Association of Specialty Contractors (CALPASC) immediately expressed appreciation for this effort to enforce the laws which penalize unprincipled contractors.  CALPASC chief executive officer, Brad Diede, stated:

“Unfortunately, once again, we must point out that owners, builders and general contractors too often take the lowest bids from unethical contractors at 5 to 50 percent below cost.  These bids often are low because contractors frequently skirt wage, insurance and safety laws.  Without effective enforcement, professional contractors operate at a competitive disadvantage against dishonest contractors who ignore workers' safety and pay their employees improperly.”

Diede also acknowledged that while California state agencies cannot pursue all of these types of cases, CALPASC supports any effort to stop those who are the worst offenders.

California is one of the states that must use tax evasion and insurance fraud violations as a workaround to prosecute those who commit wage theft and worker misclassification where there are no specific laws in place to address these offenses.