Efforts to pass a worker misclassification bill are moving forward after what was called "the big stakeholders meeting" on Monday. Sen. John Carona, Chairman of the Senate Business and Commerce Committee, brought groups like the Texas Construction Association, AGC Texas Building Branch, some individual companies and others to hash out the best way to deal with the growing problem that has often been referred to as payroll fraud. One longtime observer of the legislature told me that this kind of meeting of the minds is part and parcel of the way Sen. Carona operates when he's on board with something and thinks he can win on an issue.

Sen. Carona told me that "The meeting was very positive, with a healthy discussion centering on how the definitions will be handled, the appropriate level of fines, and whether and how enforcement should be approached." He said that we've moved past the point of having to convince people that there is a problem and into the phase of figuring out how it will be addressed. "There is general acceptance that the problems exist and need to be addressed. The outlook is very good going forward," he said. Read more » about Talks on Payroll Fraud Crackdown Called "Healthy" and "Productive"

On Wednesday, February 27, over 500 construction workers and their supporters marched to the Texas Capitol to rally for better working conditions in the industry. Holding banners with facts like “Texas is the Deadliest State to Work in Construction” and “More Workers Die in Texas Than Any Other State”, these activists called for an end to the dangerous conditions and frequent legal violations that characterize Texas’s construction industry. During the day, workers and their advocates visited with every senator and representative, as well as the Governor’s and Lt. Governor’s offices, to share their experiences with workplace injuries, wage theft, and payroll fraud.

A recent study by the University of Texas found that one out of every five workers in Texas has been injured on the job and required medical attention. The study also found that construction workers in Texas die on the job at a higher rate than in any other state Read more » about Day of the Fallen 2013: Stop Injuries and Legal Violations in Texas Construction

“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

Following last week's filing of a worker misclassfication bill in the Senate, Representative John Davis, R-Houston today filed his own version in the House. The Texas Construction Association called it "the companion piece" to Senator Carona's bill. HB 1925 is virtually identical to Carona's legislation. 

Representative Davis is the chairman of the Economic and Small Business Development Committee and has been in talks with stakeholders on this issue to move it forward in concert with what Chairman Carona is doing in the Senate. Read more » about House Chairman Follows Carona's Lead and Files Payroll Fraud Crackdown Bill

After talking about it for months, Sen. John Carona filed a bill that he believes will help stop the problem of worker misclassification, also known as payroll fraud.

The bill could still be substituted and amended, but this is a framework for dealing with the problem that is said to be more in line with what the industry would like to see than the bill filed by State Rep. Joe Deshotel. This comes after a study from University of Texas researchers showed more than 40 percent of construction workers in the state are misclassified.

Carona, who chairs the powerful Senate Business and Commerce Committee, said “We are finding in larger numbers than ever before the deliberate misclassification of workers from payroll to what used to be called ‘contract labor,’” Carona said. “Our effort is just to bring some clarity to the law in terms of the definition of someone who is an employee versus someone who is truly an independent entity or independent contractor.”

Last week Construction Citizen told you about a University of Texas study called Build A Better Texas which reported on the working conditions for construction workers in this state.  At the press conference in Austin, I caught up with Emily Timm, policy analyst for the Workers Defense Project and Construction Citizen blogger, and asked her to comment on how this study might effect positive change for workers in Texas.

In the video below, Timm states:

“This study by the University of Texas is critically important for calling attention to the dangerous working conditions and legal violations that occur in the Texas construction industry.  Read more » about Timm Calls On Texas Legislature to Take Action

Misclassifying Workers as Independent Contractors

We have written numerous times about how widespread this issue has become in the construction industry, and now we see a new lawsuit filed by FedEx Ground that uses one of the oldest arguments we’ve heard: “It ain’t my problem! All of our folks are independent contractors. They hire their own workers and deliver for everyone and we have no control over them or what hours they drive. So, General Abbott, we don’t owe the Texas Workforce Commission any workers' comp fees.”

Legitimate? We don’t know yet. The courts will decide. What we do know is that when we hear that comment on the construction site we call it a “sub – sub” problem and usually the workers come up on the short end of that stick. On the construction site, the GC hires a sub that hires another sub to do the work and claims Independent Contractor and avoids FUTA, SUTA and any other taxes.  Read more » about FedEx Sues Texas Workforce Commission

Lawmakers who are still gearing up for the real business of the 83rd Texas Legislature got an earful from construction executives from around the state on TCA’s lobby day. The Texas Construction Association’s members have several legislative priorities, including a fair solution to the problem of misclassification or payroll fraud.

Raymond Risk, CEO of the group, told Construction Citizen that they hope the legislature will address misclassification in a balanced way. He and others are encouraged by the fact that the Texas Workforce Commission voted to support legislation that would impose fines on payroll fraud committed on government contracts. There are some within the industry who think any new law should be broader than that. There are others who want to see no new regulations passed whatsoever.

Risk said many TCA members have complained that they’re being significantly underbid by unscrupulous companies that essentially pretend their employees are subcontractors – something they do intentionally to avoid payroll taxes. He pointed to the UT research unveiled last week that shows more than 40% of construction workers in Texas are misclassified. 

“Those that don’t properly classify their workers are at a large advantage when they’re bidding if they don’t have to pay taxes for the people on their project,” Risk said. “We want to encourage them to comply with the law and maybe they need a little more stimulus to get them to do so.” Read more » about TCA: Our Lobby Day Was A Success

An article in the Stamford Advocate reported that state and federal Department of Labor Officials and OSHA representatives assisted by local police cracked down on four major construction sites in the Stamford area on Wednesday, January 23.

The police were called into the activity to keep workers from leaving the sites until they were interviewed.  In the past, such raids resulted in little results as workers drifted off site or were transported to other sites to avoid the interviews.

According to the article, over 180 workers were interviewed during the sweep which was targeted at companies who are suspected of payroll fraud.  While the final findings have not yet been released, it was found that one subcontractor company with a crew working on a 227-unit apartment project, Heritage Sheetrock, had not paid 10 of their workers for 3 weeks. Read more » about Payroll Fraud Crackdown in Stamford Connecticut

Researchers at the University of Texas back up what we've been saying at Construction Citizen for years: far too many construction workers in Texas are the victims of payroll fraud.

They released a study this morning in Austin called “Build a Better Texas”.

Download the 74-page report: Build a Better Texas.

Among the study's findings:

• Wage theft results in lost tax revenue: at least $117 million in lost wages and $8.8 million in lost sales tax revenue impact cash-strapped state and local governments.
• Texas construction workers are forced to fall back on public safety nets to support their families. Low wages and wage theft contribute to economic instability for construction workers and their families. Fifty-two percent of Texas construction workers report that they were unable to meet the basic needs of their family at some point.

  Read more » about UT Research: Over 40% of TX Construction Workers are Misclassified