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Rhode Island Drywall Contractor Agrees to Pay $730K in Settlement with Workplace Fraud Unit

Last May, the US Department of Labor signed a three-year agreement with the Rhode Island Department of Labor and Training (DLT) to battle worker misclassification by establishing a working relationship in which both agencies will share information and coordinate law enforcement.  According to a press release from the office of US DOL Secretary of Labor Thomas E. Perez:

“The [agreement] represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The Rhode Island Department of Labor and Training is the latest state agency to partner with the U.S. Labor Department. Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah, Washington, Wisconsin and Wyoming agencies have signed similar agreements.”

Rhode Island Governor Gina M. Raimondo took the fight one step further by establishing a new Workplace Fraud Unit within the DLT's Workplace Regulation and Safety division.  The governor’s four-point action plan called for:

  1. Using existing funding to create a new Workplace Fraud Unit to focus DLT's efforts on dishonest companies;
  2. Coordinating state agency efforts and pooling resources to conduct investigations and bring enforcement actions with maximum impact;
  3. Enforcing worker protection laws to the fullest extent and spotlighting businesses that cheat; and
  4. Fostering compliance with the law through employer outreach and education.

This month, the plan paid off when the Workplace Fraud Unit reached a settlement agreement of $730,000 with Cardoso Construction LLC for the payroll fraud they committed against their workers who installed drywall on the University of Rhode Island's new wellness center.  According to an article in the Providence Journal:

“Cardoso Construction LLC, of Pawtucket, whose manager is Joaquim S. Cardoso, of East Providence, failed to pay the prevailing wage rate to 32 employees and misclassified 27 employees as ‘independent contractors,’ according to the consent agreement between the Rhode Island Department of Labor and Training and Cardoso.  The DLT released that consent agreement, signed August 18, to The Providence Journal [September 1, 2015].”

The Providence Journal article also had a quote from Cardoso’s attorney, Girard R. Visconti:

“Visconti, a partner with Shechtman Halperin Savage LLP, who specializes in construction law, said in 47 years practicing, he has never seen anybody ‘come to the plate’ in the way Cardoso has to make things right.  That includes agreeing to pay back, over the next five years, all past wages, said Visconti, who returned a reporter's call while on vacation in Italy.”

Earlier in the year, as Rhode Island’s DLT announced the new initiative with the US DOL, DLT Director Scott Jensen summed up the reason for the increased effort to eliminate worker misclassification:

“The misclassification of employees as independent contractors is workplace fraud.  Rhode Island will not allow bad actors to take advantage of their employees by failing to provide them with necessary workplace protections like Workers’ Compensation insurance, unemployment benefits and overtime pay.  Allowing this activity to persist is unfair to Rhode Island businesses that play by the rules.”