Reshaping the Construction Industry

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.  

Construction jobs, spending shrink in latest month but rise for year; metros vary widelyEditor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.View construction employment figures by state and rank.Nonfarm payroll employment increased by 165,000, seasonally adjusted, in April and 2,077,000 (1.6%) over 12 months, the Bureau of Labor Statistics reported today. The March gain, initially reported as a weak 88,000, was revised up to 138,000. The unemployment rate was 7.1%, not seasonally adjusted (7.5%, seasonally adjusted), down from 7.7% a year earlier. Construction employment dipped by 6,000 for the month, following 10 consecutive monthly increases, and totaled 5,790,000, seasonally adjusted, a gain of 154,000 (2.7%) over the past year. Total hours worked in construction increased by 3.0% over 12 months, implying that contractors are lengthening working hours and also hiring new workers.

On a commercial renovation job in Panama City, Florida, a Hispanic drywall construction worker was electrocuted when he came in contact with electrical wires projecting from a terminal box at the site where he was working.According to an article published in the Durability + Design Journal, “A Florida contractor must answer federal citations involving the electrocution of a Hispanic drywall worker, although the worker was paid in cash and the contractor denied knowing him.”In her statements to police at the scene, Nathalie Monroe, President of Monroe Drywall Construction, Inc. (MDC), denied hiring, or even knowing, the deceased worker. However, in subsequent testimony from other “drywallers” on the site, it was learned that MDC had hired the four men to hang, tape and finish the 338 boards on the remodel job and was paying them in cash. Monroe later admitted that she knew the deceased and had worked with him on other jobs.This is a classic case where even though the workers were employees, they were paid in cash by the subcontractor in order to avoid workers' compensation claims and taxes.  

Recently, the United States Judicial Panel on Multidistrict Litigation centralized the six current class action suits to the Eastern District of Pennsylvania for further adjudication.According to the panel of Judges, “On the basis of the papers filed and the hearing session held, we find that these actions involve common questions of fact, and that centralization under Section 1407 in the Eastern District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.”The suits arose after the defendants, USG Corporation; United States Gypsum Company; L&W Supply Corporation; New NGC. Inc.; Spangler Companies, Inc.; CertainTeed Corporation; Georgia-Pacific LLC;  American GypsumCompany LLC; LaFargeNorthAmerica, Inc.; TIN, Inc. d/b/a Temple Inland, Inc.; and PABCO Building Products LLC.