Amazon Intends to Prevent Wage Theft

March 20, 2019

 

The Amazon representative speaking to the Washington Business Journal said, “We’ve been having some conversations with the building trades, ensuring there is a workforce agreement in place, one of the priorities of that would be wage theft. In Seattle, Amazon expanded by 3 million square feet. We used 90 percent of building trades on that project. That project was delivered on time and efficiently.”

 

 

IRS Enforcement Facing Collapse

After Budget Cuts, the IRS’s Work Against Tax Cheats is Facing “Collapse”

ProPublica

October 1, 2018

https://www.propublica.org/article/after-budget-cuts-the-irs-work-against-tax-cheats-is-facing-collapse

 

The following are excerpts from the article:

 

Last year, the IRS’s criminal division brought 795 cases in which tax fraud was the primary crime, a decline of almost a quarter since 2010. “That is a startling number,” Don Fort, the chief of criminal investigations for the IRS, acknowledged at an NYU tax conference in June.

 

Bringing cases against people who evade taxes on legal income is central to the revenue service’s mission. In addition to recouping lost revenue, such cases are supposed “to influence taxpayer behavior for the hundreds of millions of American citizens filing tax returns,” Fort said. With fewer cases, experts fear, Americans will get the message that it’s all right to break the law.

 

“Due to budget cuts, attrition and a shift in focus, there’s been a collapse in the commitment to take on tax fraud,” said Chuck Pine, who used to be the third-ranking criminal enforcement officer at the IRS and is now a managing director at BDO Consulting. “I believe there are thousands of individuals who have U.S. tax obligations and are not complying with U.S. tax laws.”

 

The result is huge losses for the government. Business owners don’t pay $125 billion in taxes each year that they owe, according to IRS estimates. That’s enough to finance the departments of State, Energy and Homeland Security, with NASA tossed in for good measure. Unlike wage earners who have their income separately reported to the IRS, business owners are often on the honor system.

 

But the rate at which the agency audits tax returns has plummeted by 42 percent since the budget cuts started. Criminal referrals were always rare and are becoming rarer still, dropping from 589 referrals in 2012 to 328 in 2016. With the government conducting 1.2 million audits in 2016, that’s one criminal referral for roughly every 3,600 audits.

 

In addition, current and former IRS agents say that audits are not as intensive as they used to be. Because the IRS pushes agents to close audits more quickly, they make fewer requests for records and interviews.

 

Budget cuts have diminished the criminal investigation division, trimming the number of agents by a fifth since 2010. Recently, the IRS closed four of its 25 field offices, according to Fort. In New York state, home of the country’s financial industry, the revenue service is down to 161 agents, about a hundred fewer than it had 15 years ago.

 

Representative of the General President
United Brotherhood of Carpenters
and Joiners of America
101 Constitution Ave., NW

Washington, DC 20001
mobile: (203) 231-0398
mattclu210@gmail.com

Payroll tax fraud believed to be spreading throughout Indiana’s construction industry

February 25, 2019

View Video Here

SOUTH BEND, Ind. — The construction industry across Indiana is facing something many contractors call a growing problem — payroll tax fraud.

Some contractors are believed to be misclassifying workers, which robs them of many of the regular benefits employees receive and robs the state and federal government of hundreds of millions in tax dollars.

As you drive through Michiana it’s easy to see things are pretty good in the construction industry right now. There are new developments around almost every corner, but in recent years contractors like Tim Larson of La Porte-based Larson-Danielson construction noticed something seemed ‘off’ in some of the bids they were seeing.

” When we bid for a job we know how much is labor, how much is material and we found other contractors bidding at prices we couldn’t quite perceive how they were getting there, because we knew how much they were spending on material and we figured they had to be spending a lot less on labor than we were,” said Larson.

That’s because some contractors are believed to be participating in worker misclassification.

Worker misclassification is the practice of labeling workers as independent contractors instead of employees.

The IRS has a 20 point checklist to determine whether a worker is an employee or an independent contractor.

Independent Contractor Checklist

Do you set the worker’s hours?

Do you provide the worker with tools, equipment or materials?

Do you instruct the workers about when, where and how to work?

If you answer yes to any of these — the worker is an employee.

While some of the misclassifications are not intentional, many are.

Some suspect it’s because employers don’t have to pay independent contractors workers compensation insurance, unemployment insurance or any local, state or federal taxes.

Mike Stavitzke is the Director of the Indiana, Kentucky and Ohio Regional Council on Carpenters. He says, those savings allow contractors who misclassify to bid on projects at a much lower rate.

Mike Stavitzke – Director IN/KY/OH Regional Council of Carpenters

“Any easy 30 percent right off the top,” said Stavitzke. “It’s a race to the bottom. It sends the industry on a downward spiral.”

That’s making it extremely difficult for contractors like Larson who are playing by the rules.

Larson started to question what would happen if his company followed the misclassification model and he started to crunch some numbers.

“The figures I came up with just for our business were startling,” said Larson.

Larson found out if Larson-Danielson spent one year misclassifying its workers the company would save big time.

The company would save $800,000 in social security, medicare and federal unemployment taxes. In Indiana unemployment taxes he would save $200,000.

A year of workers comp is equal to about $164,000.

Since independent contractors take care of their own taxes, that would save Larson-Danielson $1.4 million in taxes to the federal government, $332,000 to the state and $112,000 to local cities and counties.

All adding up to a savings of $3,008,000.

“That’s just our company and there’s hundreds of contractors in the state so you know if everybody starts doing this it’s a huge problem,” said Larson.

Larson even testified in front of the state legislature with those numbers.

A 2010 study financed by the Indiana Building and Trades and Construction Council estimated Indiana could be losing up to $400 million annually in tax revenue due to misclassification.

It’s a problem on the federal level too. Last week, The U.S. Department of Labor ordered Indianapolis based TWG Construction to pay $82,477 in owed wages to 20 misclassified employees. Investigators found TWG had subcontracted with a temporary staffing company that misclassified workers and failed to pay them required wages under federal law.

TWG happens to be working on some big local projects too, including the Ivy at Berlin Place apartments at Four Winds Field.

“The level of enforcement is directly correlated with how much people comply with the law,” said Larson. “If it’s not enforced they’re not going to comply.”

“These people are supposed to be paying payroll taxes on a whole number of people and it’s just not happening,” said Senator Karen Tallian (D-Ogden Dunes).

Senator Tallian is one of several lawmakers who have tried to take on this issue in the state legislature. She says it was took a while to get other legislators to the point of realizing there is a problem.

Tallian eventually introduced Senate Bill 305 in January of last year that would have established a payroll fraud task force among the Department of Labor, Department of Workforce Development, Department of Revenue and the Worker’s Compensation Board.

“My last proposal was to get all of these agencies on board to agree to hire one sort of special investigator so that whenever we would get a complaint that looked like it might deal with worker misclassification we could put this investigator on it and they could actually go through those various agencies to find out and have the ability to really investigate the complaints,” said Tallian.

That bill had one committee hearing, but never made it to a vote.

During this current legislative session, Senator David Niezgodski (D-South Bend) is taking a slightly different approach. His bill would simply require the four main agencies to report on worker misclassification each year.

“I’m just looking for reporting so that after three years we can amass that information and can truly determine what the extent of employee misclassifcation in the state of Indiana,” said Niezgodski.

The bill was unaminously approved by the Labor and Pensions Committee earlier this month and passed the full senate on the 18th. It now heads to the House.

“For the legislative branch to choose not to receive the information that our government is already producing we think they should have it and it would help them understand the problem better and help themn find solutions to the problem better,” said Stavitzke.

“They need to do something about it now, because the potential is there this could be a huge problem in the future if it’s allowed to continue,” added Larson.

Representative Michael Karickoff (R-Kokomo) has authored an almost identical bill in the House. The hope is they can now combine the two bills and get the bill signed into law.

If you believe you are being misclassified you can file an anonymous complaint with the Indiana Department of Labor by emailing wagehour@dol.in.gov.

A tip must provide the following basic information in order to initiate an investigation.

1. Name of the employer (Who are the workers working for?)

2. Name of at least one worker who may be misclassified

3. Location where the work is being performed

You can find more information by clicking here.

 

Governor Northam Signs Executive Order Establishing Interagency Task Force on Worker Misclassification and Payroll Fraud

August 10th, 2018

Commonwealth of Virginia

Office of Governor Ralph S. Northam

FOR IMMEDIATE RELEASE

Date: August 10, 2018

 

Office of the Governor

Contact: Ofirah Yheskel

Email: Ofirah.Yheskel@governor.virginia.gov

 

Governor Northam Signs Executive Order Establishing Interagency Task Force on Worker Misclassification and Payroll Fraud

~ Misclassification blocks worker benefits and protections; estimated to cost as much as $28 million a year in state income tax collections ~

 

RICHMOND—Governor Ralph Northam today signed an Executive Order establishing an interagency task force on worker misclassification and payroll fraud. The misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives the Commonwealth of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.

“Treating Virginia workers fairly is central to building an economy that works for everyone, no matter who you are or where you live,” said Governor Northam. “Every employer in the Commonwealth should be playing by the same rules and this task force will come up with a comprehensive plan to make sure workers aren’t missing out on the protections and benefits they would receive if properly classified.”

A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) found that one-third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs as much as 40%, placing other employers at a competitive disadvantage.

The task force will develop and implement a comprehensive plan with measurable goals, including identifying ways to hold companies working on state contracts who commit payroll fraud through misclassification of workers accountable, and identifying ways to deter future inappropriate conduct by recommending enforcement mechanisms.

Secretary of Commerce and Trade Brian Ball will chair the task force. It will include representatives from the Virginia Employment Commission, the Department of General Services, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, the Workers’ Compensation Commission, and the Office of the Attorney General.

The group will develop a work plan by November 1, 2018 and report to the Governor on its progress by August 1, 2019.

 

The full text of Executive Order Sixteen can be found here.

 

###

 

Racine sues Florida company for allegedly denying wages, benefits to workers on D.C. projects

March 21, 2019

 

 

UPDATE as of March 21, 2019:

Misclassification and Wage Fraud: In the Power Design case, its subcontractor, DDK Electric received a default judgement of $253,861.60 on February 1st.  $170,000 of this amount was for worker misclassification and the remainder for record keeping, sick leave and unemployment insurance.

If you see evidence of wage fraud or misclassification of employees, you can report it to the US Office of the Inspector General by clicking on this site.

(more…)

DLLR Worker Misclassification

7/24/18

 

At the Construction Roundtable Meeting on June 28th, Kathy Sibbald reported on the Department of Labor, Licensing, and Regulation’s (DLLR) efforts regarding enforcement. She reported that there were 750 work-sites visited resulting in 138 new cases last year.

Sibbald is a DLLR administrator overseeing employment standards, prevailing and living wage, and worker classification protection.

She said the state collected $22,000 in fines and is in the process of hiring four new investigators.

Jim Tudor, program administrator for Prevailing and Living Wage and Worker Classification Protection Unit spoke about the need for contractors to submit the state’s prevailing wage survey.

DLLR Commissioner  Matt Helminiak and Labor Secretary Kelly Schulz also spoke at the meeting.

 

-Bernie Brill

Executive Director

SMACNA Mid-Atlantic Chapter

New Amendment at DC City Council

6/7/18

A new amendment at DC City Council has been proposed affecting the garnishment of wages. On Wednesday, July 11, 2018 CM Elissa Silverman is holding a round-tablebefore the Committee on Labor and Workforce’s implementation of the Universal Paid Leave Amendment Act of 2016.  The committee will review quarterly reports due by June 30 in addition to the status of other elements implementation.

 

Please let Doug know if you wish to testify before July 9, 2018. You may also submit written statement to Ms. Royster at labor@dccouncil.us.

 

On another subject, Council members Grosso, Nadeau, Bonds, Silverman, Evans, and White are sponsoring this amendment to prevent wage garnishment from individuals making less than the DC living wage, to limit the amount that (more…)

Testimony from DC Employment Services – Labor & Workforce Development

 

 

Full Video

 

“Testimony related to the District of Columbia Department of Employment Services (DOES) at the DC Council Committee on Labor & Workforce Development’s Budget Oversight Hearing on April 18th

 

Please note- testimony from Fred Codding and Vic Cornellier can be witnessed at time 2 hour 07 mins – 2 hour 27 mins.