Maryland Minimum Wage Increase

April 5, 2019

 

On March 20th, the Maryland House of Delegates and the Maryland Senate reached an agreement on a Conference Committee Report on HB 166 and SB 280. Both Chambers subsequently voted to approve the Conference Committee Report, thus finalizing the legislation.  It will now be on its way to the Governor’s desk for further action.

As reported in The Washington Post, the minimum wage in Maryland will go to $15 / hour.  In the final version there will be an increase of $1.00/year until reaching $15 on January 1, 2025 for employers over 15 employees.  Smaller employers will have additional time to reach the $15 maximum.

 

 

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.

 

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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.

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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.  

Employment Services Department

The DC Department of Employment Services has issued proposed regulations for the Universal Paid Leave Program. A copy of those proposed rules is attached. Should you wish to provide comments on the proposed regulations please do so prior to the deadline. Since the rules were published in the D.C. Register in early April, they will remain open for public comment in not less than thirty (30) days after publication of the notice. Deadline is Monday, May 7th.

The bill which passed on April 7, 2017, covers anyone working in the District even though the company is domiciled in Maryland or Virginia. The Act provides covered employees with 8 weeks of paid parental leave, 6 weeks of paid family leave, and 2 weeks of paid personal medical leave.  The paid leave will be funded by a 0.62% increase in DC employer payroll taxes.

Employers need to be aware that this bill covers District residents as well as those from Maryland and Virginia if they are working in the District. However, it does not cover a District resident who is working in another jurisdiction. Under the Act, “eligible individuals” may request paid leave following the occurrence of certain qualifying events, subject to a one-week waiting period during which time no benefits are payable. “Eligible individuals” include: (1) individuals who have been “covered employees” during some or all of the 52-week period preceding the occurrence of a qualifying event; or (2) self-employed individuals who have opted into the paid leave program, and who spent more than 50 percent of their work time in D.C. during some or all of the 52-week period preceding the occurrence of a qualifying event.

“Covered employees” include employees of “covered employers” who: (1) spend more than 50 percent of their work time in D.C. working for that employer; or (2) who regularly spend a substantial amount of time working for that employer in D.C., and who do not spend more than 50 percent of their work time for that employer in another jurisdiction.

“Covered employers” include: (1) any individual, partnership, general contractor, subcontractor, association, corporation, business trust, or group of persons who employs or exercises control over employees and is required to pay D.C. unemployment insurance on the employees’ behalf; or (2) self-employed individuals who opt into the paid-leave program. The D.C. and Federal governments are excluded from the definition of “covered employer.”

Under the Act, “eligible individuals” may request paid leave following the occurrence of certain qualifying events, subject to a one-week waiting period during which time no benefits are payable. “Eligible individuals” include: (1) individuals who have been “covered employees” during some or all of the 52-week period preceding the occurrence of a qualifying event; or (2) self-employed individuals who have opted into the paid leave program, and who spent more than 50 percent of their work time in D.C. during some or all of the 52-week period preceding the occurrence of a qualifying event.

“Covered employees” include employees of “covered employers” who: (1) spend more than 50 percent of their work time in D.C. working for that employer; or (2) who regularly spend a substantial amount of time working for that employer in D.C., and who do not spend more than 50 percent of their work time for that employer in another jurisdiction.

“Covered employers” include: (1) any individual, partnership, general contractor, subcontractor, association, corporation, business trust, or group of persons who employs or exercises control over employees and is required to pay D.C. unemployment insurance on the employees’ behalf; or (2) self-employed individuals who opt into the paid-leave program. The D.C. and Federal governments are excluded from the definition of “covered employer.”

 

Employment Services Department of 7 DCMR Ch. 34 Paid Leave

Staying Up To Date With Construction Requirements Under The Law

D.C. Politics

Audit: D.C. fails to enforce law requiring contractors to hire out-of-work residents

 

 

 

 

 

 

 

 

 

 

The renovation of Duke Ellington School of the Arts was among the projects reviewed by the D.C. Auditor’s office as part of an audit of the city’s local hiring requirement. (Photo by Michael Robinson Chavez/The Washington Post)

 

By Fenit Nirappil April 19 at 3:00 AM Email the author

 

The District government failed to make sure that companies with city contracts hired unemployed residents as required by law and rarely penalized those who didn’t, according to an audit released Thursday.

Between 2013 and 2016, the city failed to enforce local hiring requirements, even after lawmakers tightened the rules and added penalties in 2011, according to a report by D.C. Auditor Kathleen Patterson.

The 30-year-old “First Source” program is based on a simple principle: Private companies that receive public dollars should help city residents find work.

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