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

August 9th, 2018

 

D.C. Politics

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

 

 

 

 

 

 

 

 

 

 

 

 
D.C. Attorney General Karl Racine (D). (Michael Robinson Chavez/The Washington Post)

 

By Reis Thebault August 8 at 5:33 PM Email the author

 

An electrical contractor that has worked on many high-profile projects in the District allegedly engaged in a payroll scheme that deprived hundreds of workers of sick leave, overtime pay or minimum wage, according to a lawsuit filed this week by Attorney General Karl A. Racine.

The complaint, filed Monday in D.C. Superior Court, claims that Power Design Inc., based in Florida, misclassified 535 electrical workers as independent contractors, which kept them off the payroll and allowed the company to avoid paying some D.C. taxes.

Although the workers have many of the same roles and responsibilities as Power Design employees and report to the company’s managers, the lawsuit alleges, they do not receive the paid sick leave that D.C. employers are required to give. The lawsuit says that at least 180 workers weren’t paid the required overtime rate, and that at least 64 weren’t paid minimum wage.

“Power Design cheated hundreds of District workers out of their hard-earned wages and stripped them of their legal rights,” Racine (D) said in a statement. “When companies misclassify employees as independent contractors, they steal from their workers and gain an unfair advantage over competitors that follow the law.”

[If politicians care about a rigged system, it’s time to address wage theft]

 

A spokesman for Power Design said the company — which has won D.C. contracts for high-end developments such as the Yards on the Anacostia Riverfront and publicly subsidized projects such as the Line Hotel in Adams Morgan — takes seriously its compliance with local laws and regulations and has begun an internal investigation of the allegations.

 

 

 

 

 

 

 

 

 

 

 
The Line Hotel under construction in Adams Morgan in 2017. (Marvin Joseph/The Washington Post)

The complaint says the company hires workers from third-party “labor brokers” and then lists those workers as independent contractors, rather than its own employees.

Racine’s office is seeking tens of thousands of dollars in damages, along with unpaid taxes and fines for every worker misclassified.

“This maneuver allows Power Design to slash costs, evading taxes and costs associated with payroll that are concomitant with a typical employer-employee relationship,” the complaint says. “As business in the construction industry is often awarded through a bidding process, these suppressed costs are instrumental to Power Design’s success in the District.”

D.C. Council member Elissa Silverman (I-At Large), who has raised concerns about Power Design’s business practices before, called the lawsuit a “first, important step” that shows the city takes the enforcement of its labor laws seriously.

“We’re sending a message to contractors,” she said. “You need to pay your workers fairly, or there will be consequences.”

[The Trump administration proposes allowing tip-pooling in restaurants. Critics call it stealing workers’ wages.]

 

In 2017, when Power Design applied for certification to offer apprenticeships in the city, Silverman pointed out that the company had been sued elsewhere for misclassifying workers and not paying overtime.

“I have concerns about Power Design’s labor practices, and urge you to deny their application until they can demonstrate that their business practices are in line with local and federal law,” Silverman wrote in a letter to the D.C. apprenticeship council, which oversees apprenticeship programs for the Department of Employment Services.

 

A spokeswoman for the department declined to answer questions about the lawsuit or the council’s approval of Power Design’s application.

Silverman, who chairs a committee that oversees the department, said she has pushed officials there to be more proactive in enforcing D.C. labor laws, rather than mainly responding to complaints.

“It’s about really taking a muscular approach,” she said.

Labor and community activists, who also have long criticized the company, applauded Racine’s lawsuit. “For too long, the city has passed paper tiger laws that sound wonderful, but the enforcement of them has been lacking,” said Bryan Weaver, a community leader in Adams Morgan who protested the Line Hotel project.

“I hope this hearkens a new day in the District of Columbia, where developers and contractors are going to be held to the letter of the law,” he said.

Reis ThebaultReis Thebault is a reporter covering politics in the D.C. metro area. He has worked on the local desks of the Boston Globe and the Columbus Dispatch. He joined The Washington Post as an intern in June 2018. Follow 

 

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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.

(more…)

D.C. Mayor Seeks to Stop Costly Legal Delays to Development Projects

D.C. Politics

 

 

 

 

 

 

 

 

 

 

 

 

An intersection in Washington’s Union Market neighborhood is shown Feb. 9. Advocacy groups have filed eight appeals against various development projects in the gentrifying neighborhood. (Justin T. Gellerson for The Washington Post)

 

By Paul Schwartzman February 28 at 5:56 PM Email the author

 

Activists seeking to thwart the breakneck speed of development across the District have turned with greater frequency to the city’s highest court, filing legal challenges that have delayed more than two dozen projects in the past two years and driven up their costs.

(more…)