Construction Co. Owners Face Racketeering Charges in Florida

Gaetan Richard and Murray Rice were arrested this month on numerous charges, including racketeering, related to workers’ compensation fraud. According to state records, they have two active construction businesses: Richard and Rice Construction LLC and Richard & Rice Construction Co., Inc. Four other co-defendants were also arrested.

The alleged criminal scheme involved paying workers through over twenty shell companies. Over the course of about two years, Richard and Rice paid the shell companies nearly $40 million. According to an affidavit from the investigating detective, more that $12 million in workers’ compensation premiums and over $3 million in federal payroll taxes went unpaid.

If convicted, they could face 30 years in prison.

Today: UBC Meets the Challenge

Initially, many of unions were taken by surprise by the non-union sector’s developing economic clout. In the absence of a comprehensive counter-strategy, a number of locals and district councils adopted wage concessions in order to stay competitive with the non-union sector. Non-union employers effectively undercut that tactic by simply driving their own pay rates down further. At the same time, the ABC grew in political sophistication and became one of the linchpins of the “New Right” that propelled Ronald Reagan to the presidency in 1980.

“Our organization was set up to deal with the industry as it was in post-World War II North America,” said UBC General President Doug McCarron when he was elected in 1995. “But the industry has changed drastically since then, and we must change with it.”
Since his election, McCarron has reorganized the Brotherhood’s priorities and its structure. He set organizing as the union’s number one priority and has redirected its resources to get that job done. The union’s localized and often politically-motivated structure has also been restructured and streamlined to reflect today’s regional and national construction industry, as well as to ensure that union leaders are more accountable to members for the job they do.

The ultimate goal of these structural changes is to organize and reorganize every carpenter and contractor in North America and set the standard for wages, benefits, and working conditions on every jobsite. It is an ambitious goal, and one that will take a long-term effort to complete. But it can be done through organizing.

The UBC faces a complex and challenging future. New tools and materials and new methods of construction are entering the industry at an accelerated rate. In many ways, the carpenter of the 1990s is no different from the carpenter of the 1880s. But all indications are that the dawn of the 21st century will bring much more rapid technological innovation. Increasingly, the on-site carpenter is more an “installer” than a “fabricator” with the development of prefabricated materials, modular components, and panellized building sections. The multi-faceted general contractor is giving way to the construction manager whose subcontractors expect their carpenters to restrict their skills to more highly specialized tasks, such as concrete forms, framing, drywall, ceilings, finish work, etc. Union apprenticeship and journeyman-enhancement training programs have addressed these new developments while at the same time maintained a high level of all-around craft competence that union journeymen will always need.

Ultimately, maintaining and extending a strong union for carpenters will depend on combining an awareness of the dynamics of the future with the finest traditions of the past. The days of “country club” unionism that provided job security to members by keeping membership numbers down and the unorganized out are over. The UBC’s growth in the future rests on its ability to reach out and open its doors to all working carpenters.

Just as Peter J. McGuire built the Carpenters Union in the 19th century by organizing all carpenters, today’s leaders must rebuild this union in the 21st century in much the same way. They must embody that same spirit of inclusion in order to organize the unorganized and mobilize current union members to talk to their non-union brothers.

In 1882, W.F. Eberhardt of Philadelphia’s UBC Local 8 (which remains strong to this day), wrote a letter to the Carpenter. He outlined the efforts of his local’s members to contact every single carpenter in the city on a ward-by-ward basis. He described how those pioneering volunteer carpenter-organizers held regular meetings across the city to bring the unorganized carpenters into the new union. Today, more than 116 years later, the Brotherhood is using a “new” model much like the outlined by Eberhardt. Every district, council, and local in the union currently boasts an active volunteer organizing committee that uses today’s modern techniques and technologies, as well as old-fashioned one-on-one contact, to spread the still-relevant message of unionism to every non-union carpenter in their area. The American workforce may look different today–more multi-cultural, multi-racial, and multi-lingual. But the underlying principle of organizing all the men and women who make their living at the carpentry trade is exactly the same as it was in 1881, when 36 carpenters met in Chicago to improve their lives, their futures, and their trade.

Photo source: FreeImages.comGeorgeBosela

Avoid the perp, walk: workers' comp. premium fraud

“[A]s more workers’ comp fraud cases start creeping into the headlines, authorities are cracking down on the illegal practice, and construction companies need to be aware of their legal duties to avoid the potential consequences of fraud.”

“There are a few basic types of employer workers’ comp fraud, with diverse variations stemming from those few types. 

“One instance of fraud involves paying employees cash off the books so that the amount of payroll on which premiums are calculated is reduced, thereby reducing premiums.”

“Along those same lines are cases when employers intentionally misclassify employees as independent contractors.”

“Yet another common scheme is using shell companies, or companies set up for the sole purpose of paying employees without paying workers’ comp insurance and other benefits or taxes. This can be a company that the employer sets up himself or a third party who poses as a single-man operation with minimal insurance and minimal paperwork — just enough to avoid raising questions during an insurance premium audit.”

“Perhaps the strongest enforcement assets are contractors themselves.

‘”When you get burned on a job, and you didn’t get the award because somebody’s doing it for a price you know they can’t, (other employers) just turn them in,” [Mark] Sierra [construction insurance expert and consultant] said. “Then the state has people that go out on job sites and inspect them. So, yes, the competition definitely helps police it.”

[William] Canak [professor, Middle Tennessee State University]  added, “At a national level over the last decade, there’s been much greater recognition that there are a lot of people breaking the rules and that it negatively affects the proper functioning of the marketplace for employers and employees. It harms the community, it harms the workers and it harms law-abiding employers. So we’re seeing these initiatives roll out, and that’s good. It can’t all happen at once, but we’re making a lot of progress.”’

Construction Dive, January 26, 2016

Engels on Transition Team

Jon Bel Edwards was elected Governor of Louisiana. He appointed Executive Secretary-Treasurer Jason Engels to his economic development transition team. The team will make recommendations on job training and workforce development. Recently, Jason appeared on New Orleans News 8 in a three-part series exposing payroll fraud in the Louisiana construction industry.

Cash Pay Schemes Spreading

Florida is not the only state seeing check cashers and contractors conspiring to pay workers off-the-books. A bar owner in the Bronx and a pawn shop owner in New Jersey were arrested after a Port Authority and Manhattan DA investigation into contractors underreporting payroll. Contractors’ workers were paid in cash to evade paying taxes and workers’ compensation premiums. The defendants are accused of cashing almost $17 million in checks for 19 businesses from 2012 to 2014.

According to court papers, a contractor brought a $149,250 check to the bar and received $141,787. The check was then brought to the pawn shop where it was deposited for $147,011 in cash which was brought back to the bar.

USDOL Issues Guidance on Joint Employment

One of the primary schemes of corrupt contractors is using subcontractors and labor brokers that pay employees off-the-books or as 1099 subcontractors to evade paying employment taxes, workers’ compensation premiums, overtime and wages. When faced with law enforcement, corrupt contractors use that subcontract relationship as a shield against accountability. But when looked at closely, the contractor often times acts like an employer of the workers just as much as the subcontractors or labor brokers. It is a growing trend and construction is not the only industry facing the problem.

In response, the US Department of Labor issued an Administrative Interpretation (AI) of joint employment under the Fair Labor Standards Act (FLSA). Joint employment under the FLSA makes the contractor and subcontractor or labor broker separately and jointly liable for unpaid wages and overtime if the contractor is also acting as an employer of the workforce. The AI does not change the law, it provided guidance on existing law and gives notice to employers that the USDOL will use joint-employment findings more often.

Dr. David Weil, Administrator of the USDOL Wage & Hour Divisions wrote, “As the workplace continues to fissure, and as the employment relationships continue to become more tenuous and murky, we will continue to identify where joint employment applies and hold all employers responsible.”

In a press release supporting the USDOL’s action, General President Doug McCarron said, “This action by the Labor Department lets cheating contractors know that they can’t continue to hide behind their labor broker subcontracts.”

Construction Co. Owners Face Racketeering Charges in Florida

Gaetan Richard and Murray Rice were arrested this month on numerous charges, including racketeering, related to workers’ compensation fraud. According to state records, they have two active construction businesses: Richard and Rice Construction LLC and Richard & Rice Construction Co., Inc. Four other co-defendants were also arrested.

The alleged criminal scheme involved paying workers through over twenty shell companies. Over the course of about two years, Richard and Rice paid the shell companies nearly $40 million. According to an affidavit from the investigating detective, more that $12 million in workers’ compensation premiums and over $3 million in federal payroll taxes went unpaid.

If convicted, they could face 30 years in prison.

Today: UBC Meets the Challenge

Initially, many of unions were taken by surprise by the non-union sector’s developing economic clout. In the absence of a comprehensive counter-strategy, a number of locals and district councils adopted wage concessions in order to stay competitive with the non-union sector. Non-union employers effectively undercut that tactic by simply driving their own pay rates down further. At the same time, the ABC grew in political sophistication and became one of the linchpins of the “New Right” that propelled Ronald Reagan to the presidency in 1980.

“Our organization was set up to deal with the industry as it was in post-World War II North America,” said UBC General President Doug McCarron when he was elected in 1995. “But the industry has changed drastically since then, and we must change with it.”
Since his election, McCarron has reorganized the Brotherhood’s priorities and its structure. He set organizing as the union’s number one priority and has redirected its resources to get that job done. The union’s localized and often politically-motivated structure has also been restructured and streamlined to reflect today’s regional and national construction industry, as well as to ensure that union leaders are more accountable to members for the job they do.

The ultimate goal of these structural changes is to organize and reorganize every carpenter and contractor in North America and set the standard for wages, benefits, and working conditions on every jobsite. It is an ambitious goal, and one that will take a long-term effort to complete. But it can be done through organizing.

The UBC faces a complex and challenging future. New tools and materials and new methods of construction are entering the industry at an accelerated rate. In many ways, the carpenter of the 1990s is no different from the carpenter of the 1880s. But all indications are that the dawn of the 21st century will bring much more rapid technological innovation. Increasingly, the on-site carpenter is more an “installer” than a “fabricator” with the development of prefabricated materials, modular components, and panellized building sections. The multi-faceted general contractor is giving way to the construction manager whose subcontractors expect their carpenters to restrict their skills to more highly specialized tasks, such as concrete forms, framing, drywall, ceilings, finish work, etc. Union apprenticeship and journeyman-enhancement training programs have addressed these new developments while at the same time maintained a high level of all-around craft competence that union journeymen will always need.

Ultimately, maintaining and extending a strong union for carpenters will depend on combining an awareness of the dynamics of the future with the finest traditions of the past. The days of “country club” unionism that provided job security to members by keeping membership numbers down and the unorganized out are over. The UBC’s growth in the future rests on its ability to reach out and open its doors to all working carpenters.

Just as Peter J. McGuire built the Carpenters Union in the 19th century by organizing all carpenters, today’s leaders must rebuild this union in the 21st century in much the same way. They must embody that same spirit of inclusion in order to organize the unorganized and mobilize current union members to talk to their non-union brothers.

In 1882, W.F. Eberhardt of Philadelphia’s UBC Local 8 (which remains strong to this day), wrote a letter to the Carpenter. He outlined the efforts of his local’s members to contact every single carpenter in the city on a ward-by-ward basis. He described how those pioneering volunteer carpenter-organizers held regular meetings across the city to bring the unorganized carpenters into the new union. Today, more than 116 years later, the Brotherhood is using a “new” model much like the outlined by Eberhardt. Every district, council, and local in the union currently boasts an active volunteer organizing committee that uses today’s modern techniques and technologies, as well as old-fashioned one-on-one contact, to spread the still-relevant message of unionism to every non-union carpenter in their area. The American workforce may look different today–more multi-cultural, multi-racial, and multi-lingual. But the underlying principle of organizing all the men and women who make their living at the carpentry trade is exactly the same as it was in 1881, when 36 carpenters met in Chicago to improve their lives, their futures, and their trade.

Photo source: FreeImages.comGeorgeBosela

Avoid the perp, walk: workers’ comp. premium fraud

“[A]s more workers’ comp fraud cases start creeping into the headlines, authorities are cracking down on the illegal practice, and construction companies need to be aware of their legal duties to avoid the potential consequences of fraud.”

“There are a few basic types of employer workers’ comp fraud, with diverse variations stemming from those few types.

“One instance of fraud involves paying employees cash off the books so that the amount of payroll on which premiums are calculated is reduced, thereby reducing premiums.”

“Along those same lines are cases when employers intentionally misclassify employees as independent contractors.”

“Yet another common scheme is using shell companies, or companies set up for the sole purpose of paying employees without paying workers’ comp insurance and other benefits or taxes. This can be a company that the employer sets up himself or a third party who poses as a single-man operation with minimal insurance and minimal paperwork — just enough to avoid raising questions during an insurance premium audit.”

“Perhaps the strongest enforcement assets are contractors themselves.

‘”When you get burned on a job, and you didn’t get the award because somebody’s doing it for a price you know they can’t, (other employers) just turn them in,” [Mark] Sierra [construction insurance expert and consultant] said. “Then the state has people that go out on job sites and inspect them. So, yes, the competition definitely helps police it.”

[William] Canak [professor, Middle Tennessee State University]  added, “At a national level over the last decade, there’s been much greater recognition that there are a lot of people breaking the rules and that it negatively affects the proper functioning of the marketplace for employers and employees. It harms the community, it harms the workers and it harms law-abiding employers. So we’re seeing these initiatives roll out, and that’s good. It can’t all happen at once, but we’re making a lot of progress.”’

Construction Dive, January 26, 2016

Engels on Transition Team

Jon Bel Edwards was elected Governor of Louisiana. He appointed Executive Secretary-Treasurer Jason Engels to his economic development transition team. The team will make recommendations on job training and workforce development. Recently, Jason appeared on New Orleans News 8 in a three-part series exposing payroll fraud in the Louisiana construction industry.