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Tennessee contractors avoid workers’ comp to win bids
/0 Comments/in News /by IKORCCNASHVILLE, Tenn. – The amount of growth in downtown Nashville requires a lot of labor, but not every worker is equally protected in case of injury.
The practice of winning low bids by avoiding workers’ compensation payments is called worker misclassification.
The Channel 4 I-Team has found the same thing uncovered nearly five years ago at the Music City Center is now happening right across the street.
WSMV Channel 4
In 2011, a drywall subcontractor with a large workforce was failing to deduct taxes of any kind or pay workers’ compensation or overtime.
Some contractors use worker misclassification to win competitive bids. They can undercut a rival by 20 percent or more by not paying into insurance pools.
“Everybody is hurt by employee misclassification, all of us,” said Scott Yarbrough with Workers Compensation Compliance. “If an employee is hurt, they don’t have a workers’ compensation policy to fall back on. The hospitals have to treat them as a charity case most of the time.”
When the I-Team investigated the Music City Center, the state had never audited a job site for compliance. They do now.
At an apartment complex in Bellevue, a subcontractor named Pablo Delgado was fined more than $87,000 for understating his payroll.
At another Bellevue complex, Aguilar Carpentry was caught misclassifying its workforce and was hit with almost $73,000 in fines.
Investigators also levied a $39,000 fine on a Vanderbilt dormitory project.
Government jobs aren’t immune. A Metro-funded project in north Nashville led to a $69,000 fine for a roofing subcontractor.
A worker at the new Westin Hotel across from the Music City Center spoke to the I-Team. He asked not to be identified.
“Yes, it’s very common. They’re still doing it,” the worker’s translator said.
The man showed us his paychecks with no tax deductions whatsoever. There was also no overtime pay, even though he works 50 hours a week.
The man said it’s done everywhere.
“He said that 95 percent of the jobs he has done, they don’t take taxes off the cash and they don’t pay time and a half overtime,” the translator said.
“It’s a huge risk for families,” Yarbrough said. “When an uninsured employee gets hurt, it starts an economic death spiral for them. They can’t pay their hospital bills. They lose their car, can’t get to work. They lose their job, lose your house.”
Many fines go unpaid. The offender has yet to pay a dime of the $87,000 fine mentioned early. Only $5,000 of the nearly $73,000 fine against Aguilar Carpentry has been collected. The subcontractor on the Vanderbilt dorm has paid less than half of what he owes. The roofer from the Metro-funded project has managed just $3,000 of the $69,000 he owes the state.
Offenders are given 24 months to pay.
“The main thing we want to see is people coming back into compliance,” Yarbrough said. “We don’t necessarily want to run them out of business. We want to give them an opportunity to pay over time.” The state just started cracking down on this in 2013.
Collections have increased from $85,000 statewide to $132,000 last year. As of Wednesday, there is still $325,000 owed by violators.
Experts said in the construction field alone, misclassification is shorting the state Medicare pool somewhere between $7 million and $42 million.
Source: WSMV News 4, Nashville, Tenn.
Manchester drywaller jailed for under-the-table payroll scheme
/0 Comments/in News /by IKORCCMANCHESTER, N.H. – A city dry-wall contractor was sentenced to 18 months in federal prison and ordered to pay the Internal Revenue Service more than $780,000 for his role in an under-the-table payroll scheme.
Cruz E. Galvan, 39, who operated Four Star Drywall, was ordered to pay the IRS restitution totalling $786,553. Authorities said he had paid $100,000 of that amount several weeks before being sentenced Tuesday in U.S. District Court.
According to U.S. Attorney Emily Gray Rice, Galvan pleaded guilty to one count of federal employment tax evasion, admitting to a scheme to dodge payment of federal employment taxes on wages he paid to his employees.
During his plea hearing, Galvan admitted that from April 2010 until December 2012 he paid employees with vouchers instead of with checks. The employees were then instructed to present the vouchers to a local check-cashing business to which Galvan had previously provided funds with instructions to pay the vouchers in cash.
He acknowledged he did not report the wages he paid to the IRS, evading federal income tax withholding and Social Security, Medicare and federal unemployment taxes.
Immigration proceedings are underway to deport Galvan, who authorities say is in the country illegally, after he serves his sentence.
City police, the IRS, the U.S. Department of Homeland Security and the U.S. Department of Labor, Office of Inspector General, investigated the case, which was prosecuted by Assistant U.S. Attorney Bill Morse.
Source: Union Leader
Carpenters assemble Valentine’s Day care packages for US Military
/0 Comments/in News /by IKORCCEarlier this year, Brenda Bishop Young of Buckeye Military Families reached out to Local 200 regarding its third annual Operation Sharing Hearts project. The project focuses on assembling and sending 50 Valentine’s-themed care packages to service members who are deployed and stationed overseas.
In addition to presenting Buckeye Military Families with a $500 donation, five Local 200 members and their families were more than happy to assist with Operation Sharing Hearts and dedicated a Saturday and a total of 20 volunteer hours to the project. Assembled at the Local 200 office, eachcare package contained Valentine’s Day cards, candy, batteries, sports and auto magazines, toiletries and small Valentine’s Day cakes.
“I have to thank Local 200 for the use of their office – the facility was perfect for our event,” commented Bishop Young. “The help we received from their members was so awesome! They jumped in and made us feel right at home. I know this is a long-standing relationship we can look forward to in years to come.”
Michael Freeman, IKORCC Representative and Local 200 Recording Secretary and Political Advisor, commented, “We have four veterans in our Columbus office. Having served in the military, it makes me so proud to be involved with an organization that truly cares about our nation’s heroes – veterans and active duty alike. Being stationed away from family and friends can be very tough, and we know how much a small gesture like these care packages will be appreciated. They’re also a small token of our appreciation for everything our military does for our country.”
Buckeye Military Families is the Ohio chapter of Semper-Fi Sisters, which consists of individuals with a loved one who served or is currently serving in the military. Their mission is to support the families of those currently serving, the service member themselves and Ohio veterans.
Avoid the perp, walk: workers’ comp. premium fraud
/0 Comments/in News /by IKORCC“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
/0 Comments/in News /by IKORCCJon 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.