Sophisticated project owners and developers pick premier contractors who are principled, are socially responsible and develop their workforce. They know that contractors who build lasting, high quality employee relationships and career paths for their craftspeople consistently deliver the best value and results. Their practices produce tax revenue and stability to communities while also lowering social service burdens.

Knowledgeable owners and developers avoid using contractors who are are unprincipled and who use misclassified or undocumented workers who are often paid in cash and lack the skills, long-term commitment and support necessary for producing top quality work. They know these second-rate practices not only lead to poor results and hidden costs but also have social consequences in their communities including uncollected taxes, increased social services costs and lower incomes.

What do socially responsible contractors get in return for being responsible?

Do "socially indifferent" or "socially irresponsible" owners, developers and contractors in your community face consequences to their reputation and business?

Construction Career Collaborative (C3) and the Archdiocese of Galveston-Houston hosted a town hall meeting for seven Contractors on April 11, 2016 at the offices of the Houston Chapter of Associated General Contractors to discuss the recent decision by Cardinal Daniel DiNardo for the Archdiocese to support the C3 initiative.  Those in attendance included representatives from Arch-Con Construction, Axis Builders, Brookstone, Durotech, Humphries Construction, Paradigm Construction, Westfall Group, and Zenith Construction.

The meeting featured opening remarks from Steve Faught, Director of Construction and Preventive Maintenance for the Archdiocese, who described the decision made by Cardinal DiNardo and its desired impact.  Faught spoke of up to 10 archdiocesan projects, currently in the planning stages, which he hopes will become C3 projects.  He also highlighted his hope that the cost impact of C3 projects for the Archdiocese will be minimal.  To support this aspiration, Faught spoke of a large commercial office-building project, which was bid with C3 requirements and without them.  Once the bids were totaled, the cost differential for the bids, which specified C3 criteria, was approximately 0.04% (four one hundredths of one percent) more than the bids without C3 requirements.   Read more » about C3 and Archdiocese Host Town Hall for Contractors

Last week, the Construction Citizen team updated you on the fact that lawsuits about worker misclassification have been ramping up all across the country. The battle is playing out on multiple fronts – particularly in court houses and in the halls of state legislatures. The problem is at crisis levels across many industries, especially construction, and federal regulators have signaled they are getting more serious about reining it in.

Put simply, worker misclassification is cheating. It happens when a business pretends its workers are independent contractors when, by law, those people should be paid as employees. There are many legitimate uses of contract labor, however, which is why the IRS has this test to determine who can and cannot be classified that way.    Read more » about Vermont Looks to Sharpen Stance on Worker Misclassification

Across the country, there are more and more examples of businesses facing legal consequences because they were misclassifying workers as independent subcontractors when, by law, those people should have been treated as employees and compensated as such.

As Construction Citizen has documented over the years, there are many legitimate uses of contract labor. There is also, however a scourge of certain employers abusing the designation to dodge taxes, health benefits and other costs associated with having employees on payroll. Misclassification happens when a business intentionally uses contract labor to gain an unfair competitive advantage.    Read more » about Lawsuits Ramping Up Over Worker Misclassification

Marek Dallas Division President John Hinson wrote the following President’s Message for AWCI's Construction Dimension magazine. Hinson is the 2015-2016 President of AWCI.

A friend recently called me to vent about an audit by the Department of Homeland Security on his concrete business. Seeing me as an understanding ear, he related the impact this “enforcement action” was having on his seasoned craftsmen and their families.

His employees have worked for him for more than 30 years, but he admits some of them entered the country illegally in 1986 and should face punishment and fines. And what really bothers him is that he will be forced to terminate them. It is punishment to them, their families and his business that severely outweighs the crime.    Read more » about Forced To Cheat

The El Paso City Council is moving forward with plans to further crack down on companies that deny pay to their workers. Only one council member voted “no” to add tougher language to an ordinance that was initially passed last year.

Under the new version of the law, which takes effect immediately, companies will be denied permits to work in the city if they have been previously convicted of wage theft. The original version of the ordinance simply denied city contracts to companies with such a history. That method of dealing with wage theft is similar to an ordinance passed by the Houston City Council in 2013.

Prior to the most recent vote, the El Paso Times Editorial Board took a strong position in favor of the tougher language:    Read more » about El Paso Takes a Sharper Approach to Dealing with Wage Theft

A construction executive in New York is charged with underreporting his payroll so that he could reap $2 million in insurance premium breaks.

Prosecutors in Manhattan said Michael Cholowsky and his company allegedly concealed more than $3 million in payroll resulting in a fraudulent premium reduction over the course of a year starting in April of 2014.

The Manhattan District Attorney’s office released a statement saying that the “indictment stems from an investigation into a construction site fatality that occurred last year at the former location of Pastis restaurant in the Meatpacking District. In April 2015, a 22-year-old worker was killed when an improperly secured trench collapsed and fatally crushed the victim.    Read more » about Multimillion Dollar Payroll Scheme Busted in New York

Working on federal and local governmental projects requires that contractors include minorities, woman-owned, or Disadvantaged Business Enterprise firms on their teams either as subs, vendors, suppliers or consultants. The guidelines also require that those amounts be stated in the bidding process and in the reporting process during the construction of the project as well as the final accounting to the public.

Some contractors and owners, in an effort to bypass the guidelines, have found creative ways to accomplish the goals that they have to meet in their bids by defrauding the system and the firms that the MBE and DBE programs set out to help.

We have seen these fraudulent moves for decades. First it was out and out bribes such as, “We’ll include you on the team, pay you a fee and you won’t do a thing,” or “You will need to pay my cousin a fee of x to represent you on this project.”    Read more » about It’s Still Fraud Maude!

Six men have been arrested and charged with racketeering and fraud charges after allegedly paying employees of a Florida construction company through shell companies in an attempt to avoid paying more than $12 million in workers’ compensation premiums and more than $3 million in federal payroll taxes.  Meanwhile, the men appear to have made over $17 million in profits over the period of the investigation, which lasted from October 2013 to August 2015.

The Sun Sentinel, a publication based in Fort Lauderdale, reports that a Broward County Sheriff’s Office affidavit said that the owners of Richard and Rice Construction LLC and four other men used over 20 shell companies to hide the number of employees they hired.  The article says that police detective Benjamin Dusenbery wrote in the affidavit that:

“Although laborers were under Richard and Rice Construction control, they were said to be employed by the shell companies.  This allowed Richard and Rice Construction to hide the number of employees it had, lowering its insurance premiums and payroll taxes, while appearing to comply with necessary coverage requirements.  It allowed the company to submit lower bids for work.”

The article talks about the pay that trickled down to the actual workers – many of whom were paid off the books:   Read more » about Florida Contractors Accused of Racketeering and Fraud in Scheme Using “Shell Companies”

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