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?

Houston-based contractor Halliburton is set to pay out millions of dollars to hundreds of employees in one of the largest settlements for unpaid overtime in the history of the Department of Labor. The government has given the contractor credit, however, for working in good faith to resolve the issue in a timely manner as soon as the problem was discovered during an internal audit.

The company will pay $18.3 million to 1,016 employees. Halliburton has 70,000 employees, so this is a relatively small portion of its total workforce.

In a statement issued to the Houston Chronicle, Susie McMichael with Halliburton said the company discovered during a self-audit that the workers had been denied overtime pay when they were actually entitled to it because of their employment status.    Read more » about Halliburton Paying Millions in Record Overtime Settlement

The U.S. Department of Labor (U.S. DOL) and the Vermont Department of Labor signed an agreement this summer to protect employees and law-abiding businesses by reducing the practice of worker misclassification in Vermont.  The three-year Memorandum of Understanding (MOU) allows the two agencies to share information and work together to conduct investigations and enforce the laws against employers identifying their employees as independent contractors or designating them with other non-employee statuses.

Agencies from several other states have signed similar agreements with the U.S. DOL including agencies from Alabama, Alaska, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Idaho, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Rhode Island, Texas, Utah, Washington, Wisconsin, and Wyoming.   Read more » about Vermont Joins the U.S. Department of Labor to Battle Worker Misclassification

Last May, the US Department of Labor signed a three-year agreement with the Rhode Island Department of Labor and Training (DLT) to battle worker misclassification by establishing a working relationship in which both agencies will share information and coordinate law enforcement.  According to a press release from the office of US DOL Secretary of Labor Thomas E. Perez:

“The [agreement] represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The Rhode Island Department of Labor and Training is the latest state agency to partner with the U.S. Labor Department. Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah, Washington, Wisconsin and Wyoming agencies have signed similar agreements.”   Read more » about Rhode Island Drywall Contractor Agrees to Pay $730K in Settlement with Workplace Fraud Unit

Today is a day of rest for those who toil in the hot sun or blistering cold every day to build Texas and the rest of America.  Millions regularly wake up before 5 am, drink their coffee, drive to a jobsite, and – just as they can start to see in the distance the structure on which they’ll work – they’re still about half an hour from parking the truck and getting down to business.  Many do that kind of work daily from sun up until sun down and never complain or even ask for a “thank you.”

The Texas Workforce Commission tells us there are more than 13 million workers “who are the backbone” of the Lone Star State.  “As we continue to experience positive growth, in job creation and labor force size, the people of the great state of Texas are able to benefit from the thriving economy and opportunities that come with expanding employment,” commissioners said in a statement on Friday.   Read more » about On Labor Day and Every Day, Construction Citizen Honors the Working Men and Women of America

More than two dozen states have now agreed to cooperate closely with the federal government to crack down on what’s known as “worker misclassification.”

Sometimes known as payroll fraud, worker misclassification has been called a “cancer” in the construction industry and other sectors of the economy as well. “Because of weak enforcement mechanisms, there are virtually no tangible consequences for violating the law,” said Professional Janitorial Services executive Don Dyer during a Texas House committee hearing on the subject last year. So far, Texas has taken a targeted approach to the problem but many advocates say it is simply not enough.    Read more » about Another state signals it will get serious about worker misclassification

Two men in Georgia have been arrested on federal charges that they intentionally misrepresented the employment classification of construction workers on a project for the Centers for Disease Control, which is headquartered in Atlanta. Cesar Arbelaez Tabares and Juan Carlos Bazantes were arraigned after prosecutors said both men "committed fraud in connection with a construction project" for the CDC.

Prosecutors said the men engaged in a somewhat elaborate scheme to defraud both the CDC and the Internal Revenue Service. Their actions caused IWES to fail to report over $800,000 in wages to the IRS, investigators said.    Read more » about Federal Charges Filed in Connection with Alleged Payroll Fraud Scheme in Georgia

“Jill Wells, an official of Engineers Against Poverty, an advocacy group in Britain, described the guidelines issued by CH2M as commendable. But, she said, the company’s actions were unlikely to have much practical impact because construction companies passed responsibility for worker welfare down to subcontractors.

“What the main contractors do is pass the risk down the subcontracting chain, and it is the workers on the bottom of the chain” who bear it, Ms. Wells said.” (New York Times)

The New York Times reported this week that the 2014 DLA Piper report on the mistreatment of workers on the construction sites for the 2022 World Cup has resulted in few changes even though the FIFA scandal and the concerns of Qatar were thought to bring about major changes.    Read more » about More Hearings on the FIFA Scandal

Federal agencies with oversight over various industries are taking the problem of worker misclassification more seriously and are taking steps to rein in as many bad actors as possible, according to various reports.

Worker misclassification, as you may know, happens when a company pays employees as independent subcontractors with the intent of skirting payroll taxes and denying benefits like health coverage. There are many legitimate uses of contract labor, of course, but the problem arises when companies use the classification to gain an unlawful competitive advantage and to deny basic protections for craft professionals and others. Companies that cheat on their payroll taxes can easily underbid law-abiding contractors by as much as 30 percent or more because of their illegitimate savings on labor costs.    Read more » about Report: Federal government is getting more serious about cracking down on worker misclassification

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