payroll fraud

The economy in California might be on the upswing, but the construction industry falls short regarding the underground economy and wage theft and insurance fraud for one of the bandit firms that we are ferreting out all over the country.  Doherty Painting and Construction in Millbrae is neither responsible or honest.

According to an article on National Underwriter’s website Property Casualty 360, Frances Ann Doherty, owner of Doherty Painting and Construction in Millbrae, is accused of stealing from her workers over $600,000 of wages.  Not only did she withhold wages owed, she reported to her clients, the city of San Francisco and a number of school districts, that she had paid the prevailing wage to her workers.

“Liar, liar, pants on fire!”  According to the California Department of Insurance, Doherty is accused of misreporting over $600,000 in wages and over $100,000 in insurance premiums to her insurance companies.  Read more »

New Wage Theft and Payroll Fraud Study Released in Florida

According to a recent report in the Florida Independent, wage theft and payroll fraud are rampant in Florida, and the state enforcement mechanism is overwhelmed and grossly understaffed.  They cite a recent report from the Research Institute on Social and Economic Policy (RISEP) at Florida International University entitled Wage Theft: An Economic Drain on Florida – How Millions of Dollars are Stolen from Florida's Workforce that illustrates the nature of the wage theft and payroll fraud issue in Florida, specifically in 5 industries: Accommodation and Food Services, Retail, Construction, Healthcare and Social Services and Administrative Support.   Read more »

First of all I have to tell you that I think that the subcontractors who hire day laborers, work them 12-14 hours a day, and then don’t pay them their base pay or even the overtime that they are due are bandits.  They steal from the workers, they steal taxes from the state, they steal from the IRS, and ultimately they steal from you and me.
I don’t much care for that at all.

On top of that they expose the workers to unsafe jobsite conditions, and they take the chance that the construction is not high quality, so that you and I get exposed to the possibility of injury or worse when we occupy those unsafe buildings and apartments.

In the down economy when jobs are scarce, bids only ring the bell when they are much lower than the Read more »

Subcontracting companies working at Pulte Homes sites in Massachusetts have been found guilty of wage theft, payroll fraud, and unemployment insurance violations.  The subcontractors have been ordered to pay more than $400,000 in unpaid wages and penalties, and more than $141,000 has been recovered in previously outstanding revenue for Massachusetts’ unemployment system.

Pulte Homes of New England LLC and Pulte Braintree LLC operated several construction sites which were investigated after Massachusetts Attorney General Martha Coakley’s office and the Joint Enforcement Task Force on the Underground Economy and Employee Read more »

Loren Steffy, in his Sunday column for the Houston Chronicle, spells out the impact of payroll fraud and worker misclassification on the US deficit.  He says that two things are happening that are symptomatic of the situation.

First, by misclassifying workers as independent contractors or 1099 workers, the employers in the construction industry and in other labor intensive industries like hospitality and food service are not paying the taxes or benefits on the workers they hire.  Steffy states:

“For every $1,000 employers pay in wages, they are supposed to collect from employees $14.40 for Medicare and $42 for Social Security.  In addition, employers are supposed to contribute $62 themselves to Social Security, another $14.50 for Medicare and $25 Read more »

On July 13, Construction Citizen shared a story first reported by Dallas/Fort Worth television station WFAA about misclassification of workers on a school construction project.  Last week, the same WFAA reporter submitted an update to the story.

The original story featured a subcontractor who lost the bid for work on Mansfield Independent School District’s Center for the Performing Arts to a competitor who does not pay payroll taxes, unemployment tax, or workers’ compensation insurance.  Following the investigation and airing of the story, the Texas Workforce Commission (TWC) charged Mireles, the subcontractor who was hired for the project but did not pay those taxes, for Read more »

Connecticut newspaper The Stamford Advocate reported that subcontractor John Dosky, owner of American Building Group LLC, was recently arrested by Connecticut State Police for wage theft violations against three brothers, one of whom died from a fall while working for him.  Dosky was charged with three felony counts of “failure to pay wages” for owing the brothers almost $8,000 in unpaid wages.  The Department of Labor is also taking action against his company for misclassifying these and other employees as independent contractors, a practice known as payroll fraud.

The death occurred in October after 36-year-old Javiar Salinas fell more than 50 feet at the Chelsea Piers sports complex construction site in Stamford.  An article in The Danbury News-Times reported that Salinas’ estate is filing suit against each of his employers, including the developers (Chelsea Piers Connecticut LLC and Stamford Exit 9 LLC), contractor (Merritt Contractors Inc), subcontractor (AP Construction), and the sub-sub contractor (Dosky’s company, American Building LLC), because Salinas was not wearing a safety harness when he climbed to the roof that day, allowing a gust of wind to knock him off of the roof.

After the accident, Javiar’s brothers went to the Department of Labor to seek help in collecting Read more »

The US Department of Labor’s Wage and Hour Division (WHD) has a website with specific information about the issue of worker misclassification, also known as payroll fraud, and the measures being taken by each state to abolish it.  The website includes links to each Memorandum of Understanding which has been signed between the WHD and specific states’ Departments of Labor and Industry.  These agreements were created to promote compliance with laws already in existence within the states and to aid in communicating with employers and employees through training materials and coordinated enforcement actions in order to “protect the wages of America's workforce”.  Only eleven states have signed such agreements at this time.

The WHD website also contains links to each state’s Department of Labor, links to all WHD press releases categorized by region, information about related federal and state laws, workplace informational posters available for download in a variety of Read more »

According to an article in the Insurance Journal Online, advocacy groups and government organizations in Florida are bombarding lawmakers with suggestions for litigation which could curtail a rampant practice by disreputable contractors to defraud the state of workers’ compensation premiums.  This occurs when individuals set up fake subcontracting companies with workers’ compensation certificates and use those fake company names to get paid with checks payable to the non-existent companies.  They then cash the checks at check cashing stores, and pay the actual workers “off the books” with the cash.  The scheme has effectively become the status quo for doing business in some areas, and is estimated to cost the state of Florida millions of dollars in unpaid Read more »

Governor Jerry Brown recently signed two new bills into law that will address the misclassification and wage theft issues in a much stronger fashion.  According to an Advisory received by Construction Citizen and issued by the law firm of Epstein, Becker, Green, the two bills are:

“SB 459 directly impacts employers that classify workers as independent contractors.”  This bill imposes steep civil penalties ranging from $5,000 – $25,000 per incident with the upper levels reserved for those firms that exhibit a pattern of violations.  Additionally the penalties include the posting on the company’s website of a statement saying that they have been found guilty of a “serious violation of the law”.  Read more »