Dive Brief:

• Massachusetts Attorney General Maura Healey announced last week that her office fined a Leominster, Massachusetts, construction company $837,341 in restitution and penalties for wage violations.
• Healy’s office alleges that Force Corp. and its managers Juliano Fernandes, Anderson Dos Santos and Claudio Cicero Da Silva did not make timely wage payments to employees and took illegal deductions from their paychecks for items like tools, safety equipment, discipline and advances. The company also allegedly forced employees to buy tools from a company owned by Fernandes and required them to enter into unfair and misleading purchase agreements. Fernandes was previously cited for wage violations — failure to pay overtime and prevailing wages, misclassification of employees and failure to maintain accurate records — as the owner of two different construction companies. 
• “Force Corp. and its managers cheated their construction workers out of hundreds of thousands of dollars,” Healey said. “This is a textbook example of wage theft in the construction industry and we will keep working until every worker is made whole.” The AG’s Fair Labor Division this year has fined 45 construction industry employers $1.1 million in penalties and restitution for wage violations.

Dive Insight:

In 2016, the U.S. Department of Labor ordered Force and a company created by Fernandes and Dos Santos to pay almost $2.7 million in back wages, liquidated damages, penalties and interest. According to The Boson Globe, the department determined that the companies misclassified employees as independent contractors. In their settlement with the federal government, the defendants agreed to have an outside consultant help them set up an adequate system of payroll record-keeping and then examine compliance with that system on a quarterly basis.

There are legitimate independent contractors in the construction business — one- or two-person operations that have the appropriate licenses, insurance, tools and expertise. The problem is that some construction employers misclassify those who should be treated as employees as independents in order to avoid having to pay taxes, workers’ compensation insurance premiums, overtime and benefits, all of which are based on employee wages and hours worked.  

This summer, Colorado Gov. John Hickenlooper announced the creation of a state task force that will try to make it more difficult for construction companies to get away with this practice. State agencies and industry groups will pursue investigative reforms and other changes that will make it easier to share information about misclassification cases; educate employers about who should and should not be classified as an independent contractor; and make the process of filing complaints easier.