While it may seem cost-effective to pay someone $10 an hour to haul trash or sweep up after construction workers, does it work when that person is running wires, installing plumbing, laying bricks or doing other jobs for which he is neither qualified nor trained?
Similarly, what happens to the person who works a 40-hour week, goes to the same job every day for the same contractor, yet receives a 1099 on pay day?
Underpaid and unskilled workers can be found in every facet of the building industry ”“ and they aren”™t just undocumented workers from other countries who fear deportation. Many are “regular” Americans who, if they don”™t go along with the subcontractors”™ stipulations, may find themselves out of work. Does this fly with the organized trade unions in New York?
The answer is a resounding “no” from the Department of Labor and members of the construction trades and law enforcement, who say millions of dollars in revenue, in the form of lost taxes, are just the tip of the iceberg. What about workers who are injured on the job and do not have insurance or disability coverage? One law enforcement officer gave an example of a day laborer who fell from a truck and landed on his head. The injured man has been in SUNY Stony Brook Medical Center for several months and his medical bills are at $9 million.
Joined by state Department of Labor Commissioner Patricia Smith Jan. 11 at the Comfort Inn in Nanuet, several construction industry leaders and prosecutors scrutinized the real cost of contractors who skirt prevailing wage laws and who misclassify workers.
Nassau County Assistant District Attorney Christopher Nicolino said the practice is not only causing New York”™s legitimate construction workers to lose jobs but puts the public at risk ”“ untrained workers are doing jobs they are not certified to do ”“ all for the sake of saving a buck. He and other Long Island and Westchester prosecutors are seeking to change the justice system”™s mindset about the issue, helping judges see the financial benefits to the state by prosecuting dishonest contractors and by “putting a face to the crime ”“ that”™s something they understand and eventually get comfortable with.”
Nassau, Suffolk and Westchester counties all have dedicated staff in their district attorney”™s offices that prosecute builders and contractors who routinely underpay workers and refuse to include them in their health or disability insurance policies. “It is a ”˜faceless”™ crime to many,” said Nicolino, who came north to encourage counties to view the use of underpaid and misclassified workers as more than just a “faceless crime, but one that costs the taxpayers not just in safety but in the taxes lost that go into the pockets of the people who are committing this crime.”
The practice is widespread and so pervasive that it has become almost acceptable ”“ but not to people like Patrick Morin, the executive secretary and business manager for the Empire State Regional Council of Carpenters, Ross Pepe of Westchester”™s Construction Industry Council or James Bodrato, new executive director of the Construction Contractors Association of the Hudson Valley. For their members, the cost is not only pricing them out of jobs but putting the general public at risk.
“We”™d like a level playing field,” said Morin. “My retired workers in Westchester cannot afford to stay because of the taxes. Our legitimate contractors are paying legitimate wages and benefits, but our industry is being hurt by those who want to abuse the system to save money. In the end, we”™re all hurt.”
“We are taking this show on the road,” added Bodrato. “We want to make sure that new laws and regulations our government have in place are adhered to and live up to what”™s expected of them.”
“But it”™s not just the contractors,” said Nicolino. “It”™s also workers who are collecting disability or unemployment and they are also ”˜beating the system.”™”
What can the state do to enforce labor laws ”“ a problem that has vexed government since labor laws were put into place in the 1800s? The construction representatives assembled have put their hope in new Department of Labor Commissioner Patricia Smith, who has pledged to come down hard on employers who try to skirt the laws.
“These are crimes that have been seen as ”˜faceless,” said Nicolino. He said judges who might have shied away from cases like this because of their complexity can be brought on board by presenting them with hard evidence:
“Getting subs to ID their workers, keep worker logs, payroll information. Run Dun & Bradstreet reports on them. It”™s also a tremendous help to get one of the workers to ”¦ give inside information. We”™ve had union workers who have gone undercover to expose these practices, and we”™ve had good results.”
When prosecutors can turn misdemeanor crimes into felonies by proving tax fraud it becomes much easier to get the case prosecuted, agreed attorneys who have dealt extensively with unfair labor practices.
To date, Nassau County, which started the program in 2003, has collected more than $6.3 million in wages owed to workers and another $1 million has gone into its forfeiture account. “This is not chump change,” said Smith. “Multiply that out across the state, and you”™re talking millions of dollars, not just in lost taxes to the government, but in the cost of supplying health care for these unclassified and misclassified workers. The attorney general”™s office, the DOL and other state agencies are working together to rein in this practice.”
