COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Division of Administrative Law Appeals

Yuriy G. Boldyrev, Individually and
American Sunrise Construction, Inc.,
(Cit. Nos. WH070048 and MW070045),

Petitioners

v. Docket Nos. LB-08-555, LB-08-610

Office of the Attorney General,

Respondent

Appearance for Petitioner:

Eugene Lumelsky, Esquire

153 Worthington Avenue
ShrewSergeyury, MA 01545

Appearance for Respondent:

Marsha Hunter, Esquire

Assistant Attorney General
Office of the Attorney General
Fair Labor and Business Practices Division
One Ashburton Place, RM 1813
Boston, MA 02108

Administrative Magistrate:

Judithann Burke

DECISION

Pursuant to the provisions of G.L. c. 149 s. 27C (b)(4), the Petitioners, Yuriy G. Boldyrev, individually, and Sunrise Construction, Inc., appealed citation numbers WH070048 and MW070045 issued to them by the Respondent, Office of the Attorney General (OAG), pursuant, respectively, to: G.L. c. 149 s. 148 and 148B (non-payment of wages and misclassification of an employee as an independent contractor); and, c. 151 s. 19(3) (failure to furnish records for inspection), imposing civil penalties in the respective amounts of $1,010 and $200 and ordering restitution in the amount of $5,792. The citations were issued on July 9, 2007. A hearing was held on April 24, 2008 at the offices of the Division of Administrative Law Appeals (DALA), 98 North Washington Street, Boston, MA. At the hearing, nineteen (19) exhibits were marked, including several copies of the multi-page Russian Bulletin. (Exhibits 15-18). The Respondent presented the testimony of: Sergey Bondarev, the claimant of back wages; and Joseph Hyacinthe, an inspector in the Attorney General's Fair Labor Division. The Petitioner, Yuriy Boldyrev, testified in his own behalf and in behalf of American Sunrise Construction, Inc. The Petitioners also presented the testimony of Vikkie Lovett, Mr. Boldyrev's life partner. Both parties stated their arguments for the record.

Four audiocassettes were made of the proceedings. The record was left open for the submission by the Petitioner of the contract pertaining to the project in question, the "Brookline project". This document was received on May 2, 2008 and marked as Exhibit 20. Both counsel sent follow-up correspondence stating their positions regarding the meaning of the contract within the context of this appeal. The last letter, from Attorney Lumelsky, was received on May 14, 2008, thereby closing the case record.

FINDINGS OF FACT

Based upon the testimony and documents presented at the hearing in the above-entitled matter, I hereby render the following findings of fact:

1. The Petitioner, Yuriy Boldyrev, (Yuriy), 46 y.o.a., is the owner of American Sunrise Construction, Inc., a home remodeling company that was established in 2004. He is licensed as both a Master Electrician and a General Contractor. He worked as an electrical engineer in his native Russia. (Exhibit 9 and Testimony).

2. Sergey Bondarev (Sergey) was in his mid-twenties in 2005. He was an illegal immigrant at that time and he did not hold any professional licenses. During the entire calendar year 2005, Sergey advertised in the Russian Bulletin for Boston, a Russian publication that displays myriad local business advertisements of Russian entrepreneurs. Through September 2005, he held himself out as a General Contractor who owned/operated "Sergio's construction (sic) Co.", a home improvement business.

In October 2005, he advertised under the name "Graystone Contracting Co. (Exhibits 15-17).

3. Sergey is now a United States citizen. He still owns the Graystone Contracting Co. and he continues to advertise in the same Russian Bulletin. He now holds a General Contractor's license. (Testimony and Exhibit 18).

4. In July 2005, Yuriy's general contracting business was still new. He acquired two demolition jobs in Downtown Boston and he needed someone to perform the demolition work. Vikkie Lovett, who resided in Norwood, MA, with Yuriy, saw an advertisement for Sergey's company, Sergio's construction (sic) Co., on the internet under the heading "demolition". She also saw Sergey's advertisement in the Russian Bulletin. She noticed that Sergey's business was new and that he was unlicensed. She believed that his work might be less expensive than that of other demolition contractors.

Ms. Lovett next showed the ads to Yuriy, who in turn decided to contact Sergey.

(Exhibits 9, 15 and 17).

5. The details of how and when Sergey and his crew would be paid were verbally
agreed to prior to each separate job. Yuriy was not seeking hourly workers or regular employees during the first year of his business. He could not afford to do so. Rather, he was seeking companies and/or subcontractors to provide services that he could not render himself, including demolition, sheet-rocking, plumbing, painting, tiling and carpentry work. Sergey had both the knowledge and talent to perform all of these tasks. Sergey's ads mentioned that he was skilled in most of these areas. (Testimony and Exhibits 15-18).

6. Throughout 2005, Yuriy worked on his own electrical jobs to support himself while his General Contracting business was growing. He almost always had an electrical job on his work calendar that was separate from his work overseeing the few contracts he had for American Sunrise Construction, Inc. (Testimony).

7. Sergey first agreed to work with Yuriy on the two short-term demolition jobs in Boston in July 2005. The first project was located at the Boston Art Gallery. A new floor was to be installed. Yuriy brought in Sergey along with two other men who worked for Sergey, including Sergey's roommate, Andrey Pubach, and a third man, a "Julio".

Sergey and his crew did the demolition work on the project over a few days. Sergey brought many of his own tools to the project. Yuriy stopped by the project each morning to provide some additional supplies and to remove trash from the previous day. He also dropped by in the evenings to check out the work that had been done. Sergey was in charge of the site during the day. Sergey and his crew were paid as agreed upon their completion of the job. (Testimony).

8. After the completion of the project at the Boston Art Gallery, Sergey, Andrey and Julio did demolition work the on second of Yuriy's Boston demolition projects. Again, Sergey and his crew were paid as agreed upon completion of the job. (Id.).

9. Yuriy began a renovation project for a client in Brookline, MA in August 2005, the "Brookline project". The contract was signed on July 11, 2005 and the work was scheduled to be performed between August 1, 2005 and October 20, 2005. The initial project was the renovation of the kitchen. The project grew over time. (Exhibit 20 and Testimony).

10. Sergey was in charge on the Brookline project when he and his crew were working there. He and his crew did demolition work and some carpentry work in the kitchen in the early weeks. Sergey also built closets in the unit. Sergey stored his own tools on site throughout this entire project. When the kitchen was close to being finished, a change order was executed and Yuriy agreed to coordinate the remodeling of the bathroom. This work entailed replacing glass, lights, tiles, and plumbing fixtures. The kitchen cabinets were yet to be installed along with the kitchen flooring. The cabinets were ordered from Italy and the tiles from another location. (Testimony).

11. The initial work on the Brookline project ended in late September or early October of 2005. Yuriy and his subcontractors could not proceed any further without the cabinets or the tiles. In October and November 2005, Yuriy continued to work on his own electrical projects. He also performed electrical work on a project of Sergey's in Watertown, MA during that period. He was not an employee of Sergey while doing the electrical work on the Watertown project. (Testimony).

12. Sergey was paid the following checks in August and September 2005: check no. 1005, dated 8/20/2005 in the amount of $2000; and, check no. 1015, dated 9/9/05 in the amount of $4000. Neither income taxes nor any other deductions were taken from these checks. (Exhibit 3).

13. For several weeks beginning in or about mid-August 2005, Sergey had been asking Yuriy for a $3000 loan in order to purchase a car. He had been transporting himself and his crew to the job site via his own vehicle, but this car was breaking down.

The September 9, 2005 check issued to Sergey by Yuriy, no. 1015 in the amount of $4000, included payment to Sergey of $1000 for work performed by him and his crew and a $3000 loan to buy a car. (Id.).

14. On August 14, 2005, Yuriy issued a check in the amount of $547 to Andrey Pubach. Sergey actually filled in Andrey's name on the check. During August and September 2005, Yuriy also issued checks to the electrical and plumbing subcontractors and to an Alexander Androsenko for a small painting job at another location. No income taxes or other deductions were taken from any of these checks. (Id.).

15. On October 16, 2005, Yuriy issued check no. 1028 to Sergey in the amount of $3000 for work performed by Sergey and his crew on the Brookline project. No income taxes or other deductions were taken from this check. (Id.).

16. On October 21, 2005, Yuriy issued check no. 1033 to Andrey Pubach for work he performed on the Brookline project. Sergey kept a schedule of his own and Andrey's work hours on his home computer. He provided this information to Yuriy. (Id. and Exhibits 1 and 5).

17. In late September or early October 2005, Yuriy purchased a Tacoma pick-up
truck. Because Sergey was an illegal immigrant, he was not able to register a car in his own name. Yuriy allowed Sergey to operate the Tacoma. On October 14, 2005, Sergey issued check no. 133 from his personal account to American Sunrise Construction in the amount of $3000 to repay the car loan. He noted "loan for car" in the memo section of the check. (Exhibit 11).

18. Yuriy became upset with Sergey during the fall of 2005 when the latter did not appear for work on the Brookline project on a couple of occasions. He felt a kinship with the younger man, who reminded him of his own son. Yuriy wanted to help Sergey get established in his own business. (Testimony).

19. During November 2005, there was some intermittent work on the Brookline project. The plumbing subcontractor came back to disconnect the water so that the bathroom plumbing fixtures could be installed. There was also some electrical work done and some inspections were performed. (Testimony).

20. On November 23, 2005, Yuriy issued check no. 1055 to Andrey Publach in the amount of $1000. He also issued checks to the Town of Brookline for a permit and to the electrical subcontractor for the Brookline project during November 2005. No income taxes or deductions were taken from these checks. (Exhibit 3).

21. In early December, Sergey and Andrey Publach both did some work on the Brookline project. They prepared for and installed the sub-flooring in preparation for the delivery of the tile, which had been delayed for several weeks. (Testimony and Exhibit 19).

22. On December 5, 2005, Yuriy paid check no. 1059 to Andrey Pubach in the
amount of $660 and check no. 1060 to Sergey in the amount of $1000. Neither income taxes nor any other deductions were taken from these checks. (Exhibit 3).

23. After the preparation and installation of the sub-flooring, there was no more work to do on the Brookline project until the tile shipment. Sergey grew weary of the delays on the project and the resultant large amounts of time when he was not receiving payment from the project. (Testimony).

24. The tiles that were necessary to complete the Brookline project were delivered in late December 2005. Sergey disappeared with Yuriy's truck on December 30, 2005 and he did not appear for work on the Brookline job site on December 31, 2005. Yuriy decided to terminate his relationship with Sergey, as he would no longer tolerate Sergey's unexplained absences from the project. (Testimony).

25. In early January 2006, Yuriy and Ms. Lovett retrieved the Tacoma truck from Sergey. In early February 2006, Yuriy confronted Sergey about several missing tools of the former. Sergey acknowledged that he had taken some of Yuriy's tools and claimed that he had done so because Yuriy had not paid him. The value of the missing tools was in the $3000 to $4000 range. The tools were not returned to Yuriy. (Id.).

26. On May 25, 2006, Sergey brought suit against American Sunrise Construction, Inc. based upon his claim that the $3000 check he had paid to American Sunrise Construction, Inc. on October 14, 2005 had actually been a loan from him to Yuriy in order for Yuriy to purchase the Tacoma. Sergey claimed that American Sunrise owed him the full amount of that loan. (Testimony and Exhibit 10).

27. American Sunrise Construction, Inc. filed a counterclaim against Sergey for
the missing tools. (Id.).

28. On or about June 16, 2006, Sergey went to the OAG and made a claim against American Sunrise Construction, Inc. for non-payment of wages from October 1, 2005 through December 31, 2005. He claimed that he was owed a total of $5792. He also claimed that he had been paid by Yuriy on an hourly basis at the rate of $20 or $22 per hour. He submitted a handwritten schedule of his work hours from October 1, 2005 through December 31, 2005, therein indicating that he had worked nearly forty hours per week for American Sunrise Construction, Inc. during that entire period. He also submitted data generated on his home computer concerning hours he and Andrey worked and money he claimed they were owed. (Exhibits 1 and 5-7).

29. Also on June 16, 2006, the OAG forwarded a copy of Sergey's claim to Yuriy therein alleging that he had violated the Massachusetts wage and hour laws. (Exhibit 2).

30. On June 30, 2006, the OAG sent a second letter to Yuriy entitled "Failure to Respond to Previous Notice". Yuriy was told to remit a check to the OAG on behalf of Sergey or further action would be taken. Yuriy did not pay the claim. His counsel corresponded with the OAG. (Id.).

31. On October 4, 2006, Inspector Joseph Hyacinthe of the OAG issued a written request that then-counsel to American Sunrise Construction, Inc. provide any and all payroll records from July 1, 2005 to the present for inspection and transcription pursuant to G.L. c. 151 ss. 3 and 15. (Exhibit 4).

32. In response to Inspector Hyacinthe's inquiry, Yuriy and his attorney submitted copies of the American Sunrise Construction Co., Inc. checks that he had written between August 13, 2005 and December 14, 2005. (Exhibit 3).

33. Inspector Hyacinthe never saw any of Sergey's advertisements in the Russian Bulletin. He based his decision concerning the liability of Yuriy and American Sunrise Co., Inc. exclusively on the claims made by Sergey. Inspector Hyacinthe was also of the belief that Yuriy and Sergey were both licensed as General Contractors in 2005. (Testimony).

34. On July 9, 2007, the OAG issued the following citations to Yuriy individually and American Sunrise Construction, Inc.: no. WH070048 alleging violations of G.L. c. 149 s. 148, non-payment of wages to "employee" Sergey Bondarev in the amount of $5792 and a penalty of $810, and G.L. c. 149 s. 148B, misclassification of employee as independent contractor from July 31, 2005 through December 31, 2005 which carried a penalty of $200, for a total amount due of $6802; and, no. MW070045 alleging a violation of G.L. c. 151 s. 19(3) for failure to furnish records for inspection on October 25, 2006. (Exhibit 8).

35. The Petitioners filed timely appeals of both citations.

36. On November 30, 2007, judgment was entered for the defendant, American Sunrise Construction Co., Inc. on Sergey's claim of non-payment of the car loan. Sergey was ordered to pay a total of $3,309.98 on Yuriy's counterclaim for the purloined tools. This amount included single damages in the amount of $2800 and prejudgment interest of $509.98. Sergey has not as yet made any remuneration to Yuriy pursuant to this judgment. (Exhibit 10).

CONCLUSION AND ORDER

After a careful review of all of the testimony and documents in this case, I have concluded that the Petitioners are entitled to prevail in this appeal. Yuriy, individually, and American Sunrise Construction Co., Inc. have met their burden of proving that that Sergey was a subcontractor, and not an hourly worker, while working on the Brookline project.

In reaching this conclusion, it was necessary to resolve key issues of credibility.

The Respondent acknowledged in closing argument that this case involves "one man's word against another". Based upon their demeanor during the hearing, their demonstrated integrity and maturity, and, the plausibility and consistency of their versions of events, I have credited the testimony of Yuriy and Ms. Lovett.

In so doing, I have discredited the testimony of Sergey and afforded it no weight.

Sergey's testimony was inconsistent and incredulous on many levels. He was untruthful about how he met Yuriy in the first place, stating that they met through friends. He failed to acknowledge that Yuriy and Ms. Lovett had seen his ads in the Russian Bulletin or that he had received their attention due to those ads. It is reasonable to infer that his motive for this diversion from the facts was to downplay any role his ads may have had in procuring the job so as to bolster his claim that he was an hourly employee of Yuriy.

Next, Sergey claimed that he had no role in bringing on the crew that worked with him on any of Yuriy's projects. This is not the case. He brought his own crew to the worksites in his own vehicle. He lived with Andrey Publach and he brought Andrey to Yuriy's job sites as part of his own demolition-carpentry-painting-sheet-rocking crew. Yuriy had never laid eyes on Andrey, Juilo or any other men who worked on the job with Sergey until Sergey himself brought them to the job sites.

Sergey claimed that he was paid on a regular basis by Yuriy until October 1, 2005, the beginning date of his claim for hourly wages. In fact, Sergey had been paid once per month prior to that date, on August 20, 2005 and September 9, 2005 and once again on October 16, 2005. The frequency and amounts of these payments is more consistent with his being paid following the completion of a certain phase of work on a contract, as was stated by Yuriy. Sergey did not receive a set amount of money every week. Rather, consistent with work on a large and changing contract like the Brookline project, Sergey received remuneration for him and his crew when the particular job they performed was completed and paid for by the client. There is no evidence in the record that anything had changed between October 1 and December 31, 2005 with the exception that there had been no work for Sergey to do in Brookline at all in the month of November. Sergey was not on the job site of the Brookline project during that time Either: because he did not report to work with Andrey for some unexplained reason; or, because there was no work for any of Yuriy's subcontractors to perform while cabinet and tile deliveries were pending.

The record of payments by Yuriy, the nature of the Brookline project and the testimony of Yuriy and Ms. Lovett about Yuriy and Sergey being involved with other work during October, November and December 2005, all render the claim that Sergey was an hourly worker during that time utterly ridiculous. The chart that he submitted to Inspector Hyacinthe purporting to set forth his work hours carries no weight whatsoever.

Sergey was in fact putting much of the time that he claims he was an hourly worker of Yuriy's into other jobs, including one in which Yuriy performed electrical work upon Sergey's request. As such, his claim that he had no money for two full months does not ring true. Further, the Petitioners have argued convincingly that, inasmuch as Yuriy was a subcontractor and not an hourly worker on Sergey's project, the arrangement would have been the same the other way around.

The Respondent has asserted in closing argument that the issue of the car loan and Sergey's failed court claim is a red herring that is irrelevant to the resolution of this case. This contention is only partially correct. While the issue concerning the alleged car loan from Sergey to Yuriy does not bear on whether Sergey was an employee or a subcontractor, it certainly bears on Sergey's credibility, character and his whole approach to the relationship with Yuriy and the legal system. Sergey claimed in the trial court, and at the DALA hearing, that he, who was both cashed-strapped and unpaid come October 1, 2005, loaned Yuriy $3000 on October 16, 2005 for a truck that Yuriy had already purchased at least two weeks earlier. Very little needs to be stated here about the credibility of this claim. Sergey offered no set of facts in which it would be reasonable to believe that his alleged "boss/employer" would need to borrow money from him, especially since he was so cash strapped. The $3000 paid by Sergey to Yuriy on October 14, 2005 was, as Yuriy and Ms. Lovett testified, the repayment of the car loan provided to Sergey by Yuriy on September 9, 2005. That Sergey would suggest otherwise reflects that there are very few sensible boundaries to his story-telling.

Sergey took tools from Yuriy. Notwithstanding the judgment of the Somerville District Court that he is liable for their misappropriation and that he owes money to Yuriy, Sergey has not honored the ruling. Yuriy has not pursued the matter further.

Sergey has taken advantage of the good graces of Yuriy, the man who had tried to help him get started in his own home improvement business in this country and who had looked upon him as a son. Sergey's behavior and attitude is reflective of an angry, vindictive man seeking a pot of gold utilizing any means possible.

Based upon the foregoing observations of Sergey and my refusal to afford weight to his testimony, there is no merit to the Respondent's contention that Yuriy owes him nearly $6000 in back wages. Sergey simply has not documented this claim. He has not laid out a bona fide case that he was not paid by Yuriy for the work he actually did on the Brookline project. Accordingly, the Petitioners have no liability, pursuant to G.L. c. 149 s. 148, for the unpaid wages or the civil penalty imposed in citation no. WH070048.

The OAG Inspector based his decision to issue the citations in this case on the representations made by Sergey. Further, the Inspector had been wholly unaware of Sergey's advertisements in the Russian Bulletin. The OAG has offered no basis upon which to hold Yuriy, individually and American Sunrise Construction, Inc. accountable on either citation.

While the Petitioners have prevailed on all of their claims without an analysis of G.L. c. 149 s. 148B, it is still important to note that they have indeed met their burden of proving that they have satisfied all three prongs of the Independent Contractor Law, and ergo, they are not liable for the civil penalty imposed for any violation of s. 148 or 148B. G.L. c. 149 s. 148, the "Independent Contractor Law", effective July 19, 2004 created the presumption that a work arrangement is an employer-employee relationship unless the party receiving the services can establish that three factors are present. First, the worker must be free from the presumed employer's control and direction in performing the service, both under a contract and in fact. Second, the service provided by the worker must be outside the employer's usual course of business. And, third, the worker must be customarily engaged in an independent trade, occupation or business of the same type. See Commonwealth of Massachusetts Advisory on the Acts Amending Massachusetts Independent Contractor Law 0224/2, a publication of the Office of Attorney General Martha Coakley updated December 10, 2004 and G.L. c. 149 s. 148B.

Yuriy provided no direct supervision to Sergey and his crew. The job duties that were expected of Sergey and his crew were well delineated. Sergey did demolition, painting and carpentry work on the Brookline project. Yuriy did none of these jobs on that project, nor did he perform work of that nature on any project. He left the supervision and direction of these jobs to Sergey. Sergey was in charge when he was on the job site. Sergey stored many of his tools on the job site. The only supervision he received from Yuriy was to be told when deliveries occurred and when Sergey and his crew were expected on the project. Yuriy also came to the site many evening to observe how the job was moving along. This is all consistent with behavior of a General Contractor and not an employer who is supervising hourly workers. The Petitioners have proven that, when in the performance of his work on the Brookline project, Sergey was free from the control of Yuriy.

Sergey's work, and that of his crew, was performed outside the usual course of
business of Yuriy. The OAG Inspector believed that both men had the same licenses during the Brookline project in 2005. They did not. Yuriy had been an electrician all of his working life and he was a licensed electrician and he was a newly licensed General Contractor. He was not, nor had he ever been, in the demolition, painting, carpentry, or tile businesses. Thus, he needed experts in those trades to perform work on his contracts.

He read Sergey's ads putting forth that his business did in fact provide services in the trades that Yuriy could not. The Petitioners have proven that the services rendered by Sergey on the Brookline contract were outside of the usual course of Yuriy's business.

Sergey had started two home improvement companies of his own in 2005 at the time he worked with Yuriy. He continued to advertise his companies and accept other jobs while he worked on the Brookline project with Yuriy. Yuriy even worked as Sergey's electrical subcontractor on Sergey's Watertown job. Sergey continues to work under the name "Greystone Construction" to this day. He was committed to getting his own business off to a good start back in late 2005. The Petitioners have proven that in 2005, Sergey had a business independent from Yuriy's, and, this fact was understood by all parties at all critical times.

The remaining issue for resolution in this appeal is whether the Petitioners were properly cited for non-compliance with G.L. c. 151 ss. 15 and 19(3). Section 15 provides:

Every employer shall keep a true and accurate record of the name, address and occupation of each employee, of the amount paid each pay period to each employee, of the hours worked each day and each week by each employee, and such other information as the commissioner or attorney general in their discretion shall deem material and necessary…(Emphasis added).

The Petitioners were not bound to comply with this section. The Petitioner, Yuriy, was a sole proprietor and a General Contractor. American Sunrise Construction, Inc. had no employees. Accordingly, the citation no. MW070045 was inappropriately issued, and the Petitioners have no liability thereon.

In conclusion, I have found for the Petitioners in this case. They owe no money to Sergey Bondarev or the Commonwealth.

DIVISION OF ADMINISTRATIVE LAW APPEALS,

Judithann Burke,
Administrative Magistrate

DATED: July 24, 2008


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