Joint Task Force on the Underground Economy and Employee Misclassification Uncovers $1.17m in Unreported Wages by Subcontractors on the Marriott Copley Place (Host Hotels) Renovation Project
Investigation finds wage violations, lack of unemployment insurance and workers compensation coverage, and worker misclassification
Boston – September 4, 2012 – The Patrick-Murray Administration’s Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (JTF) and the Executive Office of Labor and Workforce Development’s (EOLWD) Department of Unemployment Assistance (DUA) recently finalized 12 audits that uncovered $1,171,536 in unreported wages, 63 misclassified employees, and $85,907 in unpaid DUA obligations among subcontractors at the Boston Marriott Copley Place renovation project. Three additional cases involved Stop Work Orders issued by EOLWD’s Department of Industrial Accidents. The hotel is owned by Host Hotels and operated by Marriott.
The findings are the result of investigations led by EOLWD and the JTF. The JTF was established by Governor Deval Patrick through Executive Order #499 in March 2008 to coordinate multiple state agencies’ efforts to stamp out fraudulent employment activities by enforcing the state’s labor, licensing, and tax laws. The JTF is a broad coalition of state agencies including, among others, the Attorney General’s Office, EOLWD’s DIA and DUA, and the state’s Department of Revenue. These agencies work together to protect workers and restore competitive parity and fairness for Massachusetts’ businesses. Although the vast majority of Massachusetts employers conduct business with integrity, unscrupulous offenders are a serious threat to consumers, workers, tax revenues, legitimate businesses, and the economic well-being of the Commonwealth.
“When Governor Patrick launched the JTF in 2008, he sought to ensure fair and safe conditions for workers across the Commonwealth while encouraging the growth and success of legitimate businesses by creating a level playing field,” said Secretary of Labor and Workforce Development, Joanne F. Goldstein. “The JTF was also charged with pursuing owed revenue so that the cost of illegally cutting corners by unscrupulous businesses is not passed on to the Commonwealth’s taxpayers and ratepayers. These investigations and results demonstrate that the Task Force is achieving its goals, while recognizing that there is still more to be done.”
DUA investigators determined that six companies misclassified a total of 63 employees. Of the $1,171,536 in unreported wages, $587,249 was attributable to misclassified 1099 wages and $584,287 was attributable to unreported W-2 wages. In some cases, employers were found in violation of more than one law.
Among the findings were:
- A company that illegally self-elected out of unemployment insurance contributions;
- Six companies that misclassified workers as contractors, not employees;
- Seven companies that failed to report wages;
- Three companies that had outstanding delinquencies;
- Three companies that failed to register with DUA;
- One company that failed to file quarterly reports;
- The largest violators were a company that misclassified 28 workers and failed to report over $410,000 in wages; another was not registered at all with DUA and failed to report $462,081 in W-2 wages.
DUA continues all efforts to enforce its findings and to collect all outstanding contributions owed.
In addition, EOLWD’s DIA conducted three investigations at the Boston Marriott Copley Place work site. Three Stop Work Orders were issued to companies not providing legally required workers’ compensation coverage, resulting in $7,950 in fines. All three subsequently acquired Workers Compensation (WC) policies, and 19 employees had WC coverage as a result of the investigations.
In July 2012 the Attorney General’s Office announced payment of wages by a Woburn general contractor in the amount of $31,000 to workers employed by a subcontractor at this worksite.
Workers who believe that their rights have been violated and businesses who believe they are at an economic disadvantage because of unscrupulous competitors are strongly urged to call the Attorney General’s Fair Labor Hotline at (617) 727-3465 or the Joint Task Force Referral Line at (877) 965-2267, email tips to email@example.com, or visit the Joint Task Force website at www.mass.gov/lwd/eolwd/jtf/ to submit complaints. More information about the wage and hour laws is also available in multiple languages at the Attorney General’s Workplace Rights website at www.massworkrights.com.