For Immediate Release - July 23, 2014

Patrick Administration Announces Joint Enforcement Task Force on the Underground Economy Recovered $15.6 Million from Fraudulent Employment Practices

BOSTON –July 23, 2014-Labor and Workforce Development Secretary Rachel Kaprielian today announced that the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (JTF) recovered $15,658,226 in unpaid wages, back taxes, unemployment insurance premiums, fines and penalties through thousands of compliance checks and investigations in 2013.

Governor Deval Patrick established the JTF through Executive Order 499 in March 2008. Since then, the JTF has grown to 17 agencies including the Attorney General’s Office (AGO), Department of Revenue (DOR), Department of Unemployment Assistance (DUA), Department of Industrial Accidents (DIA) and Department of Labor Standards (DLS) and has collected nearly $56 million from unlawful businesses by enforcing labor, licensing and tax laws.

“The coordinated investigations and comprehensive enforcement efforts of the JTF have paid off in better protections for more workers and millions of dollars recouped from unscrupulous businesses,” said Governor Patrick. “The task force has proven to be an effective mechanism for enhancing cooperation between state agencies, sharing information and prosecuting violators.”

 “Companies and individuals who willfully avoid the law by misclassifying employees as independent contractors or engage in the fraudulent employment practices of the underground economy put workers’ safety at risk, place legitimate businesses at a disadvantage and burden taxpayers,” said Secretary Kaprielian.

 “The Joint Task Force works aggressively to end the underground economy, which undermines our state's economy and workers' rights,” Attorney General Martha Coakley said. “This ongoing effort ensures that we are protecting workers by combatting fraud and abuse, returning significant funds to the Commonwealth, and leveling the playing field for all businesses that play by the rules.”

As detailed in the JTF 2013 Annual Report, the JTF received 176 direct tips through the tip line and online referral service along with hundreds of complaints made directly to partner agencies.  In addition to the compliance checks, the JTF’s investigative work included 103 stop work orders issued by DIA, 32 civil citations through the AGO and 124 DOR investigations.

“When the underground economy is allowed to flourish, workers are denied basic workplace rights and protections, legitimate businesses find they cannot compete, consumers are subject to unregulated goods and unlicensed services and Massachusetts is cheated out of revenue that could otherwise fund worthy programs and services,” stated Heather Rowe, Director of the Department of Labor Standards and the Joint Task Force.  “Working together, the partner agencies of the Task Force are committed to addressing fraudulent employment practices using our existing resources.”

“The Joint Task Force on the Underground Economy seeks to help both employers and employees comply with Massachusetts employment laws in a manner that ensures a level economic playing field,” said Brad MacDougall, VP for Government Affairs of Associated Industries of Massachusetts. “AIM participates because the fair enforcement of employment laws and regulations impacts the business climate and employers’ ability to create jobs.” 

 

Among the more notable accomplishments of the JTF was the outcome of a two-year state and federal investigation into two farm labor camps operated by Chang & Sons Enterprises Inc. in Western Massachusetts where workers and their families were exposed to unsafe and unhealthy living conditions and workers toiled long hours with little pay. In April 2013, the U.S. Department of Labor ordered Chang &Sons to pay workers $305,500 in back wages, fined the company $10,267 and permanently enjoined it from exploiting future workers.

Governor Patrick recently signed legislation making the JTF a permanent investigatory unit. Among the goals and objectives, the JTF will focus on increasing the volume and impact of cross-agency enforcement by maximizing future potential cooperation between agencies and creating educational material for businesses and workers.

“I am very happy with the Joint Task Force’s continuous work on bringing fraudulent employment practices to light, and their tireless efforts to provide a fair playing field for business competition in the Commonwealth,” said Senator Dan Wolf (D-Harwich), Chairman of the Senate Committee on Labor and Workforce Development. “That it will now be a permanent fixture in the Department of Labor Standards will ensure that those who are treated unfairly or face undue risks at their jobs have a dependable advocate to fight for them.”

 

To learn more about the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification go to www.mass.gov/lwd/jtf.

Workers who believe that their rights have been violated and businesses who suspect they are at an economic disadvantage because of unscrupulous competitors are 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 jtftips@state.ma.us, or visit the Joint Task Force website at www.mass.gov/lwd/jtf to submit complaints.

Below are additional comments about the work of the JTF from member agencies and advocates.

 

William F. Galvin, Secretary of the Commonwealth:

“The office of the Secretary of State is proud to assist the Task Force in its important efforts to eliminate fraudulent employment activity, promote workplace rights and protections and to level the playing field for legitimate business. The Corporations Division has assisted the Task Force by pursuing entities organized under the laws of other states or countries that are doing business here but have failed to register to do so,  thereby avoiding disclosing information to the public, paying taxes and workers compensation and otherwise failing to comply with the laws of the Commonwealth.  Communication among the more than 15 participating state agencies is the key to the success of the Task Force.”

 

Carole Cornelison, Commissioner for the Division of Capital Asset Management and Maintenance:

“DCAMM holds businesses that perform public work to the highest standards for compliance and employee protection, and we take that role very seriously,” said Carole Cornelison, Commissioner for the Division of Capital Asset Management and Maintenance. “The Joint Task Force is an important collaboration across state agencies and serves as the initial check point, ensuring that businesses are law-abiding and treating their employees fairly. This effort has resulted in more businesses rising to meet these expectations of excellence.”

 

Marcy Goldstein-Gelb, Executive Director, Massachusetts Coalition for Occupational Safety and Health

“Each week at MassCOSH, workers laboring long hours in dangerous jobs report that their wages were stolen or that their employer tried to deter them from reporting an injury because the employer lacked workers compensation.   Some workers aren’t even sure who their employer is – because they are paid through a third party, be it a temp agency or subcontractor.  The JTF has been critical in being able to investigate these situations, identify who is responsible and ensure that they comply with all of our state’s laws.”   

 

Monica Halas, Lead Attorney, Employment Law Unit, Greater Boston Legal Services

On behalf of legal aid clients, many of whom are the victims of wage theft by unscrupulous employers and fly-by-night temporary staffing agencies in the underground economy, we are so appreciative of the work of the Joint Task Force.

 

Robert Hooper, Assistant Regional Administrator, Region I, OSHA

“This cooperative effort helps enhance the safety and well-being of workers who might otherwise be exposed to injury, illness or exploitation,” said Robert Hooper, OSHA’s acting regional administrator for New England. “Our sharing and exchange of information enables us and the other task force members to reach and assist vulnerable workers and increase compliance by employers.”

 

Carlos Matos, US DOL, Wage and Hour Division, District Director

“Worker misclassification is a serious issue and there are various business models that attempt to make employment relationships cloudy in order to evade compliance with labor laws.  The classification of a worker as either an “employee” or an “independent contractor” has significant implications on compensation for hours worked,” said Carlos Matos, the Wage and Hour Division’s district director.  “That is why The Wage and Hour Division and The Massachusetts Joint Task Force will coordinate enforcement efforts to ensure employers review their pay practices to ensure full compliance and employees receive the protections to which they are entitled under federal and state laws.”

 

 Michael Felsen, US DOL, Regional Solicitor of Labor for New England

“The U.S. Department of Labor values greatly its ongoing collaboration with the Massachusetts Joint Task Force,” said Michael Felsen, regional Solicitor of Labor for New England. “By working together to address the multiple problems presented by misclassification of employees as independent contractors, USDOL and Massachusetts are leveraging their resources to ensure that workers’ rights are protected, and that law-abiding employers are able to do their business on a level playing field.”

 

 

 

 

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