Patrick-Murray Administration Announces Joint Enforcement Task Force on the Underground Economy and Employee Misclassification Recovers $6,489,549 in its Second Year of Operation
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, the Department of Industrial Accidents, the Division of Unemployment Assistance, and the Department of Revenue. Executive Order #499 requires these agencies to work together to protect workers and restore competitive equality for Massachusetts' businesses. Although the large 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.
"It is important that workers are treated properly on the job and that businesses have a level playing field," said Governor Patrick. "That is why we launched this task force and are pleased with its results to date."
Secretary of Labor and Workforce Development Joanne F. Goldstein said, "The underground economy includes individuals and businesses that willfully avoid compliance with labor, licensing, and tax laws by misclassifying employees as independent contractors or dealing in cash and other "off-the-books" schemes to conceal their activities and true tax liability. State agencies are working in close coordination to surface this underground economy and hold violators responsible."
"Our office has been aggressive in enforcing the Commonwealth's wage and hour laws in our collaboration with the Governor's Joint Task Force. The significant amount of money recovered just this year highlights the fact that employers who misclassify their employees gain a distinct financial advantage over their competitors, deprive the Commonwealth of much needed revenue, and deny employees many of the workplace protections to which they are entitled," Attorney General Martha Coakley said.
From April 1, 2009 to March 31, 2010, the JTF received over four hundred tips, both online and via telephone, in addition to hundreds of referrals made directly to its member agencies. The Task Force's investigative work included over 5,000 JTF compliance cross-checks performed between participating agencies, 3,676 Stop Work Orders issued by the Department of Industrial Accidents (DIA), 70 civil citations issued by the Attorney General's Office, and 196 Department of Revenue (DOR) audit investigations.
The Department of Unemployment Assistance (DUA) recovered $2,071,211 in new unemployment insurance taxes mostly through compliance cross-checks on employers in coordination with other agencies, including the Division of Capital Asset Management (DCAM), the Alcoholic Beverages Control Commission (ABCC), the Division of Apprentice Training (DAT), and the Department of Industrial Accidents (DIA), while the DOR recovered $1,568,166 in overdue taxes through review and investigation of JTF referrals. The DIA, in a complimentary enforcement operation, recovered $1,872,694 in fines. The Attorney General's Office recovered $788,690. The DUA also recovered $188,788 in Fair Share Contribution violations through referrals and compliance cross-checks with DCAM, ABCC, and DAT.
Also, as a result of a two-year long JTF investigation, a Worcester-based company and its owner plead guilty to 65 criminal counts of violating Massachusetts wage and hour laws and committing insurance and tax fraud. As a result of this investigation and prosecution, the company and its owner were ordered to pay $500,000 in restitution and penalties, and to serve 5 years probation.
The 2010 Annual Report also describes goals and new initiatives for the 2010/2011 year, including the creation of a Joint Task Force Advisory Council, the designing and commissioning of a research study on the current state of the underground economy and employee misclassification in Massachusetts, the development of an updated education and outreach plan, the implementation of state-of-the-art Fraud Detection Technology, advances in federal and multi-state collaboration, and a retooling of the Task Force's Investigative Sub-Team.
Director of Labor and Joint Task Force Chair, George E. Noel, described the Task Force's coordinated approach, saying, "We are focused on insuring that our member agencies operate efficiently and pro-actively in dealing with the underground economy. While we have a great deal of work ahead of us, our second year's results provide us with the momentum to take our enforcement capacity to the next level."
"The cooperative spirit exhibited day-in and day-out by the investigators and attorneys coordinating on behalf of their respective agencies is remarkable," said Task Force Director Drew Cahill. "These individuals work as a cohesive team, and it is their smart and dedicated approach that has yielded such strong results for the Commonwealth."
To view the report, visit http://www.mass.gov/Elwd/docs/dia/task_force/ar_2010.pdf file size 1MB or write to Alison Harris for the PDF file at email@example.com.
To report fraudulent activity, call the JTF hotline at 1-877-96-LABOR (877-965-2267). All tips are kept anonymous.