Press Release  New Hampshire Drywall Company Agrees to $500,000 Settlement to Resolve Claims It Misclassified Workers

Boston —  A New Hampshire drywall company and its owner have agreed to a $500,000 settlement to resolve allegations that they misclassified employees as independent contractors on multiple Massachusetts construction projects, Attorney General Maura Healey announced today. The company will pay $250,000, with the balance suspended pending its compliance with the terms of the settlement.

The settlement agreement resolves allegations that Universal Drywall, LLC (Universal) and its owner, Richard Pelletier of Auburn, NH, violated the Massachusetts Consumer Protection Act and the Massachusetts False Claims Act to gain an unfair competitive advantage over companies in Massachusetts.

“We found that Universal Drywall systematically misclassified its employees as independent contractors to gain an unfair advantage over honest competitors,” AG Healey. “This settlement sends a clear message that wage theft will not succeed as a business strategy in Massachusetts.”

Pursuant to the settlement, Universal will pay $250,000, with the remainder suspended pending compliance with the terms of the settlement, which include ensuring the company and any of its subcontractors abide by the independent contractor law. If Universal violates the terms of the agreement, they are required to pay a penalty, up to an additional $250,000.

The AG’s Office sued Universal in May 2014 after an investigation by the AG’s Fair Labor Division revealed a pattern of unfair competition through the unlawful misclassification of workers on multiple Massachusetts construction projects.

The Fair Labor Division began their investigation into Universal’s hiring practices at a residential construction project in Chelsea known as One North of Boston in 2013 after it received reports that the company had been hiring workers from New Hampshire and misclassifying them as independent contractors, in violation of the Massachusetts Independent Contractor Law.

These reports mirrored previous claims reported to the AG’s Office regarding the company’s hiring practices on publicly-funded projects at the Tahanto Regional High School in Boylston and the Douglas Intermediate School in Douglas in 2011 and 2012. These investigations, in conjunction with the Chelsea project, revealed a pattern of unfair competition through the unlawful misclassification of workers at all three projects.

The AG’s lawsuit alleged that Universal relied on this practice to save costs associated with hiring the same workers as employees. As a result, Universal was able to obtain an unfair cost advantage over its competitors by requiring the workers and not the company, to absorb the burden of an employer’s overhead costs.

The lawsuit further alleged that Universal was responsible for creating and submitting false records relating to the misclassified workers employed on the Tahanto High School and Douglas Intermediate School projects, in violation of the Massachusetts False Claims Act.

The Attorney General’s Office is responsible for enforcing the laws regulating the payment of wages and employee misclassification, in addition to laws protecting consumers and businesses from unfair competition.

Workers who believe that their rights have been violated in their workplace can also call the office’s Fair Labor Hotline at (617) 727-3465. More information about the state’s wage and hour laws is also available in multiple languages at www.mass.gov/ago/fairlabor.

This matter was handled by Matthew Berge, Senior Trial Counsel in the AG’s Public Protection and Advocacy Bureau, Assistant Attorney General Jennifer Cotter, now Director of the AG’s Insurance and Unemployment Fraud Unit, Assistant Attorney General Amber Villa, now a Director in the AG’s Trial Division, and Assistant Attorney General Jennifer Scully, Investigator Jennifer Pak and paralegal Noreen Kelly, all of the AG’s Fair Labor Division.

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