“Sixteen Arizona and Utah defendants accused of misclassifying more than 1,000 construction workers agreed to pay $700,000 in back wages and penalties, the U.S. Department of Labor announced Thursday.After a nearly five-year investigation, the government found that the 16 defendants required workers to become “member/owners” of limited liability companies, depriving them of federal and state protections that come with employee status, the Labor Department said in a news release.
The laborers were building houses in Arizona and Utah as employees one day, and then the next day were performing the same work on the same job sites for the same companies as member/owners, the Labor Department said.The investigation is part of an ongoing federal effort to stop companies from misclassifying workers to take them off legal payrolls.
“We will combat schemes like these with every enforcement tool we have,” U.S. Secretary of Labor Thomas Perez said Thursday in a statement.
The companies in this case avoided paying hundreds of thousands of dollars of payroll taxes and skirted laws that require payment of minimum wage, overtime, and employee protections such as workers compensation, the Labor Department said….
In the scheme, contractors turned their employees over to Arizona Tract, which acted as an employment agency and immediately reclassified workers as member/owners, said Jesus Olivares, spokesman for the Labor Department Wage and Hour Division’s Phoenix office….”
Read the full story at Companies accused of misclassifying workers to pay $700k in back wages, penalties.