After a nearly five-year federal investigation, 16 defendants accused of misclassifying more than 1,000 construction workers in Arizona and Utah reached a consent judgment to pay $700,000 in back wages, damages, penalties and other guarantees, the US Department of Labor’s wage and hour division announced last week.
The defendants — operating collectively as CSG Workforce Partners, Universal Contracting, LLC and Arizona Tract/Arizona CLA — avoided classifying the construction workers as employees and paying hundreds of thousands of dollars in payroll taxes by requiring them to become “member/owners” of limited liability companies, according to the Department of Labor.
The construction workers were building houses in Utah and Arizona as employees one day and then the next day were performing the same work on the same job sites for the same companies but without the protection of federal and state wage and safety laws, according to the department.
“We are pleased that this multi-agency effort has helped so many workers find justice, and produced a change in business practices in the regional construction industry,” said M. Patricia Smith, US solicitor of labor. “This kind of cooperation among state and federal law enforcement authorities will serve as a model for preventing misclassification and similar practices that deny workers’ their wages and protections, and undermine law-abiding employers. The resolution of this case should send a strong message to any other employers, in any industry, contemplating such a scheme.”