I have posted often on the tight association of hiring illegal workers with failure to take out workers comp insurance. Now WorkCompCentral, a leading source of information about workers compensation (subscription required) reports how Connecticut regulators are using stop work orders on uninsured job sites in part to crack down on hiring of undocumented workers. “The Connecticut Department of Labor’s use of a six-month-old law that allows investigators to stop work at job sites where workers aren’t covered by workers’ compensation insurance has proven a key tool in running unscrupulous subcontractors out of the state and cracking down on the use of undocumented crews, a top regulator said Thursday…. In some cases, investigators found undocumented workers being paid “off the books” without workers’ compensation insurance. In others, construction companies bought coverage but grossly underestimated the size of their payrolls, he said.”
According to WorkCompCentral, the state legislature decided to use this strategy to crack down on use of illegal labor when other strategies were deemed to be in conflict with federal law.
The report in full:
Gary Pechie, director of Wage and Workplace Standards for the labor agency, said legislation that took effect last Oct. 1 gave his investigators their first role in enforcing insurance laws, and has prompted 10 stop-work orders so far.
In some cases, investigators found undocumented workers being paid “off the books” without workers’ compensation insurance. In others, construction companies bought coverage but grossly underestimated the size of their payrolls, he said.
Pechie said the legislation passed with overwhelming support in the Connecticut General Assembly. The Legislature passed the bill after finding that other approaches to crack down on the use of undocumented workers were in conflict with federal law.
“We wanted to do something about illegal aliens,” Pechie said. “What we discovered is that we could go in and stop work, and the contractor would either get a workers’ compensation policy the next day or leave the state.”
The Connecticut legislation was patterned after a Florida’s 2003 workers’ compensation reform provision, which gave that state’s Division of Workers’ Compensation the power to issue stop-work orders.
Much like the Florida law, Connecticut labor officials can issue fines of $1,000 a day for noncompliance and another $300 per employee, if an employer refused to open his or her books to investigators.
Pechie said the Wage and Workplace Standards group trained with state investigators in West Palm Beach, Fla., before applying the new law.
“These illegal workers have been exploited. Not only do the employers not have workers’ compensation coverage, but they’re paying them less than the minimum wage. Most of them are treated as workers. The companies declare them as independent contractors.”
On Monday, Pechie’s unit shut down parts of job sides at two large Stamford condominium projects in Stamford, Conn., based on noncompliance with workers’ compensation laws.
Pechie said the agency did not shut down all work at the job site. But it did stop work by Avel Contractors and Ruffino Carpentry, of Stamford, and Tennessee-based National Carpentry.
He said the agency has another case pending against National Carpentry.
He said the agency has focused on the construction industry but is expanding its site checks to include Connecticut restaurants.
On Monday, a federal judge in Kalamazoo, Mich., handed down lengthy prison terms and combined restitution orders for nearly $50 million to three principals of a Florida janitorial service who provided undocumented janitors and groundskeepers to well-known restaurant chains across the nation, including Planet Hollywood, House of Blues, Hard Rock Café and Dave and Busters.
Prosecutors said 200 workers from Guatemala, Honduras and Mexico were paid “off the books” in cash to avoid the payment of federal payroll, Social Security and Medicare taxes in the Michigan case.
“We’re finding bottom feeders in the restaurant and construction areas,” Pechie said.