Governor moves to halt labor scofflaws
Initiative targets employers who fail to pay taxes
Governor Deval Patrick launched an initiative yesterday to crack down on unscrupulous business owners who dodge taxes and other costs by paying workers in cash or by calling them independent contractors. State officials hope that the initiative will bring in millions of dollars in revenue.
Union leaders, business owners, and others say they are being squeezed out of the market by companies that skirt the law, including hiring illegal immigrants. Such abuses are common in the building industry, critics say.
Patrick signed an executive order creating a special task force on the problem before he spoke to the annual convention of the Massachusetts Building Trades Council in Plymouth.
Nine state agencies are on the task force, and they are charged with conducting a joint investigation into the "underground economy," crafting stiffer laws, and encouraging the reporting of violations to the government.
"It's happening all across the economy, from pizza shop owners to transportation companies," said Labor and Workforce Development Secretary Suzanne Bump, who added that the initiative is modeled after similar efforts in California and New York. "It's just everywhere."
Advocates for immigrants raised concerns that the plan could backfire against immigrant workers, whether they are here legally or not. Ali Noorani, executive director of the Massachusetts Immigrant and Refugee Advocacy Coalition, said that increasing enforcement without protecting workers' rights would only make workers more vulnerable.
"We want to make sure that this is not used to target or profile any one worker," Noorani said yesterday. "If this order furthers the rights and protections of all workers, then we are going to stand with the governor to make sure it's fully implemented."
State officials said the task force will not target illegal immigrants, but will pursue the business owners who take advantage of both immigrants and US-born workers. The order requires the task force to work with social service agencies at the federal, state, and local levels to aid workers who have been exploited, including immigrants.
Though laws exist to prevent employers from paying workers in cash or misclassifying employees as contractors, Bump said that a lack of coordination among state agencies has hindered enforcement. Patrick's order requires state agencies to share information and clarify ambiguities in laws, such as differing definitions of independent contractor.
Led by George Noel, director of the Department of Labor, the task force will identify industries in which the underground economy thrives and improve enforcement by working with district attorneys and other groups. The task force will submit an annual report to the governor.
Union and business leaders hailed Patrick's order.
"I compete against other construction managers, who may hire subcontractors and the like, that don't play by these rules," said Matthew Consigli, vice president of Consigli Construction Co. of Milford.
"Especially in an economy that we're in right now, pricing is more important than ever," he said. ". . . People are looking for every edge that they can get."
Union leaders had urged Patrick to take action when he was a candidate for governor and took him to work sites where they said employers were breaking the law.
A 2004 Harvard study found that misclassifying workers alone cost Massachusetts roughly $152 million in unpaid income taxes from 2001 to 2003.
"If you crack down on people who are cheating, you can get revenue without having to raise taxes," said Mark Erlich, executive secretary and treasurer of the New England Regional Council of Carpenters, who was at the convention yesterday. "What politician doesn't love that?"
