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Sep
2015
16

RI Misclassification, Prevailing Wage Settlement Shows Power of Proper Enforcement

Gov. Raimondo

Gov. Raimondo


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A Rhode Island construction company will pay more than $730,000 in back wages and penalties after failing to pay the prevailing wage and misclassifying employees as independent contractors during work on the University of Rhode Island’s new wellness center. The settlement was the first significant action that Governor Gina M. Raimondo’s new Workplace Fraud Unit took. The unit was created within the Department of Labor and Training’s Workplace Regulation and Safety division in order to “investigate wrongdoing and enforce worker-protection laws.”

In a statement announcing the settlement, Gov. Raimondo said:

“We’re going to go after companies that cheat because breaking the law not only hurts workers, it also hurts companies that follow the rules, pay proper wages and help grow the Rhode Island economy.”

According to the Providence Journal, the settlement will see Cardoso Construction LLC pay $730,000 for their part in the payroll fraud they committed against workers who performed drywall work:

Cardoso Construction LLC, of Pawtucket, whose manager is Joaquim S. Cardoso, of East Providence, failed to pay the prevailing wage rate to 32 employees and misclassified 27 employees as ‘independent contractors,’ according to the consent agreement between the Rhode Island Department of Labor and Training and Cardoso. The DLT released that consent agreement, signed August 18, to The Providence Journal [September 1, 2015].”

The new Workplace Fraud Unit is the latest step that Rhode Island has taken in combatting wage theft and misclassification. In May, the state signed a memorandum of understanding (MOU) with the U.S. Department of Labor to establish a working relationship in which agencies can share information and coordinate with law enforcement. At the time, Labor Secretary Thomas Perez said:

“Misclassification deprives workers of earned wages and undercuts law-abiding businesses. Combating misclassification is one of several important steps the U.S. Labor Department is taking to promote shared prosperity and ensure that our economy works for everyone.”

Scott Jensen, Director of the DLT, said at the time:

“The misclassification of employees as independent contractors is workplace fraud. Rhode Island will not allow bad actors to take advantage of their employees by failing to provide them with necessary workplace protections like Workers’ Compensation insurance, unemployment benefits and overtime pay. Allowing this activity to persist is unfair to Rhode Island businesses that play by the rules.”

Following the MOU, Gov. Raimondo stepped up further with her workplace fraud division. The governor’s four point plan for action called for:

1. Using existing funding to create a new Workplace Fraud Unit to focus DLT’s efforts on dishonest companies;
2. Coordinating state agency efforts and pooling resources to conduct investigations and bring enforcement actions with maximum impact;
3. Enforcing worker protection laws to the fullest extent and spotlighting businesses that cheat; and
4. Fostering compliance with the law through employer outreach and education.

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