Don’t Drink the Tea. Think With the WE.

$750K Misclassification Penalty Could Still Grow for Out-of-State Contractor on Hawaii Hotel Project

Screen Shot 2016-09-23 at 9.33.20 AM

submit to reddit  

A Texas contractor is being fined $767,095 for misclassifying 65 construction employees as independent contractors. The construction workers were hired on a $25 million hotel renovation project in Waikiki, Hawaii.

By misclassifying their employees, R&R Construction Services was able to avoid offering numerous benefits. That is, until the company was busted by Hawaii’s Department of Labor and Industrial Relations:

State and federal investigators raided the Maile Sky Court in Waikiki last month in response to complaints from workers and the Pacific Resource Partnership, which represents the Hawaii Regional Council of Carpenters. DLIR found that Texas-based R&R Construction Services allegedly misclassified 65 construction employees as independent contractors. By doing so, the contractor avoided requirements to provide unemployment, workers compensation, temporary disability and prepaid health care insurances.

Prosecutors have intensified their focus on employee misclassification recently, and rightly so. Just this summer, the Department of Labor reached significant settlements with construction companies in Massachusetts and Arizona:

A 2014 report by journalists at The McClatchy Co. uncovered rampant worker misclassification in the construction industry. The report found that employers often claimed that legitimate employees were independent contractors so they would not have to pay them payroll taxes, unemployment or workers’ compensation.

R&R Construction has 20 days to appeal the citations, but may face additional penalties from the U.S. Department of Labor’s Wage and Hour Division and the Hawaii Department of Commerce & Consumer Affairs. Local officials understand that strong penalties deter future violations:

“Law-abiding contractors who pay their fair share face unfair competition and workers suffer when deprived of their rights and benefits,” said Linda Chu Takayama, DLIR director. “The visitor industry, and a pleasant visitor experience, is important to Hawaii, but Hawaii’s working people and law abiding contractors need to benefit fairly.”


No Comments on “$750K Misclassification Penalty Could Still Grow for Out-of-State Contractor on Hawaii Hotel Project”

No one has commented on this entry yet.

Leave a Reply

To prove you’re a person (not a spam script), type the security word shown in the picture. Click on the picture to hear an audio file of the word.
Anti-spam image