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State aims to toughen labor wage, tax laws

Plan would hold hiring companies liable

After discovering repeated labor violations at Massachusetts work sites, Governor Deval Patrick’s administration wants to strengthen enforcement against companies that use temporary agencies or outside contractors that flout tax and wage laws.

The state Office of Labor and Workforce Development is considering legislative changes and other remedies to hold companies liable in cases where their contractors are found to be underpaying employees or breaking other wage laws.

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The changes would also improve the government’s ability to punish out-of-state firms that flee Massachusetts to evade enforcement.

Currently, state law only allows investigators to charge the direct employers with labor violations in most circumstances.

The administration’s effort follows a Boston Globe report on labor violations associated with an $18 million renovation of the Boston Marriott Copley Place.

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State investigators found that 15 companies violated wage and tax laws while working on the project. The violations included the underpayment of workers from a Philadelphia drug rehabilitation ministry who received just $4 an hour to move furniture — half the state’s minimum wage.

While the 15 subcontractors were ordered to pay back taxes and take other remedial measures, neither the hotel’s owner, Host Hotels & Resorts Inc., nor the general contractor on the renovation, Baystate Services Inc., faced charges.

Lawyers for Baystate Services and Host Hotels have said their executives did not know of the labor violations until state investigators began interviewing the Philadelphia workers at the Marriott last winter. Host and Baystate have since committed to step up efforts to ensure compliance with state laws by their subcontractors.

Company executives declined to comment on the enforcement changes being considered by the state.

Joanne Goldstein, state labor secretary, said the Marriott case is one of many in which investigators had little recourse against the companies that funded and managed the work. She said holding such companies accountable will help remedy violations that hurt workers and taxpayers and make it more difficult for legitimate businesses to compete.

“This is a problem we are seeing in a range of industries, not just in traditional construction or on renovations like the Marriott,” said Goldstein, whose office oversees a special task force on the underground economy.

Goldstein said the task force is reviewing current wage and labor laws and will consider potential recommendations and remedies.

Other states have already toughened their laws.

In California, companies are now required to have their contractors certify they can afford to pay their employees proper wages and buy workers’ compensation insurance.

Illinois approved a law imposing joint liability on companies and contractors for underpaying employees or illegally charging them excessive fees for transportation or cashing checks.

In recent years, Massachusetts investigators found widespread violations of labor and tax laws on sites owned or managed by large national companies.

In many cases, however, the companies were never charged with wrongdoing. Among the cases:

 In January, subcontractors under national home builder Pulte Homes were ordered to pay more than $400,000 in unpaid wages and penalties for violations at six work sites. Many of the underpaid workers were Brazilian immigrants. Pulte did not face any charges.

In 2010, temporary agency Labor Solutions Inc. was ordered to pay $500,000 in restitution for failing to pay minimum wage and overtime to employees at several Worcester area manufacturing plants. The manufacturing companies themselves were not charged.

 In 2009, five contractors working under US apartment builder AvalonBay Communities Inc. were ordered to pay more than $50,000 in fines for tax and wage violations associated with its Massachusetts projects. AvalonBay was not charged.

State Senator Daniel Wolf, chairman of the Legislature’s Joint Committee on Labor and Workforce Development, said the recent investigation into the work at Marriott Copley Place shows that state law needs to be stronger.

“It’s a sad situation,” Wolf, a Democrat from Harwich, said of the violations at the hotel. “We’re at a time economically where a lot of people need work and are in vulnerable positions, and this is taking advantage of those people. We need to look at legislative solutions to make that behavior less likely to happen.”

In the Marriott renovation, the furniture movers were affiliated with a ministry called Victory Outreach and were hired by a Southern California firm called Installations Plus.

The men from the church, many of whom were recovering from drug addictions and other problems, said they worked 12 hours a day, six days a week, and were paid $200 a week in cash, about half the state’s minimum wage.

The owner of Installations Plus, George A. Herrera, cut off communication with investigators and was not charged with wrongdoing.

Meanwhile, Victory Outreach told investigators it did not have any money to pay the men and also was not charged.

Following an investigation by Attorney General Martha Coakley, general contractor Baystate Services volunteered to pay 37 men from the ministry a total of $31,000 in back wages. The company did not admit any wrongdoing.

Casey Ross can be reached at cross@globe.com.
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