A center for construction corruption?
Unions say that local developments are filled with illegal work practices
by Al Sullivan
Reporter staff writer
Aug 05, 2018 | 6421 views | 0 0 comments | 321 321 recommendations | email to a friend | print
CONTRACTORS
RAISING THE ROOF – Union officials raised questions at a Freeholder committee meeting about illegal practices going on regarding construction workers
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Alleging that some of Hudson County’s most prominent developers are engaging in illegal hiring practices, trade union representatives have asked the Board of Freeholders to investigate and take action. During an appearance at a freeholder Public Resources Committee hearing on July 25, officials from several construction unions charged that contractors and sub-contractors routinely violate labor laws.

The full freeholder board is expected to authorize an inquiry about labor practices in projects around the county at its August meeting.

The unions highlighted 14 active development sites, all in Jersey City, that they say are using an illegal business model and cheating workers. They alleged that other contractors throughout Hudson County may be adopting the same practices.

“These practices have become the model for how to develop here,” said Richard Tolson, director of the International Union of Bricklayers and Allied Craftworkers.

Tolson was among a number of union officials who testified at the committee hearing, calling Hudson County “ground zero” for “worker abuse, wage theft and corporate welfare.”

The abuse tends to be more on private development than government projects, partly because government oversight is better. But some these projects have received tax abatements where compliance appears to be lax.

Jersey City Mayor Steven Fulop, when contacted, seemed surprised by the hearing.

“Why are they talking to the freeholders about this?” he asked.

A county and statewide issue

Saying these illegal practices have become a statewide issue, Tolson said Hudson County, where development is booming, has seen developers have taking advantage of lax labor law enforcement and outdated regulations to “increase profit margins by abusing workers, robbing workers and the state of revenue, and creating an unequal business environment where illegality is the optimal business model.”

These developers, according unions officials, are using construction contractors who break federal and state laws by misclassifying full-time workers as part-time contractors, committing wage theft by violating overtime requirements, establishing illegal work weeks, paying cash, and evading taxes, all with one goal: to increase profits.

“This widespread worker abuse is occurring while the developers are charging record rents, record warehouse prices and recording obscene profits, and often with the benefit of state or local sponsored tax breaks,” Tolson said, calling this a kind of “corporate welfare” that is conducted in plain sight.

He said while progress has been made over the last decade in focusing on abuses of this kind, the practice is still widespread and costs New Jersey taxpayers millions.

According to “The Underground Construction Economy in New Jersey,” a comprehensive study from Stockton University released in June, 2016, approximately 35,000 workers are off-the-books or illegally misclassified as independent contractors, which leads to the state losing $25 million a year in tax revenue.

“We are seeking basic fairness and economic justice: a level playing field so businesses operating within the law can compete and for all workers to be treated fairly and afforded the protections already granted to them in existing law,” Tolson said.

“Gov. (Phil) Murphy is taking on the issue, appointing an outstanding, creative and aggressive Labor Commissioner in Robert Asaro-Angelo, and issuing an executive order creating a task force to attack the issue,” Tolson said. But he said Hudson County in particular needs to develop stronger enforcement, smarter labor laws, and raise public awareness about the problem.

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“This is not just about unions, it is a social justice issue.” – Richard Tolson, International Union of Bricklayers and Allied Craftworkers

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A paper trail

The unions said they have built a paper trail showing abuse, but said in some cases it is difficult to get people to come forward or find public records to build a case.

“This is not just about unions; it is a social justice issue,” Tolson said. “Workers are being taken advantage of and abused every day.”

Through pay stubs and interviews with workers, the union members said they have found contractors and subcontractors using undocumented workers, paying in cash at less than a living wage, and offering no medical or other benefits.

Some workers are brought to job sites in vans, they allege, guarded to keep from leaving during the day, and then transported out of the area. Often different workers show up at the same site, and the quality of work varies widely.

When workers are paid by check, subcontractors – using front companies – use stolen social security numbers and send workers to check cashing companies that do not ask questions.

Tom Hurley from the Keystone Carpenter’s Union said he and others have filed complaints with the state and federal labor departments and have sought information through public records requests. But because these are private sector jobs, pay records are not public record. When labor investigators come to work sites, workers often flee.

While one local developer has been fined nearly $1 million recently for illegal practices, the union representatives said fines are not enough.

“Somebody has to go to jail over this,” said Hurley.

Al Sullivan may be reached at asullivan@hudsonreporter.com.

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