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The California Labor Commissioner has sued Glendale-based Calcrete Construction, Inc. claiming $6,300,338 for the company’s willful misclassification of some 175 persons as independent contractors as well as other wage violations. The Commissioner credits the Carpenters/Contractors Cooperation Committee, a union-affiliated non-profit organization monitoring workplace compliance, for referring the case.
The suit alleges Calcrete forced employees to agree to be independent contractors on threat of termination. The company then purportedly attempted to shield itself from liability by paying these workers through two staffing agencies.
The Commissioner also asserts that starting in 2014, Calcrete underpaid their employees for 18-28 hours of overtime weekly, failed to allocate required sick pay, and provided defective wage statements.
The $6.3M in potential damages includes some $2.6M in penalties for misclassification, $2.5M on the wage issues, and over $1M for failure to provide the proper wage statements.
The Commissioner seeks to use the suit as a warning: “[i]t is illegal for employers to use subcontractors to distance themselves from the obligation to pay workers, and we will use every tool to dissuade employers from this scheme.”
An ultimate finding of willful misclassification could generate back taxes scrutiny for Calcrete from the IRS and the California EDD.
Whatever the outcome here, the suit is a stark reminder of the importance of correct classification of workers as employees or as independent contractors. See also:
For more information, please contact one of our attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.
Helena Kobrin,
August 18, 2017
If you are an employer facing possible litigation, or have an employee issue on which you need immediate guidance, call us to set up a consultation, or submit your message.
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