Unions Picket Rhode Island Tax Credit Project
Wednesday, July 04, 2018
Union members in Rhode Island picketed outside the taxpayer-subsidized Commons at Providence Station this week, demanding greater accountability from both the developer and general contractor, after a sub-contractor was found to have misclassified employees by the Rhode Island Department of Labor and Training.
“When an employer does this, it’s lucrative — they can shed their tax burden and worker's comp insurance,” said Justin Kelley, Business Representative with the Rhode Island Painters and Allied Trades, of the area standards picket this week after JS Interior Construction agreed to pay civil penalties for 29 misclassified employees.
The Commons at Providence Station was approved for $5.5. million in tax credits by the Rhode Island Commerce Corporation in January 2016
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“The Commons at Providence Station is a proposed development including 160 market-rate, residential units to be located at Canal and Smith streets in Providence. The Commerce Corporation approved $5.5 million in Rebuild Rhode Island Tax Credits over the five-year eligibility period. The credit amount represents just over 10% of the total project cost of $54.1 million,” announced Governor Gina Raimondo’s office at the time.
“For me — coming from Painters and Allied Trades — a developer needs to be responsible for who they hire, and the general contractor has to be responsible,” said Kelley, who said the union is seeking language in future tax agreements that would ensure oversight -- and ramifications.
“We’d like to see attachments to these tax incentives,” said Kelley. “Yes, we need [tax incentives] — but we can’t be subsidizing this [employee misclassification] with public dollars."
Misclassification
Kelley explained how the issue JS Interior Construction, the drywall subcontractor of Tocci, who is the general contractor on the project for Trilogy Development — came to light.
“This started a few months back, in April,” said Kelley. “It came to my attention, through site inspectors, that there seemed to be likelihood [of misclassification].”
After investigating an anonymous complaint, the DLT executed a settlement agreement with JS Interior.
“The signed settlement agreement reached with JS Interior Construction is attached,” wrote Nora Crowley with the RI DLT on Tuesday. “Just one note on this: You’ll notice that the settlement narrative indicates 27 misclassified employees, but there are actually 29 employees listed at the end of the agreement. It’s an error that is just about to be corrected. An amendment has been agreed to and prepared – it’s just in the signing process. The amended settlement agreement correctly covers 29 employees."
As a result of the investigation on 4/24/18 it has been substantiated that JS Interior Construction has misclassified 27 employees as independent contractors and has failed to pay wages to the employees in violation of R.I. General Law 28-14-19. Misclassification of Employees — (a) The misclassification of a worker whether performing work as a natural person, business, corporation or entity of any kind, as an independent contractor when the worker should be considered and paid as an employee shall be considered a violation of this chapter.
In addition to any relief to which any development of an aggrieved party may be entitled for such a violation, the employer shall be liable for a civil penally in an amount not less than Fifteen Hundred dollars ($1500) and not greater than Five Thousand ($3000) dollars of each misclassified employee for a first offense, which shall be equally between the department and the aggrieved party. The parties agree to $1500 of 27 misclassified employees for the first offense. The total amount of $40,500 shall be paid by certified checks by JS Interior Construction. 27 certified checks in the amount of $750 will be made out to each misclassified employee as scheduled on the list below. An Administrative Fee of $20,250 divided in 4 payments of $5062.50 due on the first of each month beginning June 1, 2018 with final payments due September 1, 2018.
“We want to see this developer’s tax credit revoked,” said Kelley of Trilogy’s role. "That’s the whole thing with JS Interior — yes, they are still subcontractors, but that’s how the underground economy functions. It’s beneficial to businesses that follow the law — both union and non-union.”
Commerce RI, when asked for comment on the RI Painter and Allied Trades calling for not just the sub-contractor, but the general contractor, and developer to be held accountable when projects receiving taxpayer subsidies are found in violation of labor law, responded with the following.
“Of course, Rebuild Rhode Island tax credits cannot be used to pay for fines or penalties and we expect all of our projects to follow state and federal law,” said Matt Sheaff, Director of Communications. “We are in close contact with our colleagues at the Department of Labor and Training and are continuing to look into this issue.”
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