Columbus City Council Targets Wage Theft

Posted by / August 31, 2020 / Categories: Columbus / Tags: , , , , / 0 Comments

Columbus City Council wants to create a new review board to ensure businesses – especially within the construction industry – are not committing wage theft or payroll fraud.

On Aug. 19, Columbus City Council’s Rules and Reference Committee held a virtual meeting to discuss ordinance 1802-2020.

Councilman Rob Dorans explained to the committee that wage theft occurs when workers are paid less than the minimum wage, are paid less than the Prevailing Wage, are not paid for all hours worked or are not paid overtime in violation of federal, state or local law.

Columbus City Councilman Rob DoransDorans, who also works as Chief Legal Counsel for the Affiliated Construction Trades (ACT) Ohio, also discussed payroll fraud, which occurs when a business conceals its true tax liability or other financial liability to a government agency by misclassifying employees or paying for business transactions in cash, without keeping appropriate records.

“Council believes that establishing a Wage Theft Prevention Commission dedicated to investigating violations of this ordinance, recommending penalties and remedies for violations and receiving wage theft and payroll fraud complaints will serve the interests of workers, law abiding businesses and residents of the City,” he said.

Among other penalties, a business found to be committing wage theft or payroll fraud may face debarment from future contracts with the City; stop work orders; denial, suspension or revocation of building permits, commercial licenses and business permits; forfeiture or reduction of tax abatement; loss of tax incentives or tax credits; and referral to local, state and federal authorities for investigation, further legal action and prosecution.

The ordinance requires employers who use independent contractors on city contracts and construction sites covered by incentive agreements to provide the city with information to confirm the workers are properly classified.

“This legislation is being put into place to discourage the use of independent contractors by making the employers show us, the City, these individuals do qualify as independent contractors,” Dorans said.

The ordinance only addresses wage theft issues related to city contracts, projects and economic incentive packages. It does not address wage theft or worker misclassification in the private sector.

“The intent of this legislation is to take a meaningful step forward as a city to push back on this type of abuse within our community,” Dorans said.

Bart Hacker, President and CEO of the Associated Builders and Contractors Central Ohio Chapter, warned the City Council that if the legislation passes, it will immediately lead to costly litigation.

“As presented, this ordinance interferes with companies’ rights to privately enter into contracts with each other in scenarios where the City of Columbus is tangentially involved. It will potentially ban a large group of companies from working within the city, not just those deemed in violation of the ordinance.”

Council is set to vote on the ordinance on Sept. 14.

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