A Bridgeport drywall company doing work at the Advanced Fusion Systems project site on Edmond Road recently was cited by the Connecticut Department of Labor for violation of wage and workplace standards, officials said.
Golden Drywall, a subcontractor on the project, was found to have four workers who were misclassified as independent contractors in order to skirt federal and state employment laws covering workers' compensation, unemployment taxes and payroll reporting, according to state officials.
"The company had four individuals who didn't have workers' compensation in place," said Gary Peschie, the director of the wage and workplace standards division at the labor department.
AFS, a high-tech firm that caters to the electricity industry, is . The company hired Claris Construction as the general contractor, which in turn appeared to have subcontracted with Golden Drywall, according to officials.
A representative of Golden Drywall could not be reached for comment and a representative of Claris did not return a phone call seeking comment.
State investigators pulled the permits on the project last month and conducted interviews with workers prior to making their determination, Peschie said. The stop work order, which was issued Aug. 22, is lifted only after the company can show it has come into compliance, Peschie said.
Members of the Connecticut Carpenters Union gathered in Newtown to hand out leaflets and protest the AFS project on Aug. 30. Union officials said they had tried to contact company officials to warn them of potential state labor violations, mainly that workers were allegedly being illegally classified as independent contractors, sometimes referred to as "1099s," after the tax form used to report income to the Internal Revenue Service.
"The problem in the industry is that lots of these subcontractors are pretty much forced in this situation where they have to work as 1099s," said Ted Duarte, a union organizer. "When you mis-classify as independent contractor, you shave 30-percent off of running a company."
A company is responsible for carrying workers compensation insurance for its employees but not for independent contractors, who are suppose to carry their own. But because some don't, if one of those workers gets injured on the job, there isn't insurance to cover for the medical costs, which eventually may end up costing taxpayers, officials said.
"That's been our problem industry wide and nationwide, it's at epidemic proportions," Duarte said, adding the situation may be one reason some companies are able to give much lower prices than others. "That is why you get some of the numbers that you get."
Peschie, of the labor department, said while investigators do get tips, they also have begun to conduct their own independent investigations. He could not say whether the investigation into the AFS work site began with a tip or on the department's own accord.
One reason the department has begun to aggressively investigate violations of work standards is to make sure there is a level playing field so that employers that do carry proper workers compensation can compete and are not penalized for the extra cost they have to bear.
"We are really changing the behavior of people," Peschie said. "This is to help employers."