The Morning Report
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By Dane Styler
The Southwest Regional Council of Carpenters held a press conference in San Diego today to launch Tax Fraud Days of Action, a three-day series of events and nationwide campaign to stem the tide of corruption that results in $8.4 billion lost each year due to construction industry tax fraud.
An affiliate of the United Brotherhood of Carpenters, the SWRCC met with city officials to preview new labor standards and emphasize the district attorney’s commitment to prosecuting tax fraud and wage theft crimes committed by contractors in San Diego’s construction industry.
The press conference shined a light on the illegal practice of tax evasion committed by one in every five construction contractors nationwide, gave voice to contractors who follow their civic obligations, and exposed pervasive and prolific issues of wage theft, insurance fraud, labor trafficking, cash pay, and the use of labor brokers to dodge accountability.
Speakers included Nathan Fletcher, Supervisor of San Diego County’s Fourth District; Summer Stephan, San Diego County District Attorney; Albert Carrillo, CEO of Western Wall and Ceiling Contractors Association; Doug Hicks, San Diego lead representative for the Southwest Regional Council of Carpenters; and Javier Santizo, a victim of tax fraud and wage theft.
First to address the crowd, Hicks referred to corrupt contractors as a criminal enterprise, and spoke to the misclassification of workers as independent contractors and cash pay, which gives contractors an unfair competitive edge at bid time. “Let’s make no mistake, this is intentional criminal activity in our industry,” said Hicks.
Supervisor Fletcher affirmed his commitment to stand alongside the working class of San Diego with a resolved enforcement of the law. “If someone steals from their employer, you know the full force of the law will be there to go after them. And it should be no different if an employer steals from their employee,” said Fletcher. “Corrupt business practices by contractors hurt the workers, rob our communities, and ultimately increase the cost of everything we do.”
In March, Fletcher’s office introduced and passed a new subcontractor transparency measure that requires subcontractors working on construction projects to disclose more information about their employees. In addition, Fletcher announced that next month he will introduce a policy to create the county’s first Office of Labor Standards and Enforcement.
Speaking directly to the employers and contractors who do the right thing everyday, Fletcher had this to say: “Thank you, and the days of being put at a competitive disadvantage by following the law, those days are going to come to an end in San Diego.”
District Attorney Stephan then shared her experience that fraudsters and criminals commit crimes and cheat in multiple ways at the same time, including not paying tax payroll, hiding employees, and not paying for insurance. This makes it easier for them to commit wage theft because their employees are invisible.
“It is organized, and it is done purposefully to line the pockets of those cheaters and fraudsters at the expense of working families and honest businesses, honest contractors that are trying to pay fair wages,” said Stephan.
To strengthen their ability to prosecute tax fraud and wage theft, and to ensure better accountability, Stephan’s team launched a workplace justice unit, which created a website for citizens to directly connect with the district attorney’s office. As of today, the new justice unit already has eleven reports that they are investigating.
Local contractor leader Albert Carrillo then shined a light on how industry tax fraud steals income from local tax-paying businesses and their employees. By evading local, state, and federal taxes, fraud-practicing contractors have less cost coming out their pockets, which enables them to underbid tax-paying competitors by thirty to forty percent.
Finally, construction employee Javier Santizo shared his experiences, giving voice to the countless workers who are victims of tax fraud and wage theft. He spoke about how he and his father couldn’t afford their own housing while working on construction projects, as they had to send all of their earnings back home so that their family could pay rent and bills. “I would work sixteen hours a day, and I wasn’t paid my overtime until I took them to court,” said Santizo. “But there’s many workers out there that don’t have that same luxury of speaking up. They are afraid of telling their experience at work.”
The conversation will continue with a roundtable on Friday at 12 p.m. PST, which will be streamed online for the public to attend. Bringing together city government leaders, members of the business community, and labor representatives, the discussion will dive deeper into how corruption in the construction industry severely impacts and economically weakens San Diego’s communities, tax-paying businesses, and thousands of hard-working laborers.
Industry tax evasion robs the local, state, and federal governments out of billions in tax revenues, which otherwise would pay for updating schools, modernizing infrastructure, caring for the veteran and homeless populations, and public safety. “But instead it is going to pad the profit line of criminal contractors,” said Hicks. And no construction job site is immune: $7.6 billion in federal taxes are lost each year, including $302 million in California alone. State and local taxes suffer significant losses as well, contributing to budget shortfalls.
Hicks closed the press conference by emphasizing that tax fraud knows no borders, and calling for justice for workers and honest contractors. “The exploitation of workers through tax fraud and our community is going to stop.”
The people of San Diego can learn how to help protect tax-paying contractors and their employees, as well as how they can support fair competition, by attending the online roundtable. They can also share the event on social media and…
The SWRCC represents more than 57,000 members in Southern California, Nevada, Arizona, Utah, New Mexico, and Colorado. Its mission is to work with developers and elected leaders to raise the standard of building and living for all workers. San Diego was chosen to kickoff Tax Fraud Days of Action because it is a leading market for construction in the Southwest. On Saturday they will hold a morning rally for union members.
The Tax Fraud Days of Action Roundtable
WHEN: Friday, April 16 at Noon PST
More information on Tax Fraud Days of Action: Website
Southwest Regional Council of Carpenters: Website