(2) Holding Developers and General Contractors Responsible for What Happens on Their Job-sites

There is little opportunity under current law and practice to hold the developer and general contractor responsible for the actions of their subcontractors and the labor brokers on their jobs. The current system allows them to absolve themselves from responsibility for what happens to workers on their job-sites. Under current law, it is challenging to obtain owner liability for wages. For example, despite the egregious wage theft the on the Amherst project, Beacon Communities continues their work, moving on to other developments, carrying along their claimed progressive values of providing low-cost housing.

And it’s not as if Beacon remained unaware of the illegal misclassification and wage theft on the Amherst project. Goldstein, on behalf of the Carpenters Union, had been in touch several times with Howard Cohen, Chairman of the Board of Beacon Communities. In these exchanges, Beacon was advised that there were workers on the Amherst job who had not been paid for the work they performed over many hours a week for a number of weeks. “I’ve been having this rather interesting email exchange with Howard Cohen of Beacon—urging him to rectify the matter,” Goldstein acknowledged. “Beacon professed that it was not sure what it could do despite hearing that it could (1) pay the owed wages for workers on their site and (2) develop a requirement of accountability for the contractor and subs on future sites.”¹⁶¹ Goldstein suggested to Cohen that based on Beacon’s professed mission and alleged adherence to doing it right, Beacon should have ensured that the owed wages were paid.

Finally, in April of 2021, nearly two years after the wage theft occurred, Beacon agreed to pay only the unpaid wages ordered by the Attorney General, but not the full back wages claimed by workers. Aside from the long lag between violation and payment, it took the release of a preliminary version of this report, press coverage and repeated overtures of NASRCC, both direct and indirect, for this payment to be made. While the workers appreciated receiving what is rightfully owed them, it shouldn’t take all of these efforts to shame a developer to get involved and make even partial payment of owed wages.

In addition to not being legally responsible for the payment of workers’ wages, under the current system, developers, general contractors and even subcontractors are also not held responsible for the lost tax revenue, workers’ compensation insurance premiums or unemployment insurance contributions, all of which are mandated. In this way, Massachusetts taxpayers are providing massive subsidies to these developers and contractors, increasing their profitability at taxpayer expense.

There will be no serious inroads at stemming wage theft and the illegal misclassification of workers until developers and contractors are held responsible for what happens on their job-sites. In addition to statutory reform, one suggestion made of a simple mechanism to improve focus on job “oversight” would be to tie the issuance and the continuance of the building permit to compliance with wage and safety laws. As one large contactor told us:

So if someone is on a jobsite and the jobsite has a building permit or any type of agency permit pulled, it should behoove the person who’s the permit holder to sign a sworn affidavit that the contractors (people) that will be working on the property will be in compliance with all federal and state laws…there should be compliance requirements so that the owner makes sure he hires contractors that are reputable, that pay state and federal wages, or it’ll go back to them, that they should have to pay the back wages. ¹⁶²

He continues, “It all goes back to—it’s a privilege to be able to build a building in your city or town. It’s a privilege for the town to give you a building permit.” He makes an analogy. “It’s a privilege to have a driver’s license. If you drive against the laws and you become a habitual traffic offender, they will pull your license. You will not be able to drive.” He suggests that the same principle be applied in construction. “If you do wrong, we (the government agency) will come and find restitution [from] anybody that has any money, that didn’t pay attention to the laws.”¹⁶³

David Weil has written extensively about both joint liability and successorship as part of his model of strategic enforcement he pioneered while in the Wage and Hour Division in the Department of Labor in the Obama administration.¹⁶⁴ As part of his larger thinking about supply chains in the fissured economy in the 21st century, he notes that we cannot hold on to 20th century conceptions of developers, general contractors and subcontractors as disconnected entities; instead, we must recognize their joint liability. Joint liability will shift enforcement efforts from low-level operators with few resources and fleeting legal existence to more established firms with resources and reputations to protect. These established firms are far more vulnerable to legal sanction and corrective actions.

The Massachusetts Legislature has considered bills to address this matter in prior legislative sessions but none became law. Currently, there are bills pending in both the House and Senate to once again try to resolve this persistent problem. H. 1959 sponsored by Representative Daniel Donahue and others¹⁶⁵ and S.1179 sponsored by Senator Sal DiDomenico and others,¹⁶⁶ propose legislation to prevent wage theft, promote employer accountability, and enhance public enforcement.

In the absence of state-level legislation, several Massachusetts communities have not waited for remedies at the state level but have instituted municipal wage theft ordinances. J.T Scott was one of the councilors deeply involved in passing a wage theft ordinance in Somerville. Along with Mary Jo Rosetti, Jesse Clingan and a number of other progressive city council members, they pulled together a broad coalition of community groups and activists as well as Greater Boston Legal Services and attorneys from NASRCC and other unions to help frame a new wage theft ordinance.

One of the innovations of the Somerville ordinance is its reliance on an ongoing advisory committee. “I think the solution that is proposed in this ordinance that we are attempting [is that] it puts power back into the worker organization’s hands. By creating this wage theft advisory committee that is staffed by people from these different community organizations like the Brazilian Worker Center… There are going to be people who both connect to, relate to and are very close to all these different types of wage theft that can and do happen and also gives a body the reporting center.”¹⁶⁷

Janice Fine has written extensively about using civil society organization to enforce labor standards, reviewing successful examples in Austin, Los Angeles and San Francisco. She suggests that “Co-enforcement, in which government partners with organizations that have industry expertise and relationships with vulnerable workers, has the potential to manage the shifting and decentralized structures of twenty-first-century production, which were explicitly designed to evade twentieth-century laws and enforcement capabilities.”¹⁶⁸ This is exactly the model codified in the Somerville ordinance and one that hold promise for larger efforts at the state level.

The ordinance in Somerville had an immediate impact. As one Carpenters union official told us:

So, we met with a developer that we have a decent relationship with …So Metro Walls was the low bidder on the non-union side. On the union side, Universal was the low bidder, and he was $1.3 million higher than Metro Walls. When Metro Walls got wind of the ordinance in Somerville and knew that it was going to be potentially under a microscope, his price went up almost $800,000. So now this developer [is] saying, ‘okay, fine. Now the difference is $500,000, as opposed to $1.2 or $1.3. Now it’s manageable. I can go to my board and say, you know what, the skill and level of professionalism and no bullshit, not getting dragged through the mud for doing this or doing that, you know what, I recommend that we come up with the extra $500,000.’

Mandi Jo Hanneke, Cathy Shoen, Patricia C. DeAngelis are town councilors who worked to craft a wage theft ordinance in Amherst, MA. They worked closely with Lisa Clausen from NASRCC who had recently been involved in the campaigns in Springfield, Northampton, and Easthampton. They had been working on this ordinance; as word spread about the wage theft at North Square, their efforts intensified. Like the councilors in Somerville, they worked hard with a number of community partners to craft the language of the ordinance. They also came to recognize that the developers often drove the development process, coming in with boilerplate contracts that only served their own interests. As Shoen describes, it was not enough to just to have general language about wage theft, but to build it into the (municipal) contracts with developers. “If we make as a condition both of initial bidding and then if an award is made, the contract language will have an agreement to abide by the laws, then we have the tool, a penalty… get it written into the contractual agreement to the project… So, it’s not just ‘thou shalt not’ in a bylaw.”¹⁶⁹

These innovations in Somerville and Amherst provide important models that could be applied in other municipalities and state-wide.