A workers' compensation fraud case involving a Long Island cleaning service is one of the latest to be referred to New York State's joint enforcement task force on worker misclassification. The multi-agency task force was formed by then-Gov. Eliot Spitzer in September 2007 to address the problem of employers paying their workers off the books and other payroll schemes.
The charges against Icon Cleaning include allegations of payroll improprieties with approximately 170 cleaners -- deemed "technicians" by the company -- who spent up to 12 hours a day and 60 hours a week cleaning air ducts and carpets in homes and businesses. The case was referred to the task force because of its scope and egregiousness.
Investigators found that each employee was forced to pay a $500 security deposit upon being hired, which could either be paid for up front or illegally deducted from subsequent paychecks. Other illegalities included taking money from workers' paychecks when customers were not satisfied or the employee needed help from other employees to handle a job, and to make up the losses on discounted services in promotional campaigns. After the unlawful deductions, some workers were bringing home less than $100 a week.
Icon Cleaning also claimed that workers were "independent contractors," even though they wore the company uniform, took direction from company management, and used equipment and materials supplied to them by the company.
Illegal deductions were taken from wages on a regular basis, totaling almost $240,000. In November, the Department of Labor issued an Order to Comply for $363,376 to "Richard Bag and Tbag Enterprises LLC" T/A Icon Cleaning. The order also included $65,149 in interest, along with a civil penalty of $59,645.
Collection may be a problem. According to Department of Labor Spokesman Joe Morrissey, there is a question of whether or not Icon is still in business. "We're in the process of getting the employer to do right by its workers right now, and that's our number one priority," he said. "We're pursuing not only the corporate entity, but also the individual who owns the company in an attempt to rectify the situation."
When Spitzer announced the task force in 2007, he said reports showed that misclassification by employers hoping to avoid taxes and other legal obligations such as workers' compensation coverage and overtime pay resulted in more than $19 million in unreported wages, $3 million in underpayments owed to workers, and more than $1.2 million in taxes and penalties owed to the Unemployment Insurance Trust Fund.
Serving on the task force are representatives from the Department of Labor; the Department of Taxation and Finance; the New York City Comptroller's Office; the Office of the Attorney General; the Workers' Compensation Board; and the Workers' Compensation Fraud Inspector General. The creation of the task force enables these agencies to share data and to coordinate enforcement efforts aimed at eliminating employee misclassification. Task force "sweeps" have often involved dozens of inspectors from several agencies investigating the same employer or worksite.
The task force will issue a report to the governor in February. All indications are that there will be favorable numbers to report.
"We have conducted 31 joint enforcement sweeps throughout the state and have expanded our sweeps from construction and restaurant industries to include many other retail and commercial businesses," Morrissey said. "We have done a great deal of work on data sharing among the task force members as well as with other state agencies, and have adopted a number of data sharing techniques that result in the automatic referral of cases and information between the agencies. We have also taken enforcement actions against several multi-state employers."
"Cleaning up" across the nation, as it were.
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