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Utah construction companies fined, ordered to pay back wages after 5-year investigation

A five-year investigation into several Utah and Arizona construction companies resulted in repaid back wages and damages for more than 1,000 workers in the two states, according to the U.S. Department of Labor.
A five-year investigation into several Utah and Arizona construction companies resulted in repaid back wages and damages for more than 1,000 workers in the two states, according to the U.S. Department of Labor.
Andreas Karelias, Getty Images/iStockphoto

SALT LAKE CITY — A five-year investigation into several Utah and Arizona construction companies resulted in repaid back wages and damages for more than 1,000 workers in the two states, according to the U.S. Department of Labor.

CSG Workforce Partners, Universal Contracting, and Arizona CLA — all Utah companies — were among the major businesses listed as defendants in the lawsuit. These and other, smaller entities attempted to avoid payroll taxes by requiring workers to become reclassified members or owners of limited liability companies, according to rulings made by federal courts in Arizona and Utah.

"These construction workers were building houses in Utah and Arizona as employees one day and then the next day were performing the same work on the same job sites for the same companies but without the protection of federal and state wage and safety laws," according to a news release from the Department of Labor. "The companies, in turn, avoided paying hundreds of thousands of dollars in payroll taxes."

The bulk of the investigation centered in southern Utah before a new state law giving increased protections to LLC members pushed the businesses to Arizona.

A Utah government agency known as the Worker Classification Coordinated Enforcement Council, designed to protect employees from being misclassified, assisted in the investigation by providing information to the U.S. Attorney's Office in Utah and the U.S. Department of Labor.

The federal judgment handed down Tuesday ordered the defendant businesses to pay back about $600,000 in back wages and liquidated assets to employees, and it also levied a $100,000 civil fine.

The ruling warned the companies to comply with minimum wage, overtime and other labor law requirements, and classify all future workers as employees. The businesses were additionally ordered to cooperate with the Department of Labor to identify and pay workers who were wronged.

“We will combat schemes like (the one prosecuted in Utah and Arizona) with every enforcement tool we have, including partnering with other federal and state agencies to ensure that workers are not misclassified as owners or members of LLCs or otherwise," U.S. Secretary of Labor Thomas E. Perez said in a prepared statement Thursday. "Deceptions like these deny workers hard-earned wages, hurt families who depend most on those wages, and leave workers without important protections if they’re injured on the job or laid off.”

Individuals who believe they are owed back wages by the violating companies are asked to call the Wage and Hour Division in Utah at 801-524-5706 or in Arizona at 602-514-7100.

Email: blockhart@deseretnews.com

Twitter: benlockhartnews