Posts Tagged ‘North Carolina’

North Carolina’s “ghost workers” allow scofflaws to thrive while by-the-book employers suffer

Tuesday, August 28th, 2012

What happens to honest businesses when unscrupulous competitive businesses fail to carry workers’ compensation insurance for their employees? In the difficult economy, some of the honest players have suffered losses while scofflaws thrive. North Carolina’s NewsObserver features an investigative series on Ghost Workers, which takes an in-depth look at the many ramifications of workers’ comp avoidance schemes and the ways that this type of fraud hurts other businesses, the state’s coffers, and any workers who are injured on the job.

State legislators and candidates in the upcoming state elections are competing to raise the outrage meter in the wake of the NewsObserver‘s revelations that as many as 30,000 employers are failing to carry workers’ compensation insurance. Many of these employers are misclassifying workers as independent contractors, so they are also thumbing their noses at other statutory obligations such as taxes, Social Security, unemployment tax, and overtime pay.
Unsurprisingly to those who have followed the misclassification trail in other states, the construction industry offers a fertile climate for fraud to thrive. The NewsObserver explains how a unique bureaucratic loophole in the state can be worked to game the system:

“A business owner, often in the construction industry, tells his insurance agent that he has no employees. He excludes himself from the policy, which is his right as a sole proprietor. He buys a policy to cover a “ghost,” an unknown employee who might unexpectedly join him to work during the year.

These policies can make a business look like it has more insurance coverage for its workers than it has.”

Tax dodging employers can hide under layers of subcontractors, as well as by hiring illegal immigrants. And state agencies that operate in silos are not coordinating to thwart this practice.
Not all the employers are small operations – the expose talks about a firm named Martin’s Bricklaying, which supplied 76,000 hours of labor to help build the $125 million Wake County Detention Center, earning $1,066,538 for this work.

“The company’s owner, Sabas Martin Galeana, has run afoul of state and federal tax obligations in years past, court records show; he settled the last of three liens in 2009. A review of several employees’ recent pay stubs shows that Martin has failed to withhold state and federal taxes as recently as July. The workers say he didn’t provide his workers the tax forms they needed to settle their own obligations.”

The practice of employee misclassification isn’t unique and it’s hardly surprising. But what is surprising is that North Carolina is so slow off the mark when other states and the federal government have been taking aggressive steps to curb misclassification and to penalize scofflaws. We’ve been covering stories of states getting tough on misclassification and workers comp avoidance since 2004. We wonder how the heads of various agencies in North Carolina never noticed. The state has faced serious budget cuts to valued services in recent years, all the while bleeding much needed tax revenue to lawbreakers. Kudos to the NewsObserver for their series.
North Carolina legislators will be working to plug this hole – particularly since it’s an election year. They may also want to sign on to federal efforts such as the
Deparment of Labor’s Misclassification Initiative. Thirteen states have signed Memorandum of Understanding (MOUs) with the Department of Labor’s Wage and Hour Division, and in some cases, with its Employee Benefits Security Administration (EBSA), Occupational Safety and Health Administration (OSHA), Office of Federal Contract Compliance Programs (OFCCP), and the Office of the Solicitor. The DOL says that these MOUs, “will enable the Department to share information and to coordinate enforcement efforts with participating states in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. Employers that misclassify their employees may not be paying the proper overtime compensation, FICA and Unemployment Insurances taxes, or workers’ compensation premiums.”

Health Wonk Review, Worker Memorial Day, OK, Obesity, Appendectomies & more

Thursday, April 26th, 2012

Health Wonk Review – Jennifer Salopek and Sarah Sonies have posted Health Wonk Review: Shiny Happy (Mostly) Edition, an excellent hosting debut at Wing of Zock, a blog sponsored by the Association of American Medical Colleges for practitioners of academic medicine. Make sure you click through to learn the origins of the fanciful name of the blog.
April 28 is Worker Memorial Day – an event dedicated to remembering those who died on the job from workplace injuries and diseases. It’s also a time to commit to doing better, to renew efforts for safe workplaces. The National Council for Occupational Safety & Health has a list of Workers Memorial Day events throughout the country, as well as fact sheets and resources in both English and Spanish.
Oklahoma decides against “alternative workers comp” – Last week, the Oklahoma Senate gave the nod to a bill that would allow some employers to opt out of workers comp system by offering a comparable alternative, but the OK House rejected the opt-out measure. Last week, Senator Harry Coates had issued an editorial discussing the opposition viewpoint: Be careful what you ask for. See Dave DePaolo’s take on OK’s non-subscription model and the recent Walmart opt out in Texas.
Is it OK to discriminate against obese people? – In what may be a first among hospital hiring restrictions, Victoria Hospital in Texas has stated they won’t hire very obese workers. HR pro Suzanne Lucas (also known as “Evil HR Lady”) asks if it is okay to discriminate against obese people, offering 5 reasons why she feels it is a bad policy. In addition to potential illegality, another issue she raises is that many health professionals consider the BMI or Body Mass Index a faulty indicator of health. The first link quotes a physician as noting that “A professional football player might have a body mass index of 32, which is technically obese, but only have 7 percent body fat.” (Be sure to check out the Flickr gallery of real people and their BMIs that Lucas links.) Now whether or not this is the wrong “solution,” the fact that obesity is a workplace problem is not at issue. A new Cornell study says that obesity accounts for almost 21% of U.S. healthcare costs, and “An obese person incurs medical costs that are $2,741 higher (in 2005 dollars) than if they were not obese.”
Usual and customary? – How much will an appendectomy cost you in a California hospital? It might depend on your insurance coverage. In one hospital, the cheapest procedure was $7,504 and the highest cost in the same hospital was $171,696. See more in Merrill Goozner’s post on the Anatomy of A Walletectomy.
Jail time for scofflaws/ – Jon Gelman notes that North Carolina is raising the stakes for employers that don’t carry workers comp – “the first contempt hearing is scheduled for May 22 when 125 uninsured employers have been noticed to appear in court.” The state says pay up or go to jail.
Sex, workers comp & horseplay – Joe Paduda posts about compensable sex on the road, an Australia case where a worker was injured while in flagrante delicto. My colleague discussed this case previously in his post Compensable Sex, Down Under? We don’t get to talk about sex very often on this blog, although there was a spanking incident a number of years ago (sadly the link to the news item appears broken.) The spanking post dealt with an instance of horseplay – an issue that Cassandra Roberts poss about at LexisNexis in her post A Roll In the Hay: Delaware’s Horseplay Defense and Australia’s Sex Romp Case Revisited, where she lists an array of quirky cases in which the horseplay defense failed.
More Noteworthy News

Health Wonk Review – special health care reform issue

Thursday, June 11th, 2009

Joe Paduda has posted this week’s Health Wonk Review: Health Reform – what’s happening and why. It includes analysis and commentary from our usual participating policy experts – as well as guest commentary from Senator Byron Dorgan (D ND), chair of the Senate Democratic Policy Committee, who gives us his thoughts on the importance of reform and a window into the process.
Other news
Three workers were killed and more than 40 were injured in this week’s devastating explosion at the ConAgra meat plant in Garner, North Carolina. According to medical authorities, several of the workers are being treated for burns covering 40 percent to 50 percent of their bodies; other suffered exposure to toxic fumes from ammonia leaks. Teams from the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Chemical Safety Board and the Department of Labor have been dispatched to the site to begin investigations into the cause of the explosion. Via WRAL, survivors recount their experience. More on the explosion: The Pump Handle and Comp Time
NIOSH addresses health and safety issues related to green jobs, noting that “…for the product of work to be truly sustainable, the work itself must also be sustainable. It must protect not only the surrounding environment and its end-users, but also the workers who are producing it. Sustainability must include worker safety and green jobs must be safe jobs.”
National Underwriter reports on a potential federal regulatory plan for insurance, which may be unveiled next week. Related: In this month’s Risk Management, Lori Widmer asks if now is the time for the optional federal charter. For more background, see the Insurance Information Institute: Optional Federal Charter.

The human cost of bringing poultry to the table

Wednesday, November 26th, 2008

Last week, North Carolina’s Occupational Safety and Health division levied 49 citations and $178,000 in fines for workplace hazards on the House of Raeford Farms, one of nation’s largest poultry processors. This action was taken in response to serious, repeat safety violations, many involving hazardous chemicals that pose a threat to the safety of both the plant workers and the community. These violations are startling given the company’s past record:

“In 2003, House of Raeford worker Bruce Glover died after a leak sent chlorine gas seeping into the company’s Rose Hill plant. The next year, a major ammonia leak at that plant forced a large-scale evacuation and sent 17 workers to the hospital with respiratory problems and burning throats. N.C. OSHA cited the company for chemical violations after each of those accidents – and each time agreed to slash the proposed penalties.
After the 2004 ammonia leak, regulators found that the company didn’t do enough to prevent and detect such accidents and had not installed an alarm system to speed evacuations.”

After these incidents and before the most recent inspections, the House of Raeford had been fined $117,000 but was able to whittle those fines down to $26,500. Unfortunately, negotiating OSHA fines down has become common practice in recent years, a practice that does little to discourage irresponsible companies from engaging in repeat violations.
That the inspections and fines were levied at all is due in no small part to the investigative series that the Charlotte Observer ran on the poultry industry and their continued reporting on the issues of safety violations, child labor, and illegal immigrant exploitation in the poultry industry, beginning with the The Cruelest Cuts, an extensive 6 part series. The series focused on the difficult and unsafe conditions facing the the 28,000 poultry workers in the region – conditions that seem more in tune with the turn-of-the century slaughterhouses depicted in Upton Sinclair’s The Jungle than in our modern, high tech 21st century world. An editorial accompanying the series states:

“Our team of reporters and editors spent 22 months interviewing more than 200 poultry workers throughout the Southeast and analyzing industry documents. Their investigation soon led them to focus on one of the largest Carolinas-based poultry producers, House of Raeford. Its eight plants have been cited for more serious safety violations than all but two other poultry companies in recent years — and more than some companies several times their size.
Our journalists found evidence that House of Raeford has failed to report serious injuries, including broken bones and carpal tunnel syndrome. They discovered that plant officials often dismissed workers’ requests for medical care that would cost the company money.
They also found that House of Raeford has undergone a work force transformation. In the early 1990s, its workers were largely African Americans. Today, between 80 percent and 90 percent of workers at some of its plants are Latinos. Most have no legal standing in this country; most are poor.
They are our newest subclass.”

It’s difficult reading on the eve of the day when most of us prepare to enjoy a turkey feast tomorrow, but if not now, it’s worth a bookmark for reading at a later time. We commend the Charlotte Observer for their reporting. When corporate social responsibility fails and when public policy enforcers are weak, it’s important that someone take up the banner for worker and public safety.

News roundup: Cavalcade of Risk, comments, lunch breaks, and quick takes

Thursday, June 22nd, 2006

Risk roundup – The second issue of Cavalcade of Risk is posted over at It’s Just Money. LA Money Guy is the host, and he’s assembled an eclectic array of posts ranging from drug caps to hurricane insurance. Check it out!
Comments – Our apologies if you’ve ever left a comment that didn’t get published here. When emptying several thousand spams from our spam trap this past weekend, we were dismayed to find about a dozen legitimate comments from you, our readers, that had been automatically routed to the spam file. Part of the reason we re-designed the site a few months ago was to incorporate a better comment filter – we get hundreds of trash comments each week, some quite vile. We thought things were working out quite nicely, but realize now that it’s been a little more aggressive than we intended. Our sincere apologies – we look forward to and appreciate your comments! We rescued about a dozen comments and rightfully restored them to the posts where they belong. We made further adjustments to the filter and hope that will do it, but we’ll be checking more carefully going forward so that we don’t lose any of your comments.
Lunch breaks – Are your employees covered by workers compensation when they are out of the office on a lunch break? Yes, according to a new ruling by the Maine Supreme Court as reported by Mark Hoffman in Business Insurance. In this case, the employee slipped on icy steps as she entered the building. The insurer contested the case on the basis of the going and coming rule, which holds that employees aren’t usually covered on their routes to and from work. However, courts often award compensation to workers who are injured in company parking lots or other areas in or around the workplace. (See our prior post on Exception to the “going and coming” rule: operating premises.) In this case, there was an additional twist: the employer was renting the office, and part of the rental contract stipulated that the landlord would keep the walkways clear of ice. Regardless, the employee’s injury would still be compensable. If the employer or insurer would like to try to recoup the costs from the third party through subrogation, that’s another matter. (Read the full court decision: Robyn D. Fournier v. Aetna, Inc., et al.)
Meatpacking hellConfined Space brings our attention to a recent series by Bob Herbert in the New York Times reporting on the brutal and dangerous working conditions at Smithfield Packing Company in Tar Heel, North Carolina. Because these are subscription only articles, we’ll link to Jordan’s two posts: Where the workers come last and Walking Into The Pit Of Hell. (See also: Blood, Sweat, and Fear: Workers Rights in U.S. Meat and Poultry Plants). Now the workers are taking their case for safety and basic worker rights the public.
Medical blogs – If you enjoy learning about emerging medical technologies, then Medgadget is the blog for you. There’s always some fascinating matter to be found. And for another interesting blog by a medical professional, check out the always fresh Emergiblog, a blog we found when Kim, a nurse who runs the blog, left a comment in one of our posts. Today, she kicks off the first edition of Change of Shift, a nursing blog carnival.
Quick takes