U.S. Hits Builders With Pay Probe

[alp227]

Source: The Wall Street Journal

The Labor Department is investigating pay practices at many of the top companies in home building, hitting them with a broad demand for records that has led to complaints of regulatory overreach.

Recipients of the letters include PulteGroup Inc.,Lennar Corp., D.R. Horton Inc. and KB Home, according to people familiar with the matter. A Labor Department spokeswoman confirmed the investigation but declined to discuss details.

A copy of one letter, dated Aug. 1 and reviewed by The Wall Street Journal, said the department was opening a probe under the Fair Labor Standards Act, which governs matters such as overtime pay and limits on using teen workers.

The letter instructed the home builder to immediately turn over the names, addresses, Social Security numbers, pay rates and hours worked for all employees over the past two years. It asked the names of all contractors hired in the past year. The letter didn't allege any specific violations of law.

Read more: http://online.wsj.com/article/SB10001424053111904103404576556991282742996.html

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[boppers]

1. "Okay, who are your employees, and who are the contractors"

Looks like they're starting to dig through the shell game, where almost everybody evades taxes and labor law by claiming they don't have "employees", they only have "contractors".... meanwhile, at the bottom of the rungs, roofers/framers/drywallers (etc.) get paid so poorly that they have minimal (if any) tax liability.

[JoeyT]

3. +1

This will definitely be a big win for Obama, even or especially in red areas. Pretty much everyone but the big boys that are running the scams have been fucked over by these companies. Often the bottom rungs don't get paid poorly, they don't get paid at all, and that's after being required to purchase all the materials, do all the labor, supply the transport, get and pay for their own liability insurance, and pay for any and all costs associated with building/remodeling.

This will be an easy one for us to defend to our right wing friends and family, too. "You know that asshole that hired you and didn't pay you anything after you spent six grand on the job? That's who this targets."

[JDPriestly]

5. This is the game in trucking too, I believe. At least it used to be.

The driver theoretically "owns" the truck, meaning the company shifts all the costs to the drive and takes the profits for itself. And of course, the company can pick and choose the nature of its legal form so as to minimize taxes.

We need to revisit the way different kinds of business entities are taxed and all the ways built into the tax code through which they avoid paying their taxes.

[nineteen50]

2. this should be done with the banks.

[boppers]

4. Banks play a different game.

They don't hide wages in the same way, "tellers" would show a reasonable-ish wage, as compared to the lowest rungs of home-building labor. Where banks (and most larger corporate entities) hide lots of income is in "non-income" awards to employees.

Here's how it works (I don't have tax tables with me, so I'll ballpark and simplify):
Pay the CEO $100,000 a year in taxable wages, and $2,000,000 in stock. The $100,000 is taxable, the $2,000,000 is not (The CEO has to cash out the stock to be taxed on it). So, say this goes on for ten years. Over those ten years, the CEO made $1,000,000 in wages, and $20,000,000 in stock. The wages are taxed at about 30%, the stock? Only 15%.

This incredibly fucking stoopid loophole is why people complain about "capital gains tax". The people who bought stocks "after tax" are annoyed that they are being taxed, again, on their gamble/investment, without realizing that huge amounts of money were *never* taxed, because it was given away for free.

[RantinRavin]

10. I do not believe that is correct

http://fairmark.com/execcomp/grants.htm

[dipsydoodle]

6. Its was an even bigger issue in the UK

due to National Insurance payments aside from tax. Its illegal for employers to use contractors in the absense of special certificates. This was set up years ago.

[dixiegrrrrl]

7. Does anyone really believe the DOJ is looking for crimes from businesses?

C'mon...DOJ for at least the last 12 years, up till today, has been actively working to NOT go after businesses and corporations and banks and etc.
The only reason I can think of that they would do so is for political reasons or tax reasons ( money raising).
And do notice it is WSJ that is bringing us this news.

[boppers]

8. Enron, Maddoff, Meat packing, Microsoft anti-trust, Lindsey Manufacturing etc...

It's just not in the news as much as Snookie or the latest "American Idol".

[No Elephants]

9. Bernie Madoff? One man alone tipped off the SEC three times, drawing them pictures, practically,

of exactly what Madoff was doing and how he was doing it.

Not sure why they did listen to the Enron whistleblowers. Wonder how many jail sentences actually resulted from that investigation. One? Two? The fraud was widespread, including the independent accountants.

Microsoft suffered a lot from the investigations, did it? People went to jail?

How about the massive frauds throughout the entire mortgage and mortgage derivative industries that brought down our economies and other economies around the world?

Edit for two typos, because some folks act as though they believe typos really matter. (If I missed some others, too bad.)

[dixiegrrrrl]

11. Enron was in 2001

Only AFTER Enron collapsed,was there any investigation into years of fraud.
The Feds formed a Task Force in 2001.
Head of Enron, a close Bush associate, was convicted 3 years later and died before sentencing in 2006.

Madoff was arrested only after he confessed, but the bankers involved were never charged.
"J.P. Morgan Chase & Co. may have also benefited from the scheme – through interest and fees charged – to the tune of a billion dollars."
http://en.wikipedia.org/wiki/Bernard_Madoff

Microsoft anti-trust suit was in 1998. Different DOJ era.(Clinton was Pres.)

Lindsey Manufacturing Company is still in the courts, being appealed on prosecutorial misconduct by the DOJ.

Madoff, Enron, Micorsoft was very much in the news, a lot, in their time.

Also in the news were DOJ's prosecutorial misconduct charges which led to dropping charges against
Alaska's Ted Stevens
and I remember the same issue when Federal charges against GE were dismissed because DOJ
( then under Bush) screwed up the case so badly the judge threw it out, saving GE millions of dollars in fines.

DOJ charged Blackwater for killing people in Iraq,in 2007. In 2010 the charges were dismissed because of
prosecutorial misconduct.
worth noting is the last sentence of the aritcle:
"The black eye to the DOJ comes of course after AG Eric Holder earlier this year tossed the conviction of former Alaska Sen. Ted Stevens due and a federal judge recently threw out a stock-options case against top executives at Broadcom, both over allegations of prosecutorial misconduct."
http://blogs.wsj.com/law/2010/01/03/another-doj-blow-charges-dismissed-against-blackwater-employees/

Any Google of "DOJ case dismissed" will show dozens of incidences of the same.

[boppers]

12. Here's a 2007 (* Era, even) press release:

http://www.justice.gov/opa/pr/2007/July/07_odag_507.html

"Chaired by Deputy Attorney General Paul J. McNulty, the Task Force includes senior Department of Justice officials, seven U.S. Attorneys, the heads of the Departments of Treasury and Labor, and the heads of the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Energy Regulatory Commission, Federal Communications Commission, United States Postal Inspection Service, and the Department of Housing and Urban Development's Office of Federal Housing Enterprise Oversight. In the last five years, the task force has yielded remarkable results with 1,236 total corporate fraud convictions to date, including:

214 chief executive officers and presidents;
53 chief financial officers;
23 corporate counsels or attorneys; and
129 vice presidents.

Additionally, the Justice Department’s Asset Forfeiture and Money Laundering Section has obtained more than one billion dollars in fraud-related forfeitures and has distributed that money to the victims of corporate fraud."

http://www.google.com/search?q=DOJ+corporate+conviction gets me 4,710,000 hits. Oh, and Enron was in 2001, which is in the proposed 12 year threshold ("DOJ for at least the last 12 years, up till today, has been actively working to NOT go after businesses and corporations and banks and etc."), and Microsoft and the DOJ settled in 2001, which is why it came to mind.