Construction-industry tax fraud harms workers, their families, contractors who play by the rules, and entire communities, which lose tax revenue needed to build schools, repair roads and bridges, fund police and fire departments, and more. Communities and families lose more than $8.4 billion a year to construction industry tax fraud, according to a national study by the Institute for Construction Economic Research.

As part of our 2021 Tax Fraud Days of Action campaign, the SSMRC reached out to exploited workers to let them know about their rights and where they could turn for help. We did this through geofence campaigns at six sites across the Southern District where our regional directors suspect workers are being misclassified as independent contractors or think fraud related to the H-2B, L-1B, or visa-waiver programs might be occurring.

We also contacted the media and attorneys general about the fraud happening in their communities and asked for their help in educating the public, strengthening employment laws, and enforcing existing laws. Read our press release to media outlets in Georgia, where the recent ending of a fraud scheme led to more than 32,000 man-hours of work for union millwrights (more on that below). We contacted 173 reporters and media outlets in 15 metro areas and attorneys general in all 11 states the UBC Southern District covers.

The SSMRC's Tax Fraud Days of Action campaign was part of a larger effort by our parent organization, the United Brotherhood of Carpenters and Joiners of America. Here is a UBC-wide recap of the 2021 Construction Industry Tax Fraud Days of Action:

The cheaters in the construction industry were not stopped by COVID-19, and it didn’t keep UBC affiliates from fighting back. UBC regional councils in the United States and Canada held more than 100 events in the 2021 Construction Industry Tax Fraud Days of Action. Events ranged from bannering, media trucks and rallies to webinars, meetings with policy makers, jobsite visits, and press conferences. All events were held in accordance with COVID-19 safety requirements.

The press paid attention. There were more than one hundred articles and television and radio broadcasts. The UBC and councils’ Twitter, Facebook, and Instagram accounts were buzzing as well. Thousands of members participated and were joined by mayors, council members, members of Congress, county supervisors, district attorneys, state attorneys general, governors, community activists, state lawmakers, members of parliament, provincial members of parliament and government ministers.

A recent case involved the SK Innovation battery plant in Commerce, Georgia. Georgia gave SK one of the biggest incentive packages in state history, including $300 million in grants, tax breaks, and free land.

In May of 2020, U.S. Customs and Border Protection intercepted 33 workers at Atlanta’s Hartsfield International Airport. The workers were attempting to enter the country under the Visa Waiver Program using employment letters CBP determined to be fraudulent. CBP revoked an additional 43 Electronic System for Travel Authorization (ESTA) applications linked to the fraud scheme. ESTA is an automated system that determines travelers’ eligibility to enter the United States under the Visa Waiver Program. According to CBP, the first group of 12 workers en route to the SK plant revealed that they were to be paid $6,000-$7,000 for two to three months of work, triggering fears that they would undercut U.S wages when many tradespeople were out of work or underemployed. Typically, non-immigrant-worker visa programs require employers to pay foreign workers the same wages they would pay American workers performing the same jobs.

In September, federal authorities arrested 13 Koreans employed at SK Innovation, and the workers voluntarily left the United States. Read the CBP news release and articles from Global Atlanta and the Atlanta Journal-Constitution. After these incidents, a contractor partner of the Southern States Millwright Regional Council obtained work at the plant, leading to more than 32,000 man-hours of work for union millwrights.

Schemes similar to the one at SK Innovation have involved contractors employing foreign workforces – by misusing the ESTA and B1 visitor visas – to build sections of U.S. auto plants in the South, as documented by CBS News.

Numerous cases of construction-industry tax fraud, wage theft, worker exploitation, and violation of temporary-foreign-worker programs have been in the news in just the past two months. Here is a sampling:

In January 2021, the U.S. Department of Labor published a final rule affecting employers seeking to employ foreign workers through certain immigrant and non-immigrant visas. On May 13, the department announced an 18-month delay to the rule. The DOL stated the delay will provide the department with sufficient time to review the public comments received in response to a Request for Information published on April 2, 2021. The RFI seeks information about potential sources and methods for determining prevailing wage levels.

Secretary of Labor Marty Walsh and Department of Transportation Deputy Secretary Polly Trottenberg joined the National League of Cities and mayors from across the country on April 19 for a virtual discussion on how the American Jobs Plan would support local economies by investing in workforce development and training programs.

View a recording of the discussion here. Read about the American Jobs Plan here.

The plan would:

The Tennessee Legislature has agreed to a ballot initiative to amend the state's constitution by adding a “right-to-work” clause. Tennessee is already a “right-to-work” state, but legislators want to make it as difficult as possible to repeal the law by enshrining it in the state constitution. The vote will be in November 2022. Learn more.