The state has recovered more than $21 million over an 18-month period by rooting out employer fraud in the so-called underground economy — an amount that is more than the state recovered in the three previous years combined, officials said.
"These efforts are a reflection of the state's capacity to encourage businesses to play by the rules," Secretary of Labor and Workforce Development Joanne F. Goldstein said.
The $21 million in wage restitution, state taxes, unemployment contributions from employers, fines and penalties was recovered from July 2011 to December 2012 by the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification. The task force, which was created in 2008 by Gov. Deval Patrick, focuses on employers in the underground economy who have multiple workers they are misclassifying in order to avoid responsibilities related to wages, payroll taxes, insurance, licensing and safety, Goldstein said. The employees often are mischaracterized as independent contracters, or are paid in cash.
After receiving a tip in the fall of 2011, for example, the joint task force launched an investigation into the Marriott Copley Place renovation project and ultimately uncovered $1.17 million in unreported wages by subcontractors.
"People who operate off the books cheat taxpayers because they're not making state or federal contributions," said Mark Erlich, executive secretary-treasurer of the New England Regional Council of Carpenters. "They also cheat legitimate employers who can't compete with them and workers who don't get unemployment when they're laid off or workers' compensation when they get injured."
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