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‘Coyotes’ on the Loose at Utah Construction Sites May Be Trouble for Contractors

Following a local television station’s report of labor brokers paying cash to construction laborers to avoid paying taxes for these workers, a Utah state legislator said she plans to introduce legislation in 2020 to increase fines and make subcontractors liable for the acts of these labor brokers. 

A Salt Lake City television station investigated and reported on the use of labor brokers, colloquially known as “coyotes,” who pay cash under the table, or off the record, to construction laborers. One legislator called the practice a robbery of tax dollars. Indeed, the report highlights that such employers pay their construction laborers cash to avoid paying workers’ compensation, unemployment insurance, and federal and state taxes. Union representatives quoted in the story also decried the practice because of the inability of employers who use union workers and abide by the law to compete under such circumstances.

Several contractors who worked with the suspected coyotes interviewed during the investigation said they did not have an obligation to audit the pay practices of another company with whom they worked and denied any reason to believe illegal activity was taking place.

Yet, these construction employers may be playing with fire. Depending on the circumstances, contractors can be held responsible for the actions of their subcontractors. For example, some states, such as California, hold general contractors liable for a subcontractor’s unpaid wages. Thus, general contractors should beware of possible illegal employment practices by other employers on the construction site. If a bid from a subcontractor appears too good to be true, then it probably is. A subcontractor paying employees in cash out of a large envelope should also raise concerns.

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Jackson Lewis P.C. © 2020National Law Review, Volume IX, Number 361
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About this Author

Courtney Malveaux, OSHA Lawyer, Employment, Richmond, Virginia, Jackson Lewis Law Firm
Principal

Courtney Malveaux is a Principal in the Richmond, Virginia, office of Jackson Lewis P.C.

Mr. Malveaux represents employers cited by the Occupational Safety and Health Administration and other regulatory agencies. He also advises and represents employers in employment law matters, including retaliation claims, employment discrimination, unemployment benefits and wage claims. Mr. Malveaux also represents business associations in state and federal legislative and regulatory matters.

Mr. Malveaux represents industry on the Virginia Safety and...

804-212-2862
Richard F. Vitarelli Principal Jackson Lewis
Principal

Richard F. Vitarelli is a Principal in the Hartford, Connecticut, office of Jackson Lewis P.C. Part of the firm’s national labor practice, he has over two decades of experience representing employers nationally in strategic labor relations, collective bargaining, and union organizing, including in the context of mergers and acquisitions, corporate restructuring and contract administration. He serves as general labor and employment counsel for employers and multi-employer associations in various industries, including construction, manufacturing, health care and senior living,...

860-522-0404
M. Christopher Moon, Employment, Management attorney, Jackson Lewis Law firm
Associate

M. Christopher Moon is an Associate in the Salt Lake City, Utah, office of Jackson Lewis P.C. He represents management in all areas of employment law, including defending employers against discrimination and retaliation claims in state and federal court.

Mr. Moon’s practice also involves traditional labor law. He has experience handling unfair labor practice charges and labor arbitrations.

During law school, Mr. Moon was an Articles Editor of the New York University Journal of Law & Libertyand Editor in...

385-282-5209
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