It's 7:30 a.m. at 1020 Hull St., and well-dressed young marketing and brand professionals are making their way to Under Armour Headquarters. They walk past a 12-foot-tall inflated "fat cat" with one paw gripping a green moneybag and the other gripping the neck of an inflatable hard-hatted worker. The cat is anchored by two buckets of cement and the gas-powered pump that keeps it inflated, as four carpenters proffer fliers.
"Under Armour Prefers We Wear Sackcloth," the headline on the top of the flier says. On the bottom, in smaller print, it says, "This message is directed to the general public. . . We are not asking anyone to stop working or refuse to make deliveries." In the middle, the flier says, "Misclassifying workers as Independent Contractors is a practice which is illegal in MD."
The Metropolitan Regional Council of Carpenters has been here all week—except Thursday, when it rained. They've set up before at Under Armour, in August, about the same issue: large construction contractors subcontracting to shadowy labor brokers who pay their workers in cash, misclassifying them as "independent contractors."
The job inside is two floors of the sprawling complex, about 150,000 square feet, with as many as 50 tradespeople working. About 20 of them are carpenters, most of them Spanish-speaking and very few are from Baltimore City, the union guys say. The dry-wall workers make $16 an hour—not bad money in Baltimore, where tens of thousands are unemployed and many more earn $10 or even less. But the prevailing wage for carpenters in Baltimore City is about $26—excluding benefits.
Companies that bid for work knowing they're going to subcontract to someone who pays $16 straight can underbid companies that follow the rules. Those companies lose jobs, the state of Maryland loses tax revenue, and the workers lose pay and benefits they would otherwise get. Preventing this kind of cheating is the job of state agencies, including the attorney general, comptroller, insurance commissioner, and secretary of the Department of Labor, Licensing and Regulation. The question is whether they'll do it.
The general contractor here is Plano-Coudon LLC, and the carpentry was subcontracted to Avena Contracting, both established and respected companies. Avena subcontacted its work yet again. That way Avena—which did not respond to City Paper's requests for comment—insulates itself from any legal consequences.
"That's the same old system, they wash their hands of it, they say, 'hey we sub the work to this guy,'" says John Barber, an organizer with the Metropolitan Regional Council of Carpenters, the carpenters union.
"They claim that these employees don't work for Avena but they all have Avena vests on," says Clint Dougherty, one of the union organizers. "There's one white foreman and the rest are exploited immigrants."
The workers come from Rockville, Takoma Park, some from as far away as Virginia, says Conce Morales, another union organizer, who says he has spoken to many of them. There is a network of contractors and workers who operate outside the law, he says. City Paper was unable to reach the subcontractors that the union says is paying these 20 dry-wall workers. "They fill the jobs through connections, one worker knows another," says Morales.
The state had been cracking down on such sketchy work arrangements, which are illegal under a number of state laws, including the 2009 Workplace Fraud Act. Former Gov. Martin O'Malley assembled a multi-agency task force and facilitated information sharing to crack down on misclassified workers. The effort resulted in hundreds of investigations and millions of dollars of wage recoveries for workers, plus more than $1 million in additional tax collections for the state.
"They were just starting to learn how to do it," Dougherty says.
Data shows that 20 percent of employers misclassify employees as independent contractors, according to the 2014 annual report from Maryland's Joint Enforcement Taskforce on Workplace Fraud. The Maryland Department of Labor, Licensing and Regulation's (DLLR) workplace fraud unit opened 806 cases on its own and had 513 cases pending in 2014. It had collected $89,000 in misclassification of workers penalties and $35K in fines.
Other task-force agencies did more. The Division of Unemployment Insurance, for example, found $59 million in unreported taxable wages in 2009 just by doing targeted audits mandated by the Department of Justice. The amounts remained consistent through 2012 and then dropped precipitously, to $27 million by 2014.
There are no figures for 2015. But DLLR Secretary Kelly Schulz has the unions worried.
"Ever since she's come on we've noticed an absolute refusal to come and do even the basics of their job," Dougherty says. He says the union has called DLLR to report off-the-books employment in the past, prompting investigations. Now, he says, the state officials ask the union guys how they know—as if to suggest they'll be charged with trespassing for entering a job site. "They take the word of the contractor," he says. "They don't even come out."
Schulz, formerly a Republican state delegate from Frederick County, worked to weaken the Workplace Fraud Act in 2012. It says on her website: "She is always working to make Maryland a more business friendly state by reducing taxes and ending excessive regulations on small businesses."
Schulz was the lead sponsor of the 2012 law, which gave employers twice as much time to produce records and added exemptions for employers. As a result, more would be found in compliance with the law. It also required a legal finding of "knowing violation" before the state or municipalities could withhold money from a contractor, rather than just a simple improper misclassification.
Back at the Under Armour Headquarters, the union guys point to cranes on the horizon all around—at this jobsite, that one over there. Dougherty says that the misclassification of workers, the underpayment of taxes, benefits, overtime, and straight pay, is all but standard now. "All these subcontracts, they're just a way to sever liability," Dougherty says. "If I was the labor secretary, and I had an investigative team, I'd look into these projects."
The workers were supposed to come out about 8 a.m., but they don't. They don't come at 8:30. Their work schedules have changed, the union guys say. The foreman from Avena walks by and the union guys jeer him. He jeers back. The other tradespeople don't wish to discuss matters with a reporter. Avena doesn't return calls and emails.
The wind picks up. The union guys strain to keep the fat cat from encroaching on the road or blocking the sidewalk, which could get them in trouble with the law. "We're a couple buckets short," Barber says, holding one of the tie-downs. "I didn't realize it would be this windy."