The SkyHouse is a 26-story luxury condo development at 1776 Broadway in Denver that touts such features as a “rooftop resort-style pool,” a “Yoga/Crossfit studio” and a “pet spa” on its website.
The massive construction project is led by joint venture contractors, with numerous subcontractors and their subcontractors.
It also appears to be one example of where worker misclassification occurred, according to a Rocky Mountain PBS News review of five workers’ pay stubs – part of a broader analysis that found that Colorado has lost about $23 million dollars a year since 2011 to businesses that failed to pay unemployment premiums.
The underlying problem is when businesses misclassify employees as independent contractors and thus not subject to payroll taxes, unemployment insurance premiums, or overtime pay. That problem appears to be growing, the analysis found.
The Department of Labor and Employment has never fined a company for skirting the laws by misclassifying employees, although a 2009 statute set up a schedule of fines for the offense.
In most instances, said Jeff Fitzgerald, director of the unemployment insurance program for the department, misclassification is just a mistake. Labor laws are complicated and a lack of understanding creates most problems, he said.
The SkyHouse site is also the subject of a lawsuit filed June 2 alleging illegally unpaid wages stemming from worker misclassification and gender and ethnic discrimination.
The companies involved say they play by the rules or would not comment. Colorado labor authorities said the law prohibits them from providing information on any company’s unemployment insurance status.
At the SkyHouse project the general contractors, Georgia-based Batson-Cook Construction and Swinerton Builders, headquartered in California with an Arvada office, oversee the highest level of construction as a joint venture while various sub-contractors and their sub-subcontractors focus on more specialized areas such as electrical, plumbing and drywall.
Rocky Mountain PBS interviewed five employees from the SkyHouse project who appear to have been improperly classified as independent contractors, exempting them from overtime pay. They estimate they are missing a total of around $9,000 in unpaid wages and overtime. The workers are part of a group that filed a claim on the property, notifying potential condo buyers they are trying to recover money from the buildings’ owners.
One worker, Violeta Solis installed drywall and swept the floor at the SkyHouse condo for a month last fall.
“I enjoyed working with the contractor, but then the problems started,” she said.
In November, 2015 she hurt her back on the job and was fired the same day, she said. She filed a claim for $1,451 in unpaid wages with Colorado labor investigators.
Solis says she is unable to work. She moves constantly about her house, unable to sit, stand or lay down for very long.
When they got to work at 7 a.m. each day Jeff Musto, superintendent of Alpharetta, Georgia-based subcontractor, The Circle Group, told the group of workers what to do. He said most of the directions they got “came from my mouth.”
But Solis’ paychecks show no local, state or federal tax withholding. That means the workers appear to have been paid as independent contractors when in fact a supervisor determined their hours and dictated their tasks – two factors that would qualify a worker as an employee, subject to overtime and payroll taxes, including unemployment insurance premiums.
Musto said Solis is lying about getting hurt on the job.
“Any hour that anybody ever complained to me about, we went back and they got paid,” Musto said.
The Circle Group’s founder Jerry Marchelletta Sr. and his son and president Jerry Marchelletta Jr. have been accused of dodging their responsibilities before. In 2007 the Marchellettas were convicted of tax evasion in federal court. Jerry Marchelletta Jr. was sentenced to three years in prison but the government dropped all charges in 2012 after a legal battle.
Solis filed a claim for worker’s compensation from The Circle Group. Musto said The Circle Group is not responsible for compensating her.
In fact, the workers with claims against The Circle Group were not the company’s employees, even though their jobs were directed by that company, he said.
Instead Solis and Salas were employed by another subcontractor called LA Drywall, in charge of supplying sites with manpower, Musto said. The company operates by paying workers as independent contractors, he said.
LA Drywall was registered to do business from towns on the outskirts of Orlando and Atlanta. Under the name LA Drywall, the company accrued over $1 million in unpaid federal taxes and penalties by June 2015, according to public records.
The Occupational Safety and Health Administration is investigating LAG Drywall for alleged discrimination in Solis’ case. .
Meanwhile, the paychecks of five workers interviewed by Rocky Mountain PBS News feature the name Gulf Coast Construction, Inc., which business records show was incorporated in Georgia in 2014 but never licensed for business in Colorado.
Gulf Coast Construction also is under investigation by the U.S. Department of Labor for Solis’ allegedly unpaid wages.
