Labor Seal NYS Department of Labor                          

Contact Leo Rosales Cell: 518-281-6167 Office: 518-457-5519 Email: leo.rosales@labor.ny.gov www.labor.ny.gov
MONROE COUNTY CONTRACTORS ARRESTED ON CHARGES OF FRAUDULENTLY MISCLASSIFYING EMPLOYEES
Investigation Conducted by New York State Joint Enforcement Task Force on Employee Misclassification; Workers Deprived of Required Employee Protections While Employers Secure Unfair Competitive Advantage

Albany/Rochester, NY (February 26, 2009) - In separate cases, two Rochester-based contractors were charged this week for crimes arising out of their avoidance of unemployment insurance taxes, workers compensation coverage and other laws related to the protection of workers in New York State. Thomas DeMarco was charged with Grand Larceny in the Third Degree, a class D felony; Offering a False Instrument for Filing in the First Degree, a class E felony; Willful Failure to Pay Contributions to the Unemployment Insurance Fund, a misdemeanor; and Failure to Maintain True and Accurate Payroll Records, a misdemeanor.  Leonard Maracle was arrested for Grand Larceny in the Third Degree; Failure to Secure Workers’ Compensation Coverage, a Class E Felony; and Willful Failure to Pay Contributions to the Unemployment Insurance Fund. The defendants face a maximum of seven years in state prison.

These arrests stemmed from investigations by the New York State Joint Enforcement Task Force on Employee Misclassification, a multi-agency strike force formed by Executive Order in September 2007, to address the problem of employers who improperly classify employees as independent contractors, rather than employees, and who pay workers “off the books.” To date, the Task Force has assessed Unemployment Insurance taxes of over $4.8 million, and over $1.1 million in unemployment insurance fraud penalties due to the state. Misclassification of employees leads to a substantial revenue loss at all levels of government for vital programs and services.

The Joint Task Force on Employee Misclassification is comprised of state and local agencies charged with enforcing worker protection laws. Led by the Department of Labor, it also includes the New York State Workers’ Compensation Board and the Workers’ Compensation Fraud Inspector General. The investigation that led to the arrests stemmed from two separate “sweeps” of construction sites in Monroe County by Task Force representatives. The Task Force referred its findings in these two cases to the Monroe County District Attorney’s Office, which brought this week’s prosecutions. The New York State Police were also instrumental in the investigation and arrests.

DeMarco, of 753 Genesee Park Boulevard, in Rochester, is alleged to have misclassified two workers as independent contractors, when they should have been considered employees under the law. Maracle, of 2458 Edgemere Drive, in Rochester, is alleged to have paid as many as eight employees “off the books.” Both employers were charged with violations of state laws relating to their evasion of payments into the Unemployment Insurance Fund.

“I know times are tough, and employers are looking to cut costs wherever they can,” said M. Patricia Smith, Commissioner of the Department of Labor. “But it is precisely because times are tough that employers must continue to obey the law. Workers misclassified as ‘independent contractors’ or paid off the books are not receiving protections they are entitled to – protections like unemployment insurance that are particularly critical, given today’s uncertain economy. And when businesses cut costs by breaking the law, they create an unfair competitive advantage for themselves over law-abiding businesses.”

Commissioner Smith continued: “I would like to thank our partners in the Joint Task Force on Employee Misclassification, and the Monroe County District Attorney and the State Police for their invaluable participation in this investigation. Their participation sends a clear message: if you break the law and evade payments due to New York State on behalf of workers, you will be caught and prosecuted to the full extent of the law.”

District Attorney Michael Green said “We appreciate the work of the Joint Task Force on Employee Misclassification and the Department of Labor. The conduct alleged here, if proven to be true, cheats workers, contractors who classify employees properly, and taxpayers, and cannot be tolerated.”

Zachary S. Weiss, Workers Compensation Board Chair, said: “Most of New York’s employers are doing the right thing and carrying workers’ compensation insurance. We will continue to pursue those who do not.”

Most Joint Task Force “sweeps” start as tips received from individuals or businesses, or through observations by Task Force members. Anyone who knows about or suspects possible violations of New York State labor laws is encouraged to contact the Task Force in the Department of Labor’s Employer Fraud Unit at 1-866-435-1499, 24 hours per day, 7 days a week. All tips are taken seriously, and you can remain anonymous. For more information, see the Department of Labor’s web site at www.labor.ny.gov/agencyinfo/MisclassificationofWorkers.shtm.