MA AG sues drywall company for misclassifying workers as non employees

The Massachusetts Attorney General’s Office has filed a lawsuit,allegeing that Universal Drywall, LLC and its owner, Richard Pelletier of Auburn, NH, violated the Massachusetts Consumer Protection Act and the Massachusetts False Claims Act to gain an unfair competitive advantage over companies in Massachusetts.

In 2013, The Fair Labor Division of the Attorney General’s Office began an investigation into Universal’s hiring practices at a residential construction project in Chelsea known as One North of Boston. The investigation began after the AG’s Office received reports that the company had been hiring workers from New Hampshire and misclassifying them as independent contractors, in violation of the Massachusetts Independent Contractor Law. By misclassifying workers as independent contractors companies may also be evading taxes which must be paid on employees salaries. Tax evasion can be handled through the IRS whistleblower laws.

These reports mirrored previous claims reported to the AG’s Office regarding the company’s hiring practices on publicly-funded projects at the Tahanto Regional High School in Boylston and the Douglas Intermediate School in Douglas in 2011 and 2012. These ongoing investigations, in conjunction with the Chelsea project, revealed a pattern of unfair competition through the unlawful misclassification of workers at all three projects.

The lawsuit alleges that Universal employed this practice to save costs associated with hiring the same workers as lawful employees. As a result, Universal was able to obtain contracts by underbidding its competitors by requiring the workers and not the company, to absorb the burden of an employer’s overhead costs.

The lawsuit further alleges that Universal was responsible for creating and submitting false records relating to the misclassified workers employed on the Tahanto High School and Douglas Intermediate School projects, in violation of the Massachusetts False Claims Act.

The Attorney General’s Office is responsible for enforcing the laws regulating the payment of wages and employee misclassification, in addition to laws protecting consumers and businesses from unfair competition.