by admin on March 24, 2016
Cambridge Mayor Denise Simmons wrote a letter to top Avalon Bay executives last week condemning their choice of Callahan, Inc. as a general contractor on their 1-25 East Street project in Cambridge.
Simmons referred to Callahan’s long track record of using illegal and unethical subcontractors, including the misclassification of workers as independent contractors, paying cash, and relying on labor brokers. Simmons criticized Callahan for being “more interested in turning a profit by any means, than in treating its workers fairly and adhering to community business standards.”
Recognizing that Cambridge is in the midst of a building boom, Mayor Simmons urged Avalon Bay to reconsider its choice of contractors, saying “I want the people working on these developments to be working on safe job sites, and earning wages that will prevent them from being forced to utilize our social services like food stamps, food pantries, homeless shelters, and so forth.”
Callahan relies on subcontractors that engage in tax and insurance fraud, pay sub-standard wages and provide few or no benefits, and fail to provide safe jobsites for the men and women building our communities. Simmons’ letter is another reminder to Avalon Bay and other developers to consider these basic standards in their selection of general contractors.
Cambridge Mayor Condemns Avalon Bay’s use of Callahan [FULL TEXT]
by admin on March 16, 2016
Earlier this month, Cruz E. Galvan, who operated Four Star Drywall, was sentenced to 18 months in federal prison and ordered to pay the IRS over $780,000 for an under-the-table payroll scheme that he had been running for years (Union Leader, 02/10/16).
Galvan pleaded guilty to one count of federal employment tax evasion after admitting that for more than two years, he paid his employees with vouchers instead of checks. Workers were told to present the vouchers to a local check-cashing business, where they could trade them in for cash. Galvan did not report any of these wages to the IRS, evading federal income tax, social security, Medicare, and unemployment taxes.
This behavior is emblematic of the underground economy in construction and the schemes contractors use to avoid paying their fair share of taxes. The overall underground economy consists of an estimated $2 trillion in unreported income in the United States1, and results in a huge loss in income tax and unemployment insurance tax to the Commonwealth of Massachusetts. In 2014 alone, the Council on the Underground Economy recovered more than $20 million in wage restitution, state taxes, unemployment taxes, fines, and penalties2.
1 America’s Underground Economy, Richard Cebula and Edgar Feige (2011).
2 2014 Annual Report, Joint Task Force on the Underground Economy and Employee Misclassification
