Four charged with falsifying employee status
MEDIA » Four people have been charged with misclassifying employees as “independent contractors” and related offenses in what Delaware County District Attorney Jack Stollsteimer said appeared to be the first actual use of a decade-old law aimed at cracking down on worker misclassification.
“Our staff hasn’t been able to find a single case, criminal case, of misclassification brought in Pennsylvania,” said Stollsteimer. “Well, that ends today.”
“When you misclassify employees, let me be clear what you are doing: You are stealing,” said state Attorney General Josh Shapiro, who joined Stollsteimer at a press conference Monday announcing the charges.
“You’re stealing on the hour, every hour,” he added. “Often, you’re stealing from workers who are underpaid, who have been denied benefits and who have been put into dangerous situations without appropriate training.”
Charged are Armando Garcia-Ramirez, 55, of the
2100 block of South Queen Street in York, owner of G&R Drywall and Framing LLC; his wife and business partner, Martha Guzman,
45; their daughter and employee, Stephanie GarciaRamirez, 26, and Angelita Paulin-Santos, 39, of the
600 block of Smith Street in York.
Each are facing dozens of charges that include conspiracy, theft by deception, deceitful business practices, making false statements and improper classification of employees.
All have posted bail and waived preliminary hearings except Armando Garcia-Ramirez, who is being held on an immigration detainer, according to defense attorney Jim Bonner. He said his client is scheduled for a video preliminary hearing Thursday.
“He’s a hard-working guy and we’re working our way through trying to understand what’s going on with his case and looking forward to getting information from the District Attorney’s Office so we can defend him and get him the best possible result,” said Bonner.
Attorneys Anser Ahmad, representing Paulin-Santos, and Enrique Latoison, representing Stephanie GarciaRamirez, declined to comment Monday. Attorney Mike Dugan, representing Guzman, did not respond to a request for comment.
Deputy District Attorney for Special Investigations Doug Rhoades and Elizabeth Schneider, chief of the Economic Crimes Unit, will be prosecuting.
According to affidavits of probable cause written by Delaware County Criminal Investigation Division Detective Steven Cortese, the county received a tip of possible workplace misclassification in September 2019 concerning construction of a new L.A. Fitness gym at 2170 West Chester Pike in Broomall.
Cortese and CID Lt. William Wright met with Stephanie Garcia-Ramirez at the York-based drywall business in November 2019, according to the affidavit. She allegedly told the investigators that all employees were independent contractors and provided paperwork to that effect for seven individuals.
In speaking with some of those people, Cortese learned that many of their Social Security numbers appearing on employer documents were fraudulent, according to the affidavits. At least two of the workers were undocumented and stated that Armando Garcia-Ramirez knew that some employees were undocumented immigrants.
Investigators also found that employees were paid an hourly wage on a weekly payroll distribution, that none of the “independent contractors” owned a business separate from G&R Drywall and Framing, and that the company gave employees money to buy liability insurance, which was required by the allegedly fraudulent independent contractor contracts the employees had signed, according to the affidavits.
Business records seized under two search warrants executed in November 2020 allegedly revealed that monetar y instruments in large quantities were routinely transferred to Hidalgotitlan, Mexico, from the business owners, employees and business address of G&R Drywall and Framing, according to the affidavits. These included vehicles, homes and U.S. currency that the affidavits claim were obtained illegally.
Act 72 of 2011, dubbed the Construction Workers Misclassification Act, provides that independent contractors must be autonomous, with their own business performing tasks at “arm’slength” for contractual payment.
Stollsteimer and Shapiro announced a pilot program early last year to crack down on misclassification of workers across numerous industries, which is a problem not only for employees who should be receiving certain benefits, but also for society at large when payroll tax, unemployment insurance and workers compensation go unpaid.
“Right here, the good people of Delaware County are getting ripped off when someone misclassifies a worker because taxes are not only withheld, and unemployment and workers comp. don’t get paid, but you are robbing the public of needed services,” said Shapiro. “Think about it for a minute. You’re not paying money into the local schools, into the local parks, the local roads and bridges. You are ripping off the taxpayers of Delaware County and the Commonwealth of Pennsylvania when you do this.”
He added that businesses that are able to undercut bids on projects by misclassifying workers also steal from other companies that try to do the right thing and play by the rules.
Shapiro said his office’s Fair Labor Section headed by Chief Deputy Attorney General Nancy Walker provided support and specialized expertise to Stollsteimer’s office, and will do the same for other district attorneys across the commonwealth pursuing similar charges.
Though misclassification was apparently enough of a problem 10 years ago to require a statute, Stollsteimer and Shapiro said it needs to be enforced to send a message that the practice will no longer be tolerated.
Stollsteimer said law enforcement does have limited resources and has to focus first and foremost on violent crime, though his administration does plan to make worker misclassification a priority.
By partnering with Stollsteimer on this case, Shapiro noted that felony theft charges could be brought in addition to the misdemeanor misclassification charges, providing a stronger incentive for companies to comply with employment regulations.
“Here is my message to construction companies here in Delaware County and across Pennsylvania: We are watching,” said Shapiro. “If you continue to try and misclassify workers, we will hold you accountable and we will prosecute you to the fullest extent of the law.”