The AG’s Office first began investigating the company in 2013 over work it did in Chelsea
Attorney General Maura Healey’s Office has entered into a settlement with Universal Drywall, LLC, and its owner Richard Pelletier of Auburn, NH. In May of 2014, the AG’s office had filed suit against the drywall company and its owner for allegedly misclassifying employees as independent contractors on various Massachusetts construction projects.
“We found that Universal Drywall systematically misclassified its employees as independent contractors to gain an unfair advantage over honest competitors,” Attorney General Healey stated. She also added, “This settlement sends a clear message that wage theft will not succeed as a business strategy in Massachusetts.”
According to the terms of the settlement announced on February 2nd, both Mr. Pelletier and his company have agreed to pay $500,000 in fines to resolve the allegations. The AG noted, however, that the company will first pay $250,000 with the balance of the fines suspended “pending compliance with the terms of the settlement.”
In the original complaint filed in Suffolk Superior Court against the defendants, the AG had alleged that Universal Drywall and Mr. Pelletier had violated the Massachusetts Consumer Protection Act and the Massachusetts False Claims Act in order to gain a “competitive advantage’ over the company’s competitors in the Commonwealth. At the time, former AG Martha Coakley had said,
“Employers are required to pay employees a lawful wage for each hour of work on construction projects, maintain accurate payroll records, and produce those records upon demand. We enforce these laws not only to protect workers, but to level the playing field for all businesses that play by the rules.”
How the investigation against Universal Drywall first began…
In 2013, the Attorney General’s office began investigating the company after receiving reports that the company had been conducting irregular hiring practices at the residential construction project it was handling at the One North apartment complex in Chelsea. The company was hiring its workers from New Hampshire, misclassifying them as independent contractors in order to bring them into Massachusetts to work on the One North project in a clear violation of the Massachusetts Independent Contractor law.
Upon further investigation, the AG’s office determined that the company had engaged in this pattern of illegal hiring practice on two other projects beside the One North project. They included the publicly-funded projects at the Tahanto Regional High School in Boylston which was completed in 2011 and the Douglas Intermediate School completed in 2012. Furthermore, the company created and submitted falsified records of its misclassified workers on both of these projects.
As a result of the investigation, the AG decided to file suit again Universal Drywall and its owner for engaging in a repeated pattern of unfair competition via the unlawful misclassification of the company’s workers on all three construction projects. The lawsuit further alleges that the company knowingly employed this practice in order to avoid additional hiring costs, thereby being able to underbid its competitors in Massachusetts in order to win the bidding on these highly sought-after construction projects. By misclassifying it workers, Universal Drywall was able to underbid its competitors by requiring its misclassified workers to assume part of the company’s overhead costs.