Rochester Democrat and Chronicle (New York), June 18, 2008, Wednesday

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Rochester Democrat and Chronicle (New York)

June 18, 2008, Wednesday

SECTION: BUSINESS; Pg. 8D

HEADLINE: Monroe vows oversight on labor abuses

BYLINE: Jim Stinson JFSTINSO@DemocratandChronicle.com

BODY:

Staff writer

Monroe County's economic development agency will take a more aggressive stand on the labor practices of companies receiving tax incentives.

After criticism that the county had not been following up on companies that are granted incentives, County Executive Maggie Brooks gathered labor and government officials at the Watts Building on Tuesday and outlined reforms that the County of Monroe Industrial Development Agency would implement.

County officials said that while they lack jurisdiction to enforce state and federal laws relating to some of the labor problems, they intend to report abuses to the appropriate authorities. The county said it was being proactive as the New York Assembly considers reforming laws governing the state's industrial development agencies.

The county will use at least two outside monitors to keep track of compliance, Brooks said.

One abuse that Brooks said the county will monitor aggressively is employers' issuance of Internal Revenue Service Form 1099 to report workers' income and taxes instead of Form W-2. In most cases, the employers should be using the W-2 form, officials said, but they use the 1099 to avoid paying Social Security taxes and premiums for worker's compensation.

Calling the 1099 abuse "rampant," Frank Wirt, president of the Rochester Building Trades Association, said the illegal activity occurs when an employer ignores legal standards and wrongly classifies employees as "independent contractors."

Wirt said a Cornell University study found that millions of dollars is lost every year because of misclassification of workers and illegal use of Form 1099.

The 2007 study, conducted by Linda Donahue, James Lamare and Fred Kotler of Cornell's School of Industrial and Labor Relations, estimated that 700,000 New York workers are misclassified each year, with the government missing out on some taxation of $4.2 billion in wages. Those numbers mean that about $175 million in unemployment taxes is uncollected, the report found.

Wrongful use of the 1099 form is a felony in New York, Brooks said.

The county also will use an independent group to monitor exemptions that allow companies to use non-local labor. The county has a compliance rate of almost 100 percent with the local-labor guideline.

Finally, the COMIDA board will spend $75,000 annually to boost apprenticeship programs, which union leaders said need improvement.

The board of COMIDA passed the reforms at its monthly meeting later Tuesday.

JFSTINSO@DemocratandChronicle.com

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