Lakewood drywall installer nailed by fines after underpaying workers on big NJ project

A drywall company based in Lakewood working as a subcontractor on an apartment complex in Harrison was assessed about $167,000 for misclassifying employees as independent contractors and failing to pay at least minimum wage, the New Jersey Department of Labor and Workforce Development said Monday.

Donald Drywall LLC also was found to have paid some workers in cash off the books, which deprived them of safety net benefits such as workers' compensation and overtime, the state said.

The fine was part of a larger investigation that revealed "misclassification of drywall workers is rampant,” Labor Commissioner Robert Asaro-Angelo said. “Our investigators are dedicated to rooting out worker exploitation."

Donald Drywall was cited for violations while working as a subcontractor at Riverbend District, a complex with 389 apartment units and more than 550,000 square feet of mixed-use space that is being built adjacent to the Harrison PATH station. Harrison is just east of Newark.

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The state has begun what it calls strategic enforcement of labor laws by investigating specific industries that officials say have a poor history of compliance, noting employees are unlikely to make formal complaints on their own.

Officials said the Wage and Hour Division found 48 instances of misclassified workers at Donald Drywall. In addition, it found the company didn't pay the rank-and-file workers at least every two weeks, as required by law.

Donald Drywall was assessed $167,060 in back wages, damages, penalties and fees, the state said.

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The Labor Department issued a stop-work order, which it said halted construction for a week. And it said Donald Drywall agreed to a compliance agreement.

Among the terms:

• A three-year debarment from working on public construction contracts.
• Submission of payroll records to the department for all its employees.
• The implementation of compliance measures, including ensuring all its workers are correctly classified as employees, are paid on the books, and reported to state employment benefits and tax agencies.

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Carlos Ramirez, owner of Donald Drywall, told the Asbury Park Press he mistakenly paid three laborers $14 an hour, when then state's minimum wage for 2023 is $14.13 an hour. He didn't address the issue of misclassification. But he said he went back and paid his workers what they were owed and settled with the state for about $50,000.

"They allowed me (back) to work right away," Ramirez said.

New Jersey is focusing on the drywall industry, state officials said, because it found a pattern in which drywall businesses often pay workers off the books, shorting workers the compensation they are owed and giving the companies an unfair advantage over competitors who comply with the law.

The state recently announced the results of a similar initiative that examined the retail laundromat industry. Investigators found labor violations at 19 out of 20 laundromats they visited. And they determined employees were owed more than $56,000 in wages, Labor Department officials said.

Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at mdiamond@gannettnj.com.