Is Music City Center construction funding 'underground economy?' - Tucson News Now

Is Music City Center construction funding 'underground economy?'

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NASHVILLE, TN (WSMV) -

First the Channel 4 I-Team discovered Music City Center workers' addresses kept secret while their religions were made public. Now, we have discovered more problems at the 5th Avenue North and Demonbreun construction site.

While the Music City Center is rising in the summer heat, is the heat on some contractors?

Are some employees working tax free without paying workers comp, unemployment or social security?

Is a so-called underground economy helping to erect Nashville's most expensive public project ever?

The price tag for the Music City Center is a staggering $585 million. That's twice as much ($290 million) as it cost to build LP Field in 1999. It is four times the price of Bridgestone Arena ($144 million), built in 1997.

The Music City Center is a giant government project that appears to be feeding a growing government problem, what they call an "underground" economy.

Q: "Did you fill out any paperwork on the job?"

A (Undercover workers): "No, there was nothing like that ... They simply just gave them (us) the job."

These workers said they're afraid to show their faces or reveal the sound of their voices.

However, to be clear, these workers are in the country legally.

They said they've been working for weeks as carpenters, installing drywall at the Music City Center.

Just like any employee, they got company safety training.

"Bell, Clark and Roswell both gave us training onsite," said the workers. The training was at a trailer on the site.

But that's where the routine treatment ends.

The workers said they're getting $13 per hour, four to five dollars less than what carpenters are supposed to earn.

These workers said there is no overtime, even though they routinely work 11-hour days, six days a week.

They're paid by check, but nothing is deducted from that pay - no federal taxes, no workers comp is provided, no unemployment, Medicare or social security premiums paid.

That may be routine for self-employed, independent contractors, but these workers said they're not self-employed.

They said they're supervised and answerable to a company. If that's the case, that's a mis-classified worker.

A Middle Tennessee State University sociologist has analyzed the problem statewide.

"In construction, the problems arise when people are actually employees who are supervised and held responsible by supervisors or management to work certain hours at certain times and certain places," said Dr. Bill Canak, an MTSU sociologist. "But they're classified and paid as independent contractors."

In this case, the men are paid by Stallings Drywall, a North Carolina subcontractor of Roswell Drywall, the Georgia firm that won the $17 million convention center contract.

Stallings Drywall relies on Jaime Juache, workers said, to recruit cheaper labor and help companies like Roswell win with lower bids.

"We found a job and it was a pretty big job," said the workers. "We went to the job site and talked to Jaime Juache and he was the one who gave us the job."

"We receive payment by check from Juache and it's a check that said Stallings Drywall."

The I-Team wanted to know more about Juache, so with the help of a native Spanish-speaker, we approached and asked about getting a job.

Q: "How much do you pay by the hour?"

Juache: "$13 an hour."

Q: "Any overtime?"

A: "No."

Q: "Do I need my Social Security number?"

A: "No, use any number."

Q: "How do I deal with taxes?"

A: "I'll give you a 1099, then you're responsible for taxes."

Q: "Only $13 you pay?"

A: "Yeah it's the maximum I can pay for experienced people on the job."

"Well, we've heard some allegations. We're investigating and continuing to gather information," said Holly McCall, spokesperson for the Music City Center. "I think you know we've got a track record of doing the right thing. Channel 4 brought an issue to light similarly last fall with a subcontractor, and we took pretty swift action on that."

There's no telling how many workers have arrangements like this because Tennessee has never audited a job site to find out.

Yet, a study presented to the state legislature just a few months ago show the losses are huge.

In the construction business alone, missing unemployment payments range from $4.9 million to $11 million a year.

The workers comp pool is shorted by $30 to $70 million that should be coming in, but when it's not deducted, it doesn't get paid.

And the loss to Medicare pools, just in Tennessee construction work, total somewhere between $7.7 million and $42 million.

"We're talking very serious money for the State of Tennessee," said Canak.

And there are serious consequences for anyone who might be injured or lose that construction job.

"People will come in to make a worker's comp claim or apply for unemployment insurance and that's when they'll discover they're not really a worker," said Canak.

"These people are free riders on the system, but they're more than free riders, they're undermining the capacity for law abiders to compete."

"We're here legally," said the workers. "We want to do everything legally ... everything."

And though they're frightened to be seen, with the help of a union, these workers have filed a formal complaint with the Tennessee Department of Labor.

"We've received allegations as far as some subcontractors not paying workers compensation or unemployment insurance and a variety of other things," said Jeff Hentschel, Department of Labor. "We're not taking action at this time. We're just reviewing the documents. We'll see what happens."

The Channel 4 I-Team contacted the Roswell Drywall Company, the firm that holds the contract on the Music City Center drywall job. It's Roswell's hand-picked company, Stallings Drywall, that may be paying workers in an improper way.

As of news time, the Channel 4 I-Team had not heard from Roswell about this story or the workers complaint filed with the state.

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