Related Group under federal scrutiny for contractor/employee misclassification: Miami Herald report

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Video: 2015 groundbreaking for the Edificio Piñeiro project

The Miami Herald has published an article saying that federal investigators are seeking to learn if the Related Group, Miami’s biggest developer, lowered costs on an affordable-housing project by hiring subcontractors who failed to pay employment taxes.

The strategy involves treating workers as outside contractors instead of in-house employees. That allows companies to skip paying costly employment taxes, the newspaper reported.

Related hired subcontractors who did just that, according to certified payrolls obtained by the Herald through a public records request.

How workers are classified must be decided on a case-by-case basis. If companies wrongly treat employees as independent contractors — and don’t pay employment taxes — they violate the law.

Related’s business practices are under scrutiny because of a long-running federal investigation into South Florida’s affordable-housing industry. Investigators have recently focused on Edificio Piñeiro, a Miami apartment building for low-income seniors that Related developed with public money in 2014, according to sources with knowledge of the inquiry who were not authorized to speak on the record. Related has denied being targeted by investigators.

The Herald says that at Edificio Piñeiro, the majority of subcontractors hired by Related treated their workers as independent contractors rather than employees, payroll records show.

See the complete article here.