The Somerville Board of Aldermen has resolved to require developers that are receiving any form of public financial support to use responsible prevailing-wage contractors.

By Jim Clark

At the most recent regular meeting of the Board of Aldermen, the Legislative Matters Committee reported on the completion of a resolution to require all developers that receive any form of public financial support to use responsible prevailing-wage contractors that provide health insurance, worker’s compensation, retirement benefits, and apprenticeship training to build their projects.

As specifically stated in the resolution, the Assembly Row developer Federal Realty Investment Trust (FRIT) has been the direct and indirect beneficiary of approximately $73 million of public support from the City of Somerville and the Commonwealth of Massachusetts to their projects in the form of direct public grants and publicly-subsidized financing.

Numerous residents and community groups warned Federal Realty Investment Trust (FRIT) not to select Callahan, Inc. as its general contractor for their Parcel 6 448-unit residential project, because Callahan has a longstanding business model of using subcontractors that often pay substandard wages and benefits, engage in tax and insurance fraud by illegally misclassifying their employees as “independent contractors,” pay them in cash under the table, or sometimes don’t pay them at all.

Several members of the Board and of Somerville’s State Legislative delegation, as well as numerous residents and community groups, subsequently called on FRIT to select instead a union general contractor for the project.

The resolution further states that despite the extensive public financial support for the Assembly Row development, and despite the fact that FRIT is a huge, publicly-traded company worth about $9 billion, FRIT hired Callahan as its general contractor, arguing it could not afford to use union labor.

According to the Committee’s findings, Callahan selected an irresponsible contractor, Force Corporation, to perform a substantial portion of the work, despite the fact that Force Corporation, its owner and principals, and their predecessor companies, are well known for their illegal business practices.

Additionally, Callahan’s subcontractor Force Corp. and its owner and principals have agreed to a Consent Judgment in Federal Court in Boston after the United States Department of Labor sued them for illegally misclassifying employees as independent contractors, thereby cheating employees out of wages and cheating the government out of payroll taxes, and the Consent Judgment will require them to pay over $2.3 million in back pay and interest and liquidated damages, and another $262,000 in civil penalties, and the payroll and withholding taxes they failed to pay.

The United States Labor Department is currently suing for over $1 million the predecessor companies that Force Corp’s owner and principals had operated because they repeatedly ignored numerous citations for workplace safety violations.

According to the resolution, if FRIT had hired a responsible general contractor, all the various forms of public support for the project would not be benefiting contractors like Callahan and Force, whose business practices are antithetical to the public good, and all the workers who are building the project would be receiving area standard wages and benefits and would be able to afford to live in the residences under construction.

The matter was resolved and entered into the record.

UPDATE:

In response to the above article, Callahan has submitted the following statement:

“Callahan is committed to integrity in the workplace and selects subcontractors – both union and non-union – in accordance with all Federal, state and local regulations under the condition that subcontractors will perform their work according to these regulations.

We implement strict procedures to ensure hired subcontractors are compliant, and we reserve the right to audit these groups and discontinue partnerships at any time. While Force Corp. was compliant on all of its work for Callahan, we made the decision to end our relationship with this subcontractor, which is no longer working on any Callahan projects. Callahan has never been involved in any federal or state action relating to unfair labor practices.

At Callahan we highly value our relationships with the communities in which we work, and are actively involved in supporting Somerville’s cultural and educational initiatives through work with such groups as East Somerville Main Streets, Somerville High School and Somerville Community Corporation, among others.”