DETROIT - A Labor Department investigation into home builder pay practices for laborers heats up as PulteGroup Inc. resists a subpoena of payroll records and future hiring plans in Eastern Michigan District Court.
At issue is whether Pulte, Lennar Corp., KB Home, D.R. Horton and NVR Inc. are retaining laborers as general contrators rather than hiring them directly for general construction, including carpentry, custom woodwork, electrical, plumbing and other building construction acitivities.
Government officials say the workers are employees, and subcontractors should be withholding taxes, paying minimum wage, and contributing to Social Security. The investigation into home cosntruction pay practices began last August, then broadened in September as the Internal Revenue Service and regulatory agencies in others states joined in.
In the latest proceeding, PulteGroup lawyers objected to a Labor Department request that seeks "future business plans: Contracts with all contractors and suppliers of materials that will perform work within the next 12 month period for future business plans." Pulte called it an abuse of the process, since last summer's investigation turned up no wrongdoing by PulteGroup.
"During its investigation, DOL demanded (and PBS provided) timekeeping, payroll and earnings records; DOL. investigators also reviewed personnel files and job descriptions, conducted on-site interviews, and evaluated whether employees were properly classified," Pulte lawyer John F. Birmingham, Jr. told the court. "After much time and after imposing significant burdens on PBS, DOL concluded its investigation in August 2011 without any formal findings of a violation against PBS and did not charge PBS or Pulte with any wrongdoing."[A court document here provides Pulte's objections to the latst subpeona by the Department of Labor.
"DOL inexplicably targeted Pulte for reinvestigation in 2011 when DOL’s just-completed 2010 investigation disclosed no FLSA violations whatsoever while simultaneously refusing to proffer a coherent explanation for imposing that burden on Pulte," Pulte argued, stating, "this subpoena is due to the influence of unions."
Home builders have been struggling through the downturn. PulteGroup, which reported $13.8 million net income during the fourth quarter ended Dec. 31, 2011, posted a $210 million loss for the year. KB Homes lost $48 million in the first quarter 2012, for the period ended Feb. 28, 2012.
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