Like any businessman, Steven Pagliarini wanted to minimize his labor costs. But he also shortchanged laborers in the process. On April 15, Pagliarini, an executive of two Rhode Island landscaping and nursery firms, one union and the other nonunion, was sentenced in Providence federal court to three years of probation for conducting a scheme for avoiding payment of scheduled benefits to union employees. In addition, he concealed the employment status of nonunion workers from a state agency so as to pay employees with unemployment checks. The information had contained four charges – three for document falsification and one for wire fraud. As part of his sentence, he must pay restitution totaling $171,695.22. Pagliarini pled guilty on January 28 after announcing his intent to do so on January 4.
The scheme, in essence, was a case of ‘double-breasting.’ This is a well-known practice by which a unionized contractor creates a separate nonunion enterprise, identical all but in name, in order to avoid paying wages and/or benefits at levels specified in a union collective bargaining agreement. The arrangement is illegal. But Steven Pagliarini, executive vice president-treasurer of Central Landscaping Construction Co. (union) and executive vice president of Central Nurseries Inc. (nonunion), each based in Johnston, R.I., was unfazed. During January 2007-December 2010, he knowingly underreported the number of hours that Central Landscaping employees worked on two federally-funded public works projects in Providence, indicating that part of that time they worked for Central Nurseries. In addition, said prosecutors, Pagliarini submitted false remittance forms to two construction union-sponsored welfare and pension plan administrators so as to avoid making contributions. Additionally, during November 2009-April 2010 he mailed false unemployment claim notices to the Rhode Island Department of Labor and Training (RIDLT) indicating certain employees of Central Nurseries had been laid off when in fact they were active part-time workers. As a result, the RIDLT paid out $68,487 in excessive benefits.
The guilty plea was the product of a joint federal investigation by the Justice Department and the Office of Inspector General of the Departments of Labor (DOL), Transportation (DOT), and Housing and Urban Development (HUD). The Rhode Island Department of Labor and Training also assisted in the probe. It’s worth noting that construction unions are very powerful in that state. They are adept at pressuring state and local government agencies into signing Project Labor Agreements for large-scale public works projects that mandate the use of union labor. If inadvertantly, these prehire agreements raise the likelihood of double-breasting. While cheating workers out of promised wages and benefits is always wrong, creating mandatory PLAs invite such corruption. A system of public contracting more friendly to the merit shop would go a long way in discouraging this practice.