The operations manager for a Montgomery County paving and sealcoating company pleaded guilty to a single count of violating the Construction Workplace Misclassification Act of 2010 for improper classification of employees.
Joshua Dallas, 44, North Wales, was sentenced to one year of probation under the negotiated guilty plea worked out by Deputy District Attorney Douglas Rhoads and defense counsel Michael Noone.
Assistant District Attorney Dan Kerley stood in for Rhoads during the hearing before Common Pleas Court Judge Anthony Scanlon.
The act criminalizes the misclassification of employees as “subcontractors.” The law requires that independent contractors be truly autonomous, with their own businesses and performing tasks for the contractor on an “arm’s-length” basis for contractual payment.
Misclassifying employees allows employers to skirt things like payroll taxes and unemployment compensation contributions.
Dallas, doing business as Monster Paving LLC in Ambler and North Wales, was charged earlier this year following an investigation into two projects the company had worked on The Meadowgreen Park project in Springfield and the Gateway Slopes project in Lansdowne.
Delaware County Criminal Investigation Division Detective Edward Rosen and Edward Lounsberry of the Pennsylvania Foundation for Fair Contracting interviewed two people employed by Monster during the investigation: Richard Giangiulio, who worked as a heavy equipment operator from 2019 to 2022, and Flavio Quito, who worked on the Gateway Slopes project.
Giangiulio allegedly received an Internal Revenue Service Form 1099-NEC (Non-Employee Compensation) stating $9,418 for his work. Flavio also allegedly received a 1099 from Monster in 2019 for $3,081 and a 1099 for $7,000 in 2021.
But investigators found both men functioned as employees, not contractors, and should have been paid as such through the company’s payroll system.
A prior release on the charges notes that the Misclassification Act also makes it a crime to take an adverse action against any person in retaliation for exercising their protected rights.
Giangiulio allegedly told detectives in March 2022 that when he went to pick up his final paycheck, Dallas said he was aware that Giangiulio was speaking with investigators and offered him $5,000 to “make it go away.”
Flavio also told investigators that Dallas told him not to come to work anymore after making him aware that he knew Flavio was speaking with authorities.
The Montgomery County Detective Bureau was also investigating Monster and Dallas, and served search warrants at Dallas’ home and Monster offices in April 2022. When Dallas’ wife was advised of the reason for the search, she allegedly told detectives that their accountant had warned them against using 1099’s to report income.
Noone said Wednesday that his client had never been in trouble before, but he was taking this “very seriously” and was prepared to enter the plea and make necessary restitution to the state.
Dallas, who has been free on unsecured bail since his arrest in September, was ordered to pay a total of $2,539 in restitution to the Office of Unemployment Compensation Benefits and Uninsured Employer Guaranty Fund as part of the plea.
He declined an offer by the judge to speak during the brief hearing.