19 Del. Admin. Code § 1326-1.0

Current through Reigster Vol. 28, No. 6, December 1, 2024

Section 1326-1.0 - General Provisions

1.1 Purpose and scope.

1.1.1 The regulations set forth in this part contain the procedures established by the Department of Labor for carrying out its responsibilities in the administration and enforcement of the Workplace Fraud Act.

1.2 Address; office hours.

1.2.1 Questions may be addressed to "Office of Labor Law Enforcement - Administrator" at 4425 North Market Street, Wilmington Delaware 19802. The office is open daily from 8:00 a.m. to 4:30 p.m. except Saturdays, Sundays, and Legal Holidays.

1.3 Definitions.

1.3.1 The terms "attempts to violate", "Construction services", "Contractor", "Debarment", "Department", "Employee", "Employer", "Exempt person", "General Contractor", "Independent contractor", "Knowingly", "Labor Broker", "Outside of the usual course of business", "Place of business", "Public body", "Secretary," "Secretary of Labor", Stop work order", "Subcontractor", and "Violate", when used in this regulation, shall have the meanings set forth in the Workplace Fraud Act.

1.3.2 The following words and terms, when used in this regulation, shall have the following meanings:

"Administrator" means the Office of Labor Law Enforcement Administrator or their designee.

"Corporate officer" or "officer of a corporation" means any person who fills an office provided for in the corporate charter or articles of incorporation. As to persons engaged in the construction industry, the term "officer of a corporation," includes a member owning at least 10 percent of a limited liability company.

"Day" means calendar day unless otherwise specified.

"Party" means any employee, employer or the Department of Labor.

1.4 Attorneys; form of appearance on behalf of parties.

1.4.1 An attorney admitted to practice before the State of Delaware Supreme Court may appear on behalf of a party by providing written notice of appearance. To constitute an appearance, a form, letter, or document shall contain the names of the parties, the Department's docket number if known, the name of the party that the attorney represents, and the attorney's address, telephone number, facsimile number, and e-mail address.

1.4.2 If a party appears through an attorney, all papers shall be served on the attorney with the same force and effect as though served on the client.

1.4.3 An attorney may withdraw his appearance by providing written notice of withdrawal to the Department, certifying that a copy of the notice of withdrawal was mailed to all parties.

1.5 Parties' obligation to keep department informed of change of address or status.

The parties shall promptly notify the Department of any change in address, telephone number, contact information, or other material change in business status while the charge is pending.

1.6 Liberal construction of regulations.

These regulations shall be liberally construed by the administrator to permit the Department to discharge its statutory duties under the Workplace Fraud Act.

1.7 Practice where regulations do not govern.

In any circumstance that arises not governed by these regulations, the administrator shall exercise his discretion in order to permit the Department to discharge its statutory duties under the Workplace Fraud Act while ensuring procedural due process to employers and other parties.

1.8 Validity of regulations if any portion declared invalid.

If any portion of these regulations is adjudged by a court of competent jurisdiction to be invalid, or if by legislative action any portion loses its force and effect, the ruling or action will not affect, impair or void the remainder of these regulations.

1.9 Amendment of regulations.

The administrator may rescind, amend or expand these regulations from time to time as necessary to comply with the purpose of the Workplace Fraud Act and such new regulations shall be submitted to the Registrar's office in accordance with the provisions of 29 Del.C. § 10161 (b).

1.10 Examples of Workplace Fraud. Pursuant to 19 Del.C. § 3503 (f), the following examples are provided to demonstrate violations of the Workplace Fraud Act. These examples are by no means exhaustive. These examples involve individuals and or entities who are not registered contractors under 19 Del.C. Ch. 36 Delaware's Contractor Registration Act or those individuals and entities who do not meet the definitions of Exempt Person/ Independent Contractor as defined in 19 Del.C. § 3501 (6), (7).

A. John Smith has an oral agreement with ABC Building Company (ABC) to do carpentry work on houses in a development designated by ABC. John Smith supplies his own hand tools and has his own business license. ABC supplies the material for each job. He has to do the work himself and he works on a full time basis for the company. For some work he is paid on a piecework basis and for some work he is paid on an hourly basis. He does not have assistants, does not have an office, and does not advertise in newspapers or otherwise hold himself out to the public as being in the carpentry business. ABC can fire him any time before he finishes a job without contractual liability. John Smith is an employee of ABC. Violation 3503(c).

B. Sarah Green is a painting subcontractor who has contracted with XYZ General Contracting, Inc. (XYZ) to paint 264 houses. She in turn hired 40 painters to do the work for her and as condition of employment requires the 40 painters to obtain business licenses before they can start work and they will receive a 1099 tax document at the completion of the project, although only about 15 are on the job at any one time. She supplies all the paint, brushes, and ladders. She designates the house to be painted and either pays the painters per house or by the hour. Detailed instructions about the work are not necessary because of the painters' skill in their trade. Sarah Green inspects the work and requires them to repaint any unsatisfactory work. The painters cannot engage helpers without her consent. She can discharge them for any reason, and they are free to resign at any time. The painters assume no business risks and have no capital investment. The painters are employees of Sarah Green, not XYZ, and Sarah Green is an independent contractor, not an employee of XYZ. Violation 3503(c).

C. Chris Johnson, an experienced tile and terrazzo journeyman, orally agreed with Floor, Inc. (Floor) to perform full-time services at construction sites. He uses his own tools and performs services in the order designated by Floor, Inc. and according to its specifications. Floor, Inc. supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. He does not have a place of business or hold himself out to perform similar services for others. Either party can end the services at any time. Chris Johnson is an employee of Floor, Inc. Violation 3503 (c).

D. Person A employs workers from a temporary agency. These workers are never given a chance to become permanent hires. Their contracts are continually renewed by Person A, with no opportunity provided to become full-fledged employees. Person A classifies them as independent contractors. Violation 3503 (c).

E. Person A and Person B are co-owners of Construction Company X. At the suggestion of Person A, Person B assists in the incorporation of Subsidiary Company Y, nominally owned by his relative, Person C. When Construction Company X receives a contract, it sub-contracts the work on this contract to Subsidiary Company Y. Subsidiary Company Y hires the employees of Construction Company X, and treats them as independent contractors. Violation 3503(d), 3503(e).

F. Attorney A advises Contractor B to create a corporation separate and distinct from his primary business. When his primary business receives contracts, Attorney A advises him to employ the employees from his primary business in the separate corporation as independent contractors. Violation 3503(e).

G. Person A enters into a "sub-contracting agreement" with "Worker B, LLC" and "Worker C, LLC." These workers are paid once per week at an hourly rate by Person A. Person A provides all materials and tools for them to complete the project. Person A provides them with the truck they use for hauling materials, and they report to Person A's business location at the start of the workday to receive instruction from Person A concerning the work they will perform. No sub-contracting agreements are drafted or signed. As a condition of entry into these "sub-contracting agreements" and of employment on the project, Workers B and C are required to obtain business licenses through the efforts of Person B, who is employed by Person A. Bid forms do not list any of the sub-contractors. Violation 3503(c), 3503(d), 3503(e).

H. Contractor A advertises their company provides various construction services, such as drywall installation, and bids on and is awarded the drywall portion of a construction project. Contractor A will not perform any portion of the drywall work but will contact Contractor B to provide workers for the project with negotiated hourly wages. Contractor A asks Contractor B how many workers they are capable of supplying? Contractor B states "we can bring up to 10 workers". Contractor B states the workers they will bring for the drywall installation will be on the project every day until finished and will work 55 hours per week paid at a straight hourly rate with no overtime payments. Contractor B classifies the workers as independent contractors and provides the workers 1099 miscellaneous tax forms. Violation 3503 (a), (b), (c), (d).

19 Del. Admin. Code § 1326-1.0

21 DE Reg. 237 (9/1/2017)
25 DE Reg. 287 (9/1/2021) (Final)