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Pulte-Centex Labor Department Probe
Sunday, 25 March 2012

U.S. Battles Home Builder Over Pay Probe
The Labor Department has stepped up pressure on PulteGroup Inc. in what has become a nasty battle between the Michigan-based home builder and the Obama administration over an investigation into the housing industry's pay practices. The department filed a petition in federal district court in Michigan on Feb. 28 seeking to compel Pulte to produce thousands of records related to its employees and subcontractors, as requested in a subpoena it sent the company last year. ...Federal officials issued the subpoena as part of a broader investigation into pay practices of at least five national home-building companies. Related article: U.S. Hits Builders With Pay Probe       Pulte Homes Under U.S. Labor Dept. Investigation
The Boston Global: Pulte Homes contractors fined for failing to pay workers and taxes 
   

U.S. Battles Home Builder Over Pay Probe

Pulte Fires Back, Accuses Labor Department of Improprieties After Agency Seeks to Compel Company to Fully Honor Subpoena

By ROBBIE WHELAN And MELANIE TROTTMAN

The Labor Department has stepped up pressure on PulteGroup Inc. in what has become a nasty battle between the Michigan-based home builder and the Obama administration over an investigation into the housing industry's pay practices.

The department filed a petition in federal district court in Michigan on Feb. 28 seeking to compel Pulte to produce thousands of records related to its employees and subcontractors, as requested in a subpoena it sent the company last year.

Pulte has turned over documents related to its own employees, according to a person familiar with the matter. But it argues in court filings that the subpoena, which seeks payroll records on building projects in eight states from November 2009 to the present, is too broad, and has criticized the department's tactics in the probe.

Federal officials issued the subpoena as part of a broader investigation into pay practices of at least five national home-building companies, which also include Lennar Corp., LEN -1.00% KB Home, KBH -8.45% D.R. Horton Inc. DHI +0.06% and NVR Inc. NVR -1.32%

A Lennar spokesman declined to comment. D.R. Horton and NVR couldn't be reached for comment. KB Home didn't respond to a request for comment.

The main issue in the investigation, say people familiar with the matter, is whether brick layers, carpenters, laborers and other subcontractors hired by the big home builders are paid proper minimum wages, overtime and other benefits, as required by the federal Fair Labor Standards Act.

More

The big builders typically don't build homes themselves. Instead, they hire local companies as subcontractors. Unions have long complained that the big companies have driven down wages for home construction by using subcontractors whose employees are willing to work for less than minimum wage and without overtime pay and health-care or other benefits.

In the past few years, the Obama administration has stepped up enforcement of so-called wage-and-hour requirements, investigating suspected violations in the hotel and janitorial-services industries, as well as housing construction.

The building industry has accused the department of overreaching, saying that big home builders aren't responsible for ensuring that other companies, including their subcontractors, obey labor regulations, and that the government is hindering job growth by targeting the builders.

Pulte fired back at the Labor Department on March 19, accusing it in a legal motion of making unreasonable demands on the company, of legal improprieties and of targeting Pulte unfairly in response to pressure from labor unions.

"[The Department of Labor's] tactics in this investigation have been less than honorable," the motion said. It cited a raid by department employees last year on a Pulte building site in Washington state. The company also alleged that Pulte's chief executive, Richard Dugas, was "interrogated" by government lawyers without his own lawyers present at a Feb. 15 meeting at the department's headquarters. In court documents, Pulte accused federal officials of "legal misconduct" in the incident.

The Labor Department declined to comment, and hasn't responded to the allegations in court.

Pulte, in court filings, also accused the department of bowing to pressure from unions to investigate the company. Documents it filed to support the allegation refer to union officials attending the National Action Summit for Latino Worker Health & Safety, an April 2010 conference in Houston at which, Pulte says, it was unjustly criticized for allegedly mistreating workers. The conference was sponsored by the Labor Department.

Unions have been waging a long-running battle with Pulte. For the past several years, the Laborers' International Union of North America, an AFL-CIO affiliate, has targeted Pulte with actions such as picketing its shareholders meetings to publicize what it says have been a variety of labor violations by the company.

A Labor Department spokeswoman declined to comment.

LIUNA's director of communications didn't reply to requests for comment.

The AFL-CIO directed questions to Margot Veranes, an Arizona-based researcher for the Building Justice Campaign, a push by various labor groups, including the AFL-CIO, to overhaul pay practices in the building trades.

"There's no doubt in our minds that the home builders have to be the ones to take the lead on improving the industry. That's where the buck stops," Ms. Veranes said. "They choose their contractors. They have the responsibility to say, 'We're going to pay an amount that allows for workers to be paid properly under the law.' "

Pulte said in a statement that it "has never objected to a legitimate" Labor Department investigation, but that it does object to "unprecedented requests" by the Labor Department to turn over records related to subcontractors and contract workers, some of whom it plans to use on future projects. In its court filing,

Pulte said the department's probe and subpoena go too far in suggesting improprieties. The agency, for example, asked the company to provide it with information about Pulte's contracts with contractors and suppliers that will do work within the next 12 months, the filing said.

"While the skilled labor crews building our homes are not Pulte employees, our vendor agreements state that contractors are required to comply with all applicable labor laws and wage practices," said Jim Zeumer, Pulte's head of investor relations. "It is not just an expectation, it is an explicit contractual requirement."

Write to Robbie Whelan at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it and Melanie Trottman at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

 
 
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