Karen Peterson

Karen Peterson: Cheating contractors easier to pin down with group effort

It’s good to have family in the business.

The national story on the front page about fraud in the federal contracting business would not have been possible if our sister McClatchy Company papers hadn’t made this a family affair.

Our sister paper in Raleigh, North Carolina, The News and Observer, first wrote about so-called “ghost workers” in a 2012 story about companies illegally treating employees as independent contractors.

Sunday’s story, part of the “Contract to Cheat” series we’ll run this week, goes deeper into this issue.

“In an attempt to see how extensive the practice is in the state’s construction industry — and at what cost,” N&O reporter Mandy Locke wrote, “we gathered payroll records submitted by private companies hired to build federally funded or backed affordable housing projects.

“The U.S. Department of Housing and Urban Development tried to block The N&O’s access to records stored at dozens of agencies across the state (North Carolina).

“The newspaper, along with The Charlotte Observer, filed a lawsuit in June 2013; we eventually collected tens of thousands of pages of payroll records for 64 projects larger than $1 million built from 2009 through 2013.”

The two McClatchy papers then reached out to reporters and editors of the 27 other papers in our chain. Several pitched in to gather payroll records in their states.

In many of the records, companies showed no tax withholding for workers who should have had it withheld under IRS rules.

McClatchy reporters interviewed nearly 50 misclassified workers found on the 64 projects examined. Nearly half said they were provided no 1099 tax forms by the companies that hired them.

Project reporters kicked up information along the way indicating Washington might be better than most states at detecting worker misclassification.

News Tribune reporter Melissa Santos ran down the tips.

While we’ve had misclassifications, as well, Santos found our state is in some ways a model of how to do it right.

The state has begun performing more site inspections of public works projects and implemented a new database system to help find companies committing fraud. Her story also runs on the front page.

By combining efforts with newspapers across the country, we could prove that worker misclassification is a national problem.

By taking a local look at the national story, we could put our own state’s actions into perspective.

We think both are important in telling this story.


You might get an email in the next couple of weeks asking you to fill out a survey for us.

It’s designed to help us learn more about how you live, what you are concerned about and how you use news. Your answers will be anonymous and pooled with thousands of others respondents.

This is the second half of a monthslong effort to gather data about what kinds of stories work best for our readers.

The first half has been underway since June. Our editors have been “tagging” every local story we write — about 1,000 a month — by topic, depth and relevance to readers.

With software provided by the American Press Institute, we will be able to pull reports about which kinds of stories are most popular with our readers.

The institute will help us analyze the results from both data pools and use them to fine-tune our coverage. The goal: to better serve your needs.

The more people who respond to the survey, the clearer the picture becomes, so please consider taking a few minutes to fill it out.


If you’re reading this on a computer, phone or tablet, click on this link: bit.ly/1pynGEK. If you’re reading the paper, but you own a computer, go to it and type in the link.

The link takes you to a video shot by Adventure editor Jeff Mayor. It goes with today’s story about his rafting trip down the “new” Elwha River on the Olympic Peninsula.

The river is taking new turns, creating new sandbars and hosting new wildlife after the removal of two 100-year-old dams returned its flow to nature.

Mayor’s video puts you in the boat beside him. It lets you listen to the river run. It lets you hear the joyful voices of people who worked for decades to achieve this.

Writing is a powerful storytelling tool. So is video. We’re glad these days to be able to bring you both.