EXCLUSIVE: Undercover video shows Ala Moana construction workers being paid in cash

HONOLULU (HawaiiNewsNow) - Undercover video shows construction workers at Ala Moana Center's new high-end shops being paid "off the books" with cash.

Contractors and sub-contractors in at least nine stores and eateries are under investigation by the state for labor and safety violations.

In the undercover video, shot earlier this month, a construction supervisor pays a construction worker cash at one Ala Moana shop work site. The supervisor can be seen counting out $20 bills.

Informants for the Hawaii Construction Alliance – a coalition of five construction unions -- said they were paid $30 an hour in cash to work on jobs at Hawaii's largest mall and never filled out tax forms or were given a pay stub, as required by law.

Kalani Morse, general counsel for The Hawaii Group, a human resources consulting firm, said that's bad for the workers.

"Not realizing that, hey, 30 years from now when I decide I want to retire, there's no recorded earnings for me on the social security side. And that could be a real rude awakening for somebody," Morse said.

Morse said firms that dodge the law and pay employees in cash are cheating the government, their competitors and themselves.

"You may have saved a few bucks on taxes here but the cost of an investigation and any fines or penalties and the distraction from doing what you are really best at doing, which is running your business.  All of that comes back as a big heavy cost in time, energy and resources," Morse said.

The surveillance video also shows a construction supervisor talking about how the project is behind schedule:

Informant: Are they pushing you on this project?

Supervisor: Oh my God, yeah.

Informant: When were you supposed to be done?

Supervisor: September 2.

Informant: So the target is behind?

Supervisor: Oh, way behind. They think we're going to be done Nov. 5.

Informant: Are they shooting for that?

Supervisor: They're talking about seven days a week, every single day.

One informant said a construction supervisor offered him $500 in cash if he could bring in two more carpenters to work on the upcoming weekend earlier this month. Some workers reported working for just one day or only for the weekend and were paid cash only, with no paperwork.

Ala Moana Center has said Monday's raid by investigators from the state labor, business and tax departments will not delay the planned opening of the new wing on November 12.

State records show electrical and plastering contractors were each fined $1,000 last month for not training their employees on the use of scissor lifts – which is automatic scaffolding -- in jobs at Ala Moana Center. The same contractors were cited because they didn't have written records of daily safety inspections.

Tyler Dos Santos-Tam, executive director of the Hawaii Construction Alliance, which sent in undercover workers and prompted the investigation, said, "We're worried that when people are under the gun, that they cut corners. And we really hope that that's not the case. We want to make sure that everyone there is being safe."

State investigators raided the job site Monday and are now looking into whether contractors and subcontractors working on the Ala Moana expansion are guilty of payroll fraud because they were trying to avoid paying them medical benefits as well as covering them for workers compensation and disability insurance.

Santos-Tam said the informants in his organization sent to various job sites at Ala Moana were never asked about their training or background and were not given safety training.  Some of them were put to work the day they walked into the site and asked if anyone need another worker, he said.

"It's also whether these people are trained, whether they're licensed, whether they are familiar with all the safety rules.  Those are sort of the bigger concern because those are the things that affect the general public who's going to be shopping in these stores in just a few weeks," Santos-Tam said.

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