A Loeb Award winner discusses her stories

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Mandy Locke was born and reared in Shelbyville, Tenn., where she started her journalism career as a high school student covering the Tennessee walking horse industry.

After graduating from the University of Virginia, she worked at the Vineyard Gazette in Edgartown, Mass., before joining The (Raleigh) News & Observer in 2004 to report on the criminal justice system. She has won numerous North Carolina Press Association awards for breaking news and investigations.

On Tuesday, Locke and her News & Observer colleague David Raynor won a national Gerald Loeb Award for their three-part series “Ghost Workers.” Loeb Awards are the highest award to receive in business journalism.

Lock and Raynor revealed the competitive trick many contractors in North Carolina have used to win bids: they cheat.  The series details the ways in which worker misclassification and other tax and labor law violations hurt not only construction workers but contractors and the state itself.  Sadly, lax enforcement and poor inter-agency communication has allowed the cheaters to win, and has threatened the future of contractors who do play by the rules.

In part one of the series, “Cheating Businesses Make It Tough for Honest Employers,” Locke tells the story of an honest contractor who is losing business because he won’t cheat.  Part two, “Injured Worker Pays for Employer’s Gamble,” profiles Clemente Hernandez Gonzalez, who was paralyzed in an accident at work but must now fight for just compensation because his employer misclassified him as an independent contractor.  In the final third part of the series, “Inept Bureaucracy Lets Dishonest Businesses Win,” Locke and Raynor report that segmented information and bureaucratic “silos” have helped create a bidding environment in which cheaters win.

Locke spoke Thursday with Talking Biz News about the series and how it was reported and written. What follows is an edited transcript.

LoebLogoHow did the idea for the series come about?

My work on these issues began earlier in 2012 and quite innocently. I was writing a story for Sunshine Week about the trend of private companies using the public records law to get information from government. One of the companies I learned about had been wrestling with the state Industrial Commission to get its database of companies and their workers’ comp policies. I wondered why, so I called the company’s owner. His business model wasn’t particularly interesting or relevant to my reporting, but he told me that he thought North Carolina had a big problem. He couldn’t account for as many policies as there should be based on the number of companies in our state requires to carry insurance.

I decided to take a look myself. We got a copy of the database, and Raynor worked hard to clean it and account for individual policies. Then, we used some simple math. There should have been at least 170,000 companies carrying it. The database revealed only 140,000. I double checked with the Rate Bureau (which collects the data) to make sure our count was accurate.

The problem of uninsured employers had plagued the Industrial Commission for years, though little had been done to stop it. I talked to current and former employees of the commission and searched their database of cases to find some compelling examples. It was a problem in plain sight.

We had a pretty good run of stories about this issue in April and May. State leaders promised reform, and the IC woke up.

During this collection of stories, I started to hear from all sorts of business people about all sorts of problems. I heard from Doug Burton, a masonry company owner. (He was highlighted in day one of the series). He was the first person to mention to me the problem of misclassification, though I’d seen the issue of subcontractors arise in some of the workers comp cases I had studied. The more I learned, the more I realized this was an important story.

I also heard from other employers who told me about the scheme of ghost policies. I got busy searching the database for a good case to explore and found the Worrell/ Gonzalez case.

I convinced Mr. Burton to let me use his business struggles to tell readers about the problem of misclassification. He eventually agreed and opened up his business records and schooled me on the masonry business.

Where did you begin your reporting?

As I mentioned above, my first entree was Doug Burton. I studied his business and spent quite a bit of time with him in those early days. I read all I could about the problem and what other states were doing to tackle it. I spoke with an expert at SAS. I knew very little about payroll taxes and profit margins in the construction industry, so my early weeks were spent talking to as many people as I could who could educate me.

How did you find contractors willing to talk on the record?

My main characters like Burton came to me because of my workers’ compensation stories. A few others, like the Baker brothers, had written a letter to the editor after some of my stories. The others I found by scouring workers compensation cases. For as many as were willing to speak openly and freely with me, many, many more weren’t. Business people like to guard their personal details, and I needed complete disclosure.

You used a lot of paystubs and other paper documents that aren’t public record. How did you get those?

After we decided to focus on masonry to explain the scheme of misclassification, sources directed me to Martin’s Bricklaying, a big player whom they had heard was misclassifying workers. Another source introduced me to a former employee of Martin’s, and that worker became my ambassador to other bricklayers. He shared pay stubs he had from time working with Martin’s and contacted old coworkers to do the same.

Because of their immigration status, some were too scared to speak, but they were willing to share paperwork through my ambassador. Also, Martin’s bricklaying had a pending workers compensation claim from a former employee. While none of those records were at a public stage at the Industrial Commission, I convinced the employee’s lawyer to share paystubs from that worker. In short, I had to navigate a network of undocumented workers, quickly earn their trust and convince them of the value of my story. Some days were particularly challenging, and I had the weight of trying to ensure I wasn’t endangering them by using them as subjects.

Some contractors were not willing to talk to you. What steps did you take to try to get them on the record?

I worked really hard to try to get the owner of Martin’s Bricklaying, and I started early in the process. I called him multiple times, and spoke to his wife two of those times. She assured me she would share a message. I got his cell phone number and left messages there. I went to his home, and while he wasn’t there, I left a message with a relative. I went to worksites where I was told I might find him.

Finally, I sent a registered letter explaining to him what I wanted to talk with him about and what the stories would say. I had the great benefit of hearing about his business in his own words from his application to become a Historically Underutilized Business with the state. I’m confident he knew I wanted to speak to him and that he had every opportunity to connect with me.

The only other contractor I can recall that I wasn’t able to capture was one of the masonry contractors who often hired Martin’s. I left multiple phone messages with his assistant on his cell and home phones over a course of weeks. She assured me he’d received the messages and would call if he liked. I also emailed both him and his son, I seem to recall.

How long did the reporting take? And then the writing and editing?

I spent most of April writing and reporting exclusively about workers’ compensation problems. In May, I started to explore these other issues. June and July were devoted to more reporting and juggling a few other unrelated stories. I spent four days writing the stories. Steve Riley and I took a week to edit, then it was off to copy editors and designers who worked for another week, while Steve and I did massive fact checking and polishing. The stories ran mid-August.

How did you use state databases to improve the storyline?

The database of employers and workers comp policies was critical to both the April stories as well as our August series. In August, we used the database to illustrate missed opportunities with state officials who do health and safety inspections for businesses. We compared OSHA records with the database to show how many possible opportunities there may have been to detect employers without insurance. I simply wanted to illustrate lost opportunities for how agencies could work together to find cheating businesses.

Also, the IC has a searchable database of opinions rendered in contested workers’ compensation cases. I found a great many uninsured cases there once I figured out some key words to use in searches.

Has anything been done about the “ghost policies”?

The governor appointed a task force after our series to explore all of these issues. That group recommended ghost policies be eliminated. That effort, though, hasn’t been spearheaded at the legislature.

What was the most surprising thing you found out in your reporting?

I was surprised at how blatantly some employers broke the laws and how easily they avoided detection. I think we all expect some of this would happen in the free market, but even with government funded projects with a fairly high level of scrutiny, this still occurred.

How did you and David work together in putting the series together?

David was a huge support in analyzing and cleaning the databases we studied. The insurance policy database was pretty dirty, so he worked hard to make sure we were making sound conclusions.

Some news researchers at the paper also contributed. What did they do?

News researchers offered help in trying to find alternate contacts (phone, email) for some of the people I needed to track down.