AG Healey: Colonial Auto Group Cheated Unemployment System

Colonial Automotive Group Inc., with several dealerships in Dartmouth, has agreed to pay $1 million to settle claims that it took advantage of the state's unemployment benefits during the COVID-19 pandemic. The company maintains it did not violate any laws, and settled with the Commonwealth to put the matter behind them.

Attorney General Maura Healey says the company encouraged furloughed employees to apply for unemployment benefits when its showrooms were closed during the pandemic, then requested that those employees continue to work without pay.

"Colonial Automotive planned and carried out an illegal scheme to cheat our unemployment system and avoid paying its workers in order to maximize its profits during the COVID-19 crisis," AG Healey said. "This is a brazen attempt at exploiting workers and the state's unemployment system, and we will take action against those who defraud our state agencies and try to steal taxpayer dollars."

The AG's Office alleges the company directed its furloughed employees to perform various jobs including calling prospective sales leads, setting appointments with prospective customers, delivering cars to customers, and finalizing sales, and it did not pay these employees' salaries for the work they performed during this period.

A spokesman for Colonial said Friday, "the COVID-19 pandemic created an existential business threat. We acted in a good faith effort to survive as a business and save employee jobs while complying with the law. We did not require any employees to engage in sales activities while furloughed. We do not feel we are involved in any violation of law, and we settled with the Commonwealth to put the matter behind us."

Under the terms of the assurance of discontinuance, Colonial will pay $1 million that will go to the state's general fund. The company will also enact policies and procedures to ensure that furloughed employees do not perform any functions related to their job or Colonial's business and, in any instance where furloughed employees do perform these duties, the company will compensate them in accordance with state employment regulations. Colonial is also required to amend any prior inaccuracies in its Employment and Wage Detail Reports filed with DUA.

Colonial operates 16 car dealerships throughout Massachusetts, including Colonial South Chevrolet, Colonial South Jeep Dodge Ram, and Colonial Honda, all on Route Six in Dartmouth.

Information from Mass. Attorney General's Office

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