East Lyme — More than a half dozen members of a carpenters union protested outside the Seaside Village construction project Monday morning, calling attention to state Department of Labor stop-work orders alleging that three out-of-state contractors had violated labor laws at the Niantic site.

According to the New England Regional Council of Carpenters union and confirmed by the Labor Department, Massachusetts firms WCP Construction, KBF Flooring and D+E Flooring were misclassifying employees as independent contractors. Allegations against the firms, which were working under general contractor Dellbrook Construction of Quincy, Mass., also included failure to pay worker's compensation, said Gary Pechie, director of the Wage and Workplace Standards Division of the Labor Department.

"Responsible, law-abiding contractors are not able to compete with companies that cheat and ultimately put local workers on the sidelines," said union representatives in a press release.

Pechie said WCP Construction, which had 21 workers on site, faces a minimum fine of $10,000. D+E had five workers on site, while KBF — the only company so far that had contacted Pechie to try to come into compliance, he said — had two employees at the Niantic project.

"It's still a chonic problem," Pechie said of the workplace violations. "It's like Whac-a-Mole. It's constant."

Pechie said contractors often take a calculated risk at hiring cheap labor, hoping not to get caught. The problem is that, if someone gets hurt, it's the State of Connecticut and its taxpayers that have to pick up the cost of workers compensation, he said.

Union officials and members, standing with signs in front of giant inflatables Scabby the Rat and FatCat the feline squeezing the life out of construction workers, said the latest stop-work order for the site was issued Friday. A previous order a few months ago also cited the 38 Hope St. construction site for similar violations, the Labor Department confirmed.

"It's a big problem," said one of the protesters, union organizer and business representative David Jarvis, on the picket line. "It's everywhere. It's so out of control it's become a business practice."

Tim Sullivan of Barkhamsted said Connecticut is leaving tax dollars on the table every time a firm from out of state works in violation of the law. So far this year, according to the Labor Department, the state has issued more than 200 stop-work orders to firms violating state regulations regarding employee labor, including overtime provisions.

"They should significantly increase the penalties and really make these guys have some skin in the game," Sullivan said of companies found to have been in violation.

Dean Pallotti of Willington said he believes general contractors should be held accountable as well.

"They know what's going on," he said. "They could stop it if they wanted to."

Representatives for general contractor Dellbrook and project owner New Boston could not be reached for comment.

The Seaside Village project, in its second phase estimated originally at $10 million, is envisioned as a workforce housing development with 118 residences at completion. Thirty percent are to be classified as affordable.

New Boston Development Partners owns the site, whose first phase included 53 total units. The current second phase, initially estimated to cost $10 million, involves 45 additional townhome units.

l.howard@theday.com

Twitter: @KingstonLeeHow