A plumbing contractor in Louisiana has been banned from government contracts after being found guilty of prevailing wage violations. In what is described as “egregious violations,” the contractor was ordered to pay $32,835 in back wages. They were additionally debarred from bidding on future government contracts for a minimum of three years.
Find out what happened and see how to prevent it from happening in your company.
Here’s what happened
A plumbing contractor from Geismar, Louisiana was hired to perform work on a housing project under the US Department of Housing and Urban Development. The project was located in Baton Rouge and was subject to federal prevailing wage laws. An investigation was launched by the Department of Labor’s Wage and Hour (WHD) division after complaints were raised against the contractor.
The investigation found that the plumbing contractor did not pay three plumbers and a laborer the required prevailing wages and fringe benefits. Instead, they paid a daily flat rate regardless of the type of work done or the number of hours worked. They also did not pay for all hours worked and failed to keep accurate payroll records.
Here is what the Wage and Hour District Director in New Orleans, Troy Mouton, had to say about the situation:
“Our investigation found substantial prevailing wage and fringe benefit violations by Morales Plumbing LLC. The U.S. Department of Labor takes aggravated or willful violations of the laws it enforces very seriously. Due to the nature and severity of the violations found, this employer has lost the opportunity to participate in government contracting for at least three years.”
How to prevent it
This situation appears to come from ignoring prevailing wage laws or not fully understanding how to comply. This demonstrates why it’s important to educate your entire team on what it takes to be compliant with federal and state labor laws. While this can be complicated for government contractors, taking a proactive approach to compliance is the best way to reduce risk.
Here are a few tips on how you can stay up to date with prevailing wage requirements and make compliance a part of your daily processes.
Understand prevailing wage laws: Prevailing wage laws can be complicated, and they are subject to change. This makes ongoing education a key element of staying out of trouble. There are many ways to address this, but bookmarking resources and prevailing wage tools is a good start.
Official prevailing wage info:
- Davis-Bacon Act
- McNamara-O’Hara Service Contract Act
- DOL Compliance Assistance
- DOL Prevailing Wage Seminars
- Official wage determinations (DBRA and SCA)
Helpful prevailing wage info to bookmark:
- Guide to Wage Determinations
- Understanding the Fringe Trust
- How to fill out Certified Payroll Reports (Form WH-347)
You may also want to appoint one person to help your payroll team stay on top of prevailing wage rules and regulations. This person can share educational resources with the team, attend webinars and help everyone stay up to date.
Reduce manual tasks: Even if you understand the laws, mistakes from manually entering information into payroll or reporting systems can occur. By reducing manual tasks, you reduce mistakes and risk. This can be done by moving to a digital time and attendance system in place of handwritten timecards and spreadsheets.
Consider moving to a payroll system that also lets you generate required reports in a format that can be uploaded into reporting systems, like the DIR in California. This will not only make reporting easier, but it can also reduce mistakes from keying information in wrong.
Use industry-specific software: Basic payroll is quite different than payroll for construction. If you’re using software and services that handle the basic needs of a business, then you are missing out on tools that can make life easier. Ideally, your payroll solution should handle all basic payroll functions, but include tools that make certified payroll and reporting easy too.
Look for a payroll solution with features such as:
- Auto-assign prevailing wage rates
- Checks and balances for prevailing wage issues
- Easy work classification tracking for workers in the field
- Simplified wage restitution
Last but not least, take a second look at your recordkeeping policies and make sure they are in line with all laws. Not only are there recordkeeping requirements for general business, but there are also specific rules that government contractors must follow. And while these types of violations may not be what sparks an investigation, they are often uncovered in an audit or inspection. You can save yourself stress by making sure your recordkeeping practices are compliant.
Learn more about recordkeeping for construction companies and check out these helpful resources for prevailing wage contractors:
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.