The Minnesota Department of Labor ruled against two construction companies for prevailing wage violations on a project at Camp Ripley. The ruling includes $54K in back wages along with fines for various labor regulation violations.
Here’s what happened
This case involves two construction companies working at Camp Riley, home to Minnesota’s National Guard. Minnesota, like many states, has prevailing wage laws in place for state-funded construction projects or other projects covered by law. These laws require companies to pay wage rates comparable to wages paid for similar work in the area where the project is located.
The first construction company was found to have inaccurately classified nine workers installing metal roofs. Although the contractor listed the workers as roofers, and paid them accordingly, the DOL says they should have been classified under sheet metal workers. This change in work classification would have resulted in the workers earning a different prevailing and fringe rate. As a result, the workers are now owed $35,727 in back wages. Additionally, they were fined $8K for failing to maintain adequate employee records.
The owner stated that the DOL found that everyone touching sheet metal must be paid the prevailing wage for sheet metal workers. This ruling meant that roofers installing the roof, and those handling the metal roofing, must be classified and paid under the sheet metal wage determination. In a statement to DL-Online, the owner said he was not going to work on state projects in Minnesota again.
The second construction company was also found to have misclassified workers and paid them a lower prevailing wage rate. The company has agreed to pay nearly $19K in back wages to the eleven affected workers.
How to prevent it
In this case, both construction companies accidentally misclassified workers. This happens for any number of reasons, including:
- Workers fail to accurately track their changing roles throughout the day, resulting in hours being reported under the wrong work classification.
- Workers or payroll teams do not correctly classify workers based on the type of work they are doing on a project.
Work classifications are an important starting point for the certified payroll process. If something is wrong with how workers are classified, everything from that point on is likely to be incorrect as well. This is because classifications are directly tied to wage determinations, which tell you the prevailing wage rate and fringe rate. No matter how good your processes are, you will end up with incorrect payrolls in this situation.
As you can see, even a single mistake can become a big problem when it comes to prevailing wage work. This makes it essential to have strong processes in place, including a system of checks and balances to find and correct issues before they become sizable problems.
To prevent situations like this, you should make sure that everyone on your team fully understands what it takes to stay compliant. This includes having a detailed understanding of:
- Prevailing wage requirements
- How to locate correct wage determinations
- How to classify every worker role on the jobsite
- How to locate official resources pertaining to wage determinations, prevailing wage regulations, and worker classifications.
You will also want to make sure your workers in the field understand the role they play in correctly capturing the roles they work under on their timecard. Last but not least, you want to make sure your time and attendance system, along with your payroll software, is capable of helping you stay compliant. The right software makes it easy for workers to capture time and roles, offers auto-verification of data and simplifies the wage determination and classification process.
Resources to help you stay compliant:
Learn how to find and read wage determinations with this updated guide.
Learn how to prevent common prevailing wage and certified payroll mistakes.
Access certified payroll resources for contractors that do prevailing wage work.
Visit our construction resource hub for additional resources.
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.