The U.S. Department of Labor’s Wage and Hour Division (WHD) is responsible for overseeing labor laws and investigating reported violations.  Recently, the agency ruled against Roepnack Corp., a Florida-based contractor, for violating the Labor Standards Act (FLSA), the Contract Work Hours and Safety Standards Act (CWHSSA) and Davis-Bacon and Related Acts (DBRA). As a result of the finding, Roepnack Corp. must pay $124,075 in back wages and fringe benefits.

Here’s what happened

Roepnack Corp. performed work on the Seminole Development, a Hialeah senior living facility in south Florida. The project was funded by the U.S. Department of Housing and Urban Development, making it subject to all federal labor laws, including prevailing wage regulations.

According to WHD, Roepnack Corp. failed to pay the correct prevailing wages to ironworkers, forklift operators, carpenters, truck drivers and laborers. Additionally, they didn’t pay fringe benefits or required overtime. The WHD also found that the contractor did not correctly record the number of hours employees worked on the project.

While keeping up with federal labor regulations is difficult, Tony Pham, Wage and Hour Division District Director (Miami) says that, “All contractors and sub-contractors must ensure they understand all of the requirements associated with performing work on federally funded construction projects” (Source)

How to prevent it

Paying the wrong prevailing wage is a common mistake that’s easy to make because prevailing wages change on a regular basis. This is further complicated by how difficult and complex wage determinations are to read and understand. To do it correctly you have to visit the federal government’s official website, locate the correct wage determination based on several factors, including the type of contract, the location of the job and the type of work being done. It’s easy to make mistakes at any step along the way, but this guide on reading wage determinations will help you learn how to  navigate the system correctly.

Sometimes the wrong prevailing wage gets paid because a worker isn’t accurately recording their changing roles throughout the day. So, if someone starts out the day doing electrical work, then works as a laborer helping with job site cleanup, their role changes and assigned wage determination must be recorded. Since an electrician has a different prevailing wage than a laborer, failing to record the changing role would result in the wrong hourly rate.

This case also included failing to pay overtime, which might point to problems around how time is recorded and processed. Sometimes this happens because people are using manual methods to track hours, like spreadsheets. It may also result from mistakes made when transferring information from time cards or spreadsheets into payroll systems. You can help prevent this by updating your time and attendance processes to use digital time capturing,

You should also create a system of checks to verify and validate all information, from job site info and hourly wages to the number of hours worked. This should be done before payroll is processed so that you can prevent certified payroll mistakes before they happen. Make sure you also have an easy method available for people to report errors and a good process for making wage restitution when necessary. As you can see, it is quite easy to make simple mistakes that lead to large violations. This can lead to financial and legal problems, or even debarment from government contracts. For this reason, it’s important to be proactive when it comes to preventing prevailing wage mistakes. Apart from making sure everyone understands the rules and regulations, you can use payroll software that’s made specifically to handle prevailing wage work for the construction industry.

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.