Hourly wages and fringe benefits are pre-determined for those that work on qualifying public works projects. Wage determinations are the published list of these wage and fringe benefit rates for each labor category that falls under these guidelines. There are federal prevailing wage rates, but there may also be state and municipal rates depending on the area and funding source for the project.
Construction and service companies that work on public works projects must use the correct wage determination for each type of labor category. If the correct rates are not used, or other errors occur that lead to an employee being paid less than they should have been, restitution must be made. Simply put, this means that the missing wages must be calculated and paid.
Errors that can lead to restitution
There is a fair deal of complication involved in managing government funded projects. Given all of the regulations and reporting requirements, on top of general project management, it is easy to make mistakes. Some of the more common ways that mistakes can lead to a wage restitution situation includes:
- Selecting the wrong wage determination
- Misclassifying workers
- Workers self-selecting/reporting incorrect roles
- Workers self-reporting incomplete hours worked
- Not paying all worked hours
- Not paying overtime as it’s required by federal and state law
Essentially, any data source that impacts the amount of money an employee receives can lead to an error that requires wage restitution.
Once an error has been found, you must determine the amount of restitution, pay all employees that were affected, and file amended certified payroll reports. The amount of restitution typically is the difference between what should have been paid, what was paid and the number of hours the deficit occurred. If overtime was accrued, it will need to be calculated and included in the restitution payment.
Once restitution has been made you must file an amended certified payroll report. If the error occurred over the duration of multiple weeks, new reports must be filed for each week. This can be time consuming, but it is required to show that you’re in compliance.
If you use software to handle time, attendance and payroll, making restitution can be easier. For instance, our platform makes restitution as simple as a few clicks in most situations. Typically, a client simply corrects the error in the time and attendance system, runs restitution and the affected employees are paid the corrected amount.
If the error occurred due to a misclassification, the correct classification would need to be selected before restitution is ran. New certified reports can be generated with a click or two, making the entire process quick and easy. This not only reduces the time it takes to correct errors, but helps companies quickly get back in compliance.
Preventing errors that lead to restitution
Prevention is always the best policy, especially when it comes to compliance issues. While mistakes may be inevitable, you can take steps to reduce how often they occur. Implementing the right software and payroll platform is the quickest, and most effective way to limit errors. If that’s not possible at the moment, you can take the following steps:
- If employees manually report their hours, verify them before you process payroll and complete reporting.
- Make sure every employee knows the importance of tracking their various work classifications throughout the day. Double check these before processing payroll each week.
- If something seems off regarding reported hours, work classification and overtime, investigate it. It is easier to look into these issues before payroll has been processed.
Last but not least, make sure that you’re using the correct wage determinations. It’s important to know that wage determinations change periodically, so the wage rate today may not be the same in three months.
To find the correct rate, you should follow these guidelines:
Wage determinations for state jobs – Use the advertised date of the job to locate the correct rate.
Wage determinations for federal jobs – Use the published date of the job to locate the correct rate.
You can find federal wage determinations here.
State wage determinations can be found through official state resources, such as the Department of Industrial Relations in California or the Texas Workforce Commission. If there is a difference in between federal and state rates, defer to the higher rate. Always contact your state authority if you have questions about which wage determination to use.
Wage restitution is taken seriously by the official agencies that oversee prevailing wage work. Although mistakes are both common and easy to make, there are many things you can do to stay on the right side of the law. By creating a process for verifying payroll related data, and quickly correcting errors, you mitigate your overall risk. For those looking for a simple, and effective solution, software may be the answer. The right software platform can both reduce the occurrence of errors and streamline the process of resolving them when they happen.
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.