Compliance with prevailing wage laws is a critical aspect of any prevailing wage construction project. Failing to follow the laws, even when its due to a mistake or misunderstanding of the law, can have serious financial and legal consequences.  A recent incident involving an contractor based in Queens serves as reminder of the true cost of not adhering to prevailing wage law.

Let’s look at what happened, and what your company can do to prevent it from happening on your next prevailing wage project.

What happened 

An contractor based in Laurelton, Queens recently reached a settlement with the City Comptroller’s office over allegations of wage theft on two subway stations in 2019.The project involved in demolition and masonry work on two train stops, and was covered under state prevailing wage law.

While the complaint was initially brought forth by two employees, further investigations revealed that at least four other workers had also been underpaid by the company. It is quite common for a case like this to start with a specific complaint and expand to include violations that are discovered during the investigation. In this instance, one worker was lost nearly $3,500 in wages between August and December 2019. With the inclusion of accrued interest at a rate of 16%, the total amount rose to just over $4,900. In total, six workers were underpaid, resulting in more than $8,000 in lost wages.

The settlement required the company to pay a substantial fine of $14,215.64 for failing to pay the prevailing wages as required. This includes interest and penalties, in addition to the back wages owed to the employees. In this instance, the City’s Comptroller’s office stated that the violation was not considered willful. While this indicates that the contractor did not intentionally break the law, it does not change the results of the case.

How to keep it from happening to you

The incident involving this construction company underscores the importance of strict adherence to prevailing wage laws. Contractors and companies engaged in public projects must take proactive measures to ensure they do not face similar problems. While this is a comprehensive, ongoing need for prevailing wage contractors and subcontractors, the following tips can help you stay on the right track and out of hot water:

Familiarize Yourself with Prevailing Wage Laws: It is crucial to thoroughly understand the prevailing wage regulations specific to the area and type of construction work involved. Stay updated on any changes to these laws.

Maintain Accurate Records: Keep detailed records of employee hours, type of work performed, wages and fringe benefits paid. This will help demonstrate compliance in case of an audit or investigation. Read more about construction record keeping here.

Implement Regular Audits: Conduct periodic internal audits to identify and rectify any wage discrepancies or potential violations promptly. If you find an error in pay, correct it with wage restitution and update any related certified payroll reports.

Cooperate with Investigations: If faced with allegations of wage violations, cooperate fully with any official investigations and work towards resolving the issues as quickly as possible.

Choose Reputable Subcontractors: If acting as the primary firm, carefully vet subcontractors and ensure they have a track record of compliance with prevailing wage laws.

Digitize your Payroll Process: Many construction companies use paper timecards, handwritten time tracking, and multiple systems that require them to manually move info in between them. systems. Using digital time tracking and certified payroll software that is designed for the construction industry can dramatically reduce risk and make payroll quick and easy.

Contractors and companies must be proactive in their approach to compliance to avoid the legal and reputational consequences that come with wage theft allegations. By taking these preventative measures, construction companies can protect their reputation, avoid costly fines, and, most importantly, ensure that their workers receive fair compensation for their valuable contributions to public projects.

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.