New Maryland Law Exposes General Contractors and Subcontractors to Greater Wage and Hour Liability (MD)

Posted by National Alliance for Fair Contracting on

September 19, 2018
J.D.Supra

Effective October 1, 2018, general contractors with projects in Maryland will have a new headache to deal with. That’s when Maryland’s new law, the General Contractor Liability for Unpaid Wages Act, will go into effect. Under the Act, GCs will be jointly and severally liable for the failure of any subcontractors on the GC’s project to comply with Maryland’s existing wage and hour law. GCs will have to ensure that all of their subcontractors (including any sub-subcontractors or other firms they hire) pay their employees in accordance with Maryland law.

Under the new Act, an employee can sue both its employer and the GC on the job for up to three times the wages owed to the employee, plus attorneys’ fees and costs. This applies to any job involving “construction services”, which is broadly defined to include any work involving “building, reconstructing, improving, enlarging, painting, altering, and repairing” of property.

Subcontractors will not be spared the effects of this new law. They are required to indemnify a GC for “any wages, damages, interest, penalties, or attorneys’ fees owed as a result of the subcontractor’s violation.” That means the failure to comply with Maryland’s wage and hour laws can expose a subcontractor to significantly greater liability than before.

GCs should prepare for the new reality by reviewing their subcontractor agreements to ensure they are protected. They also will want to implement protocols for reviewing the pay records of subcontractors and any sub-subcontractors or suppliers they hire.
In addition to the above compliance controls, subcontractors should be on the lookout for new indemnification language in subcontracts and the partial releases that most GCs require in exchange for periodic payment on construction projects.

(Read More)

Study: Prevailing Wage Strengthens Minnesota’s Economy & Promotes a Skilled Workforce (MN)

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School Project Data Shows the Law Boosts Local Hiring and Has No Effect on Construction Costs

Date: July 16, 2018
Author: Frank Manzo IV

St. Paul: In the wake of Michigan’s controversial decision to repeal its prevailing wage law, new research shows that Minnesota’s prevailing wage law boosts the economy by almost a billion dollars every year, creates 7,200 jobs, strengthens apprenticeship programs, increases local hiring by 10%, and has no significant effect on the overall cost of publicly-funded construction projects. The research was completed by the Midwest Economic Policy Institute and University of Colorado State University-Pueblo economist Dr. Kevin Duncan.

“This study brings important, new evidence that Minnesota’s prevailing wage law maintains wages and benefits for Minnesota’s construction workers, reducing their need for public safety programs and helping to keep these working families in the middle class, and it does this without a detectable impact on public construction costs,” said University of Minnesota labor economist Dr. Aaron Soujourner. Soujourner is a former economic adviser to President Trump and President Obama who performed a peer review of the research.

Prevailing wage functions as a local minimum wage for different types of skilled construction work. It is typically applied to publicly-funded projects like roads, bridges, and schools, and is based on what skilled craft workers in the community are most often paid for comparable work. The state’s average full-time, blue-collar construction worker currently earns about $48,000 per year.

“Prevailing wage is a win-win-win for Minnesota taxpayers, the state’s economy, and the construction industry,” said study co-author and Colorado State University-Pueblo economist Kevin Duncan. “While the data consistently shows that overall project costs and bid competition are not affected by the law, its impacts on wages, local hiring, welfare reliance, workforce productivity, and the overall stability of the labor market are especially significant.”

The study analyzed more than 600 winning bids for school construction projects in the Twin Cities region between 2015 and 2017. While the majority of bids did not include prevailing wages, there was no statistically significant difference in the average total cost of prevailing wage bids and non-prevailing wage bids. However, prevailing wage bids utilized 10% more local subcontractors.

“In terms of project costs and local hiring, the new data out of Minnesota mirrors what’s been seen in other states,” said study co-author and Midwest Economic Policy Institute Policy Director Frank Manzo IV. “A repeal of Minnesota’s prevailing wage law would not save money, but it would export more tax dollars to businesses from out of town.”

(Read More)

(PDF Copy of Full Report)

(Executive Summary)

(Key Findings)

VIDEO: Protecting Prevailing Wages (MN)

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By Filiberto Nolasco Gomez
Workday Minnesota
October 1, 2018

MINNESOTA – The Fair Contracting Foundation works to elevate the legal enforcement of applicable laws to ensure quality contractors have the opportunity to compete fairly. One of their focuses is protecting prevailing wages.

“Working people in Minnesota are preserving part of the middle class through prevailing wage laws. Unfortunately, these laws have recently been repealed in several states, including Wisconsin, because some political leaders claim that construction wages are too high. Support the skilled people who build Minnesota; support your local economies; and support prevailing wages!”

(See Video)

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On issue of prevailing wage, Minnesota succeeds where neighboring states have failed (MN)

Posted by National Alliance for Fair Contracting on

By Frank Manzo IV and Kevin Duncan. July 30th, 2018

A legislative virus that is shrinking middle-class incomes, eliminating jobs and causing skilled workforce shortages is spreading across the Midwest. It’s called repeal of state prevailing wage laws.

Prevailing wage laws establish local minimum wage rates for the skilled workers that build our schools, highways, bridges and other critical infrastructure Since 2015, three Midwest states (Michigan, Wisconsin and Indiana) have repealed their prevailing wage laws, and even more have tried to weaken them.

Minnesota has not. And a growing body of evidence tells us why the Gopher State has it right.

First, eliminating prevailing wage doesn’t save taxpayers money. Recent research out of Indiana showed no difference in construction costs before and after repeal of prevailing wage. Additionally, that state’s Assistant Republican House leader has publicly acknowledged that repeal “hasn’t saved a penny.” This is because labor represents only 23 percent of the total cost of a construction project. It is simply not possible to find significant cost savings by cutting worker wages and benefits.

Instead, research shows that when you eliminate the wage floor, any savings disappear due to a host of new problems. For example, arbitrary wage cuts discourage local skilled workers from pursuing careers in the construction trades; and these workers are often replaced by lower-skilled workers from out of town. Costly impacts in the form of lower productivity, more jobsite injuries and increased reliance on social safety net programs more than offset any savings from paying lower wages.

And repeal invites even larger consequences for the local economy.

In a study released this month, we examined hundreds of school construction bids over a three-year period in the Twin Cities area. We found that prevailing wage increases the share of construction value completed by local contractors by 10 percent. If prevailing wage were to be repealed, the tax dollars that employ local workers – and the ripple effects from their spending as consumers – would be exported out of the local community. In fact, we found that Minnesota’s prevailing wage law ultimately strengthens the economy and creates 7,200 jobs statewide.

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Register Now – 20th Annual NAFC Conference, August 19-22, 2018 – San Diego, CA

Posted by National Alliance for Fair Contracting on

July 2018

It’s our 20th Anniversary! Save the date and join NAFC at our upcoming Annual Conference in sunny San Diego, CA. The Conference will be held at the Hilton San Diego Bayfront Hotel, in downtown San Diego. This year’s Conference will be jointly sponsored by the Center for Contract Compliance and will have a national as well as a California specific focus. The NAFC National Conference is attended by participants from across the nation, including representatives from labor organizations, responsible contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

(Visit NAFC’s Conference Page)

(Download Joint Conference Registration Form)

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US prosecutors target construction firms that “institutionalise theft” from their own workers

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A recent spate of criminal prosecutions in New York and California against builders who don’t pay their workers the agreed wage suggests a hardening mood against corporate graft in the country.

27 June 2018 | By GCR Staff

In one case, a luxury home-builder in Manhattan has been charged with stealing more than $1.7m from 500 workers through payroll tricks.

Previously, failure to pay the correct wage was treated as a civil matter, putting the onus on the worker to bring a suit against their employer. But now state prosecutors seem more willing to treat the issue as a violation of criminal law.

Diana Florence, an assistant district attorney (DA) in Manhattan, said the aim was to stop companies in industries that rely on lots of low paid workers from “institutionalising theft as a business model”.

The new approach was illustrated most recently last week when authorities in New York announced that a Brooklyn construction company had pleaded guilty to second-degree grand larceny for underpaying 21 employees.

The Urban Group then made full restitution of $303,411 to the workers, all of whom were immigrants.

Contractors on public sector projects often commit to paying wages as a certain rate, and this case revolved around Urban’s falsely certifying that it had paid employees on a public schools contract at the prevailing wage rates of $63 an hour when in reality it had paid between $10 and $17, and had offered no overtime or benefits.

The discrepancy was revealed when the company was forced to post the legal wage on signs around its worksites.

As well as making restitution, Urban was debarred from public work in New York state as a contractor or subcontractor for five years.

(Read More)

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Brooklyn contractor pays more than $300K to settle worker wage theft claims (NY)

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Kim Slowey
June 21, 2018

Dive Brief:

Brooklyn District Attorney Eric Gonzalez, together with New York City Department of Investigation Commissioner Mark Peters, announced Monday that a Brooklyn construction company pleaded guilty to second-degree grand larceny for underpaying and committing wage theft against 21 employees. Brooklyn-based contractor The Urban Group made full restitution of $303,411. According to the New York Daily News, Gonzalez said the affected workers were immigrants.

Between 2014 and 2015, according to Gonzalez’ office, Urban employed six non-union workers to perform construction-related work – including demolition, masonry, carpentry and painting – at five schools in Brooklyn and the Bronx. Urban reportedly falsely certified that it paid those workers at prevailing wage rates ($62 to $63 per hour), but only paid between $10 and $17 per hour and no overtime or benefits. Urban ended up owing those workers more than $230,000 in restitution. Urban also reportedly underpaid non-union day laborers hired to perform construction work at other school sites by more than $71,000.

The pay discrepancies reportedly were revealed when the company was forced to post the legal wage on signs around its worksites. The Urban Group on June 13 was sentenced to a conditional discharge and is debarred from performing public work in New York state as a contractor or subcontractor for five years.

Dive Insight:

In December, New York city officials, led by Manhattan District Attorney Cyrus Vance, launched a crackdown on wage theft in the city by announcing the prosecution of area construction companies that had allegedly stolen more than $2.5 million in wages from approximately 400 of their workers by writing them bad checks, not paying them prevailing wage rates or overtime and, in some cases, withholding payment altogether. The DA’s office accused the companies involved of making total underpayments ranging from $13,000 to $700,000.

(Read More)

Automating Wage Theft: A Crime Against Families and Community Made Easy

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CAROLE LEVINE | June 1, 2018

We probably should not be surprised that an industry has been built to support “rounding down” the wages of low paid workers, but there’s evidently a large market for it. Perhaps United Way’s new ALICE initiative should pay attention to this kind of corporate behavior.

It’s all pretty simple. You clock into your job, and the system is set to round the time up or down (sometimes in your favor, sometimes not) if you are a few minutes early or you stay late. The system is set to deduct time for your breaks and your lunch, even if you are not able to take that time because of a crisis or a demanding work project. You don’t get paid for that time worked. And now we know that companies are deducting these hours purposefully.

University of Oregon Associate Professor of Law Elizabeth C. Tippett documented this first and co-authored a 2017 study on timekeeping software and a follow-up article on wage theft. Now, she writes in The Conversation about how employers are using software for the purpose of “wage theft” and are cheating workers out of millions of dollars of wages they have worked and should have been paid for.

“Wage theft” is a shorthand term that refers to situations in which someone isn’t paid for the work. In its simplest form, it might consist of a manager instructing employees to work off the clock. Or a company refusing to pay for overtime hours.

A report from the Economic Policy Institute estimated that employees lose $15 billion to wage theft every year, more than all of the property crime in the United States put together.

That report, however, focused on workers being paid less than the federal or state minimum wage. Our 2017 study, which was based on promotional materials, employer policies and YouTube videos, suggested that companies can now use software to avoid paying all sorts of hourly workers.

Tippett focuses on two main areas of digital wage theft by employers: rounding and automatic break deduction. She did a search to see if there were legal cases brought to reclaim lost wages to these two causes, expecting to find only a few. To her surprise, she found hundreds and hundreds of legal opinions. To quote her from the article, “The study’s methodology does not support quantitative inferences about how often digital wage theft occurs or how much money US workers have lost to these practices over time. But what I can say is that this is not a theoretical problem. Real workers have lost real money to these practices.”

(Read More)

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Plymouth man sentenced for wage theft, ordered to pay $100,000 back to workers (MA)

Posted by National Alliance for Fair Contracting on

By Alana Levene GLOBE CORRESPONDENT
JUNE 07, 2018

A Plymouth man accused of swindling dozens of his construction employees out of their wagespleaded guilty Tuesday in Suffolk Superior Court and ordered to pay them nearly $100,000 in restitution, prosecutors said.

Joseph B. Kerrissey, III, 41, was also sentenced to three years of probation, and barred for bidding on public works projects for five years, state Attorney General Maura Healey announced Wednesday.

Kerrissey and his two companies, J. Kerrissey LLC and Sunrise Equipment & Excavation Inc., pleaded guilty to more than one hundred charges including willful wage and hour violations, larceny, and failure to pay the state’s prevailing wage from 2011 to 2017, prosecutors said.

Kerrissey will have to pay $91,743 to 37 former employees of the two companies,which did public construction projects in Hanover, Weston and West Tisbury, the statement said.

“For years, this employer refused to pay his workers and took intentional steps to make it impossible for them to obtain their wages,” Healey said in the statement. The transgressions included bouncing payroll checks, not issuing checks, shaving hours from paychecks, and paying employees less than their agreed-upon rate, prosecutors said.

Prosecutors launched an investigation after several employees complained about not getting paid by Kerrissey, who was indicted in 2016.

He made up an array of excuses to avoid paying, including “telling employees the money should be in the account, saying they did not earn the wages or had to work for nothing, and threatening to take out criminal complaints if they attempted to use the legal system to obtain their wages,” according to the statement.

(See Article)

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BUILDING A FIGHT FOR BETTER WAGES IN SEATTLE (WA)

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Steve Leigh reports from Seattle on a solidarity rally organized by rank-and-file building trades workers who are fighting to win their fair share.

Steve Leigh
June 6, 2018

SEATTLE IS in a building boom, but most building trades workers can’t afford to live in the city.

That was the message that 150 members and allies of CORE 46, the Caucus of Rank-and-File Electrical Workers in International Brotherhood of Electrical Workers (IBEW) Local 46, delivered at a rally on May 31.

The level of construction activity in Seattle is three times what it was in 2011. Contractors and developers are making money hand over fist. CORE 46 has been fighting for decent union contracts and against an unresponsive union leadership since a poor contract was settlement three years ago. In one section of IBEW Local 46, union leaders imposed an inferior contract after members had voted it down several times. Another section of the local is organizing to make sure the same doesn’t happen to them.

In order to step up the fight, CORE 46 organized a “Cross Trades Rally” of all the construction trades in downtown Seattle. The theme was solidarity between all the trades, and with workers in general.

One sheet metal worker explained, “Even with the building boom, the contractors in Seattle are demanding a wage freeze in our next contract. Outside the city, they’re demanding a 30 percent wage cut.”

Others noted that even workers in trades that are being offered a raise won’t get enough to keep up with the rising cost of living.

(Read More)