Construction wages cut in half by new prevailing wage rules (MO)

Posted by National Alliance for Fair Contracting on

By KTTN News | 08/29/2019

According to Jeff Phillips, Communications and Outreach Manager of the Laborers International Union of North America in St. Joseph, construction workers in many rural Missouri counties are working for less this Labor Day holiday.

Missouri’s new prevailing wage law has cut wages for construction workers in many counties, sometimes by more than half. The new formula that calculates the wage for public works projects was approved by Missouri lawmakers last year and went into effect on July 1st.

One of the counties hardest hit was Grundy County in northwest Missouri. The new prevailing wage for construction laborers on building projects is $19.81 an hour, as compared to $39.56 an hour in 2018. Heavy highway laborers this year will earn $19.81 an hour, down from $40.63. The higher wage often included benefits like health insurance and pensions. The new wage applies to all construction crafts in Grundy County.

“This is not a union problem. It hits everyone who works construction, union, and non-union, across all trades,” said Jason Estes, Business Manager of Laborers Local 579 in St. Joseph. “These pay cuts are hitting many of our rural counties hardest, where construction wages are the best jobs available in these communities. These are the people and places who need these family-wage jobs most.”

The new law calculates the wage based on public works projects with more than 1,000 hours worked, and a project cost of more than $75,000. The wages are broken down into two categories: Building, which includes projects like schools, and state and local government facilities; and Heavy Highway, which includes any local, county, state or federal road or bridge.

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Page wants prevailing wage for county projects (MO)

Posted by National Alliance for Fair Contracting on

October 2, 2019 1:27 pm

St. Louis County Executive Sam Page announced last week that he will request that the County Council enact an ordinance requiring contractors to pay a prevailing wage on projects where St. Louis County extends tax incentives.

Page said he planned to request the ordinance last Friday, when the council agenda is released.

Prevailing wage refers to the rate of pay contractors must offer employees when doing business with a public agency. Prevailing wages are established by Missouri’s Department of Labor and Industrial Relations for each trade and occupation.

“In St. Louis County, our work force deserves to earn competitive wages for their work,” Page said in a news release. “Requiring contractors to pay a prevailing wage will prevent companies from low-balling proposals at the expense of their workers.”

Although prevailing wage requirements may increase the hourly labor cost of a project, such requirements may actually help keep the total project cost down by promoting better training, work efficiency and productivity and retention of highly skilled workers, according to the release.

Page also contended that prevailing wage policies help boost the local economy by promoting the use of local contractors and residents for projects, which promotes more money earned and spent in the local economy.

“These prevailing wage requirements, coupled with the county’s minority- and women-owned business enterprises policies, will help promote economic development and protect the interests of working families in St. Louis County,” said Page in the release.

(See Article)

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N.J. contractor gets prison for cheating undocumented workers out of $155K at dorm project in Camden (NJ)

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By Joe Brandt
Posted Sep 12, 2019

Past violations should have stopped Albert Chwedczuk from getting any public money – and therefore, from working on a student housing facility for Cooper Medical School.

He was barred from working on public contracts after past violations of the state Prevailing Wage Act with companies Ren Construction and Real Construction. But he created a new company that soon earned a $400,000 subcontract for masonry work at a Cooper dorm on South Broadway in Camden.

During that work, from 2015 to 2016, Chwedczuk did not pay prevailing wage to his employees, many of whom were undocumented immigrants, the state Attorney General’s office and Department of Labor and Workforce Development said in a news statement.

They estimated that he cheated employees out of about $155,166 in wages once obtaining the contract. He paid most employees a fraction of the prevailing wage they were owed, and others were not paid at all. Chwedczuk also sent falsified payrolls to the project’s general contractor each week.

He also told employees to lie to an investigator from the state labor department about the wages they were receiving, the statement says.

“When contractors receive taxpayer dollars for a public project, they promise to pay prevailing wages to employees for all their hard work,” Attorney General Gurbir Grewal said in the statement. “But this employer cheated his workers and hoarded public funds for his own enrichment. This case is a message to all employers that we will not tolerate contractors underpaying their workers and lying about it.”

“Contractors working on public projects in New Jersey must pay their workers every penny they are entitled to under the law,” Labor Commissioner Robert Asaro-Angelo said.

Chwedczuk pleaded guilty on March 27 to a second-degree charge of false contract payment.

On Sept. 6, Camden County Superior Court Judge Mark Chase sentenced Chwedczuk, 45, of Toms River, to three years in state prison.

(See Article)

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Area DA’s pledge crackdown on wage theft, public works violations (NY)

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October 18, 2019

NEWBURGH – County district attorneys in the Hudson Valley, along with representatives from labor and construction associations, Thursday afternoon, explained the detriments associated with construction and wage fraud that has become a growing concern for public projects, subject to an RFP bidding process for which private contractors are eligible to apply.

In New York, as of 2018, $35.3 million were returned to 35,000 workers directly related to wage and workers compensation fraud.

Orange County District Attorney David Hoovler and Dutchess DA William Grady toured the construction underway at the Newburgh campus of Montefiore St. Luke’s Cornwall Hospital on Thursday.

Hoovler said his office has found a steady increase in the county over the last four years and he outlined a number of ways these different fraudulent practices appear that they have discovered.

“Prevailing Wage Fraud is where you don’t pay the proper wage; or, rather than paying the proper wage, you misclassify someone. Let’s just say a laborer is supposed to make $20 per hour, but a painter has to make $40 per hour. You have people painting; but, you classify them as a laborer. So, you should be paying them $40, but you’re saying you’re only paying them $20. That’s a form,” said Hoovler.

Worker’s Compensation, not having the proper Worker’s Compensation, or Worker’s Compensation at all. “It’s very dangerous if someone gets hurt on the job site. Other liability insurances, that contractors don’t carry, not having them; and then, finally, not paying the proper taxes,” he said.

Hoovler explained that these cases will use prosecution as a last resort. Their first priority is to get these contractors educated and then to get them compliant. A main incentive for these fraudulent behaviors is due to trying to rig the RFP process, where the lowest bidder must be taken. Wage fraud and lack of insurance allows these contractors to submit substantially lower bids.

When it comes to projects that are related to public health and safety, following appropriate practices is of the utmost importance because of the real danger shoddy construction, unqualified workers and lack of insurance could result in.

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Thoughts on labor, unions and prevailing wages (OR)

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I’ve come to my support of labor, unions and prevailing wages in several ways.

Theresa Kohlhoff
Thursday, August 29, 2019

Labor Day signals the end of summer, kids going back to school, my birthday, late season harvests and barbecues. This Labor Day, given the PERS vote in the legislature and the LO council goal to advocate against our state prevailing wage law, as the sole dissenter on the council to this “goal,” I wanted to also make some observations about the significance of the holiday itself.

Oregon’s prevailing wage law, “Little” Davis-Bacon Act, is modeled after the federal law. The statutory purposes are progressive: “To ensure that contractors compete on the ability to perform work competently and efficiently while maintaining community-established compensation standards; to recognize that local participation in publicly financed construction and family wage income and benefits are essential to the protection of community standards; to encourage training and education of workers to industry skills standards and to encourage employers to use funds allocated for employee fringe benefits for the actual purchase of those benefits.”

If a public works project – e.g. schools, roads, pipelines and other public facilities – is going to cost over $50,000, LO must pay prevailing wages. These wages are generally, but not precisely, the rate that union workers get paid in a particular geographical area and are set by the Bureau of Labor and Industries. So for example, the prevailing rates for a public contract in the Portland metropolitan area will generally be higher than, say, in Eastern Oregon.

On the other far end, non-union, non-prevailing wage construction workers may be paid at a cheaper rate, and with or without benefits. Touted as choice and freedom for the worker, it is touted as fiscal responsibility: Paying the differential between the two rates – prevailing and non-prevailing – is denounced as a waste of tax payer money.

I disagree.

If one only focuses on the cost of prevailing wage labor in public contracting versus cheaper non-prevailing wage labor, the economic analysis completely overlooks equal or greater cost savings and the major benefits derived from prevailing wage – to the public entity, to the worker and to the community. Note: I am not advocating for public projects that are beyond our means, or for disregarding prudent budgeting. Raw cost to taxpayers obviously matters. It’s just that true costs have to include far more economic and community factors than just the one criteria: cheapest contract bid. One only has to look at the dismal prospects of our youth as the dark cloud of income inequality and the gig economy reveals who is benefitted by the squeeze and who is gasping from being squeezed.

I’ve come to my support of labor, unions and prevailing wages in several ways. For one, I’ve had practical experience as a lawyer representing a private contractor doing major projects in five states.

He preferred to use union labor and continues to support a strong union.

He got better ratings and therefore cheaper insurance. He was rewarded with an enhanced reputation, even in a fast moving environment, for getting jobs done well and on time. Nothing in this world is perfect but to this business owner the extra labor cost was really minimal when the issue was considered as a whole.

Research confirms and expands these observations. For example, see www.smartcitiesprevail.org/benefits-prevailing-wage/. A union construction worker earns as much as 17% more, lowering the poverty rate by 30%; worksite injuries and fatalities are reduced by as much as 18%; apprenticeships for veterans and POC are expanded by 40%; unfair competition from employers cutting corners on safety/quality is reduced; job productivity is improved by as much as 20%; up to $367 million is saved on food stamps and tax credits. Every $1 of prevailing wage produces $1.50 for the economy! Is this not the way to opportunity? Is this not the way to have confidence and NOT scare ourselves into recessions? The way to build/rebuild a vibrant, resilient, capable middle class that benefits and supports the entire community? I certainly think so.

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Prevailing wages are important to workers, contractors and taxpayers (PA)

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by: Jack Ramage
Posted:
Aug 16, 2019 / 12:00 AM

The Aug. 11 letter “High Gas Tax Feeds a Broken System” by Nathan A. Benefield, in response to the Aug. 4 article “Why Is Pa.’s Gas Tax So High? We’ve Got a Lot of Roads,” identifies three reasons. He is correct on two of those reasons; Pennsylvania gas taxes fund mass transit operations and pay for much of the state police budget, not just roads. Prevailing wages however, are not a contributing factor.

Prevailing wages do not increase the cost of publicly funded construction projects. In those states that have repealed prevailing wage laws, the promise of lower-cost public construction projects never materialized. Casually concluding that eliminating prevailing wage requirements will automatically reduce construction costs is an out-of-touch misconception of today’s economic environment.

Every segment of the economy is competing desperately for qualified workers. Allowing contractors to lower construction workers’ wages in order to gain an unfair advantage over the competition will cause a race to the bottom and exacerbate the shrinking workforce crisis resulting in costlier projects, substandard workmanship and delayed completions due to a shrinking number of skilled workers in construction. States throughout the country are reporting shortages in skilled construction labor. These shortages are especially acute in states where prevailing wage laws have been repealed.

Prevailing wages create a level playing field by establishing reasonable wages and benefits for workers building our state’s infrastructure projects. Without prevailing wages, unscrupulous contractors will import cheap labor and eliminate good paying jobs for the citizens of Pennsylvania, creating an environment where no one wins: not the workers, not the local contractors and, most of all, the taxpayers of Pennsylvania.

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Central Pennsylvania contractor charged for theft of workers’ wage and benefits (PA)

Posted by National Alliance for Fair Contracting on

Sep 30, 2019

Harrisburg – Attorney General Josh Shapiro announced charges against a Centre County contractor after a Grand Jury investigation found that he underpaid workers on Prevailing Wage projects totaling more than $64,000 in wages and benefits for at least five years.

Scott Cameron Good, 56, of State College, is the owner of Goodco Mechanical, Inc., a mechanical contractor based in Centre County who worked on public works projects in Clearfield, Centre and other Pennsylvania counties. Good was charged with Perjury, Tampering with Public Records, and False Swearing. Goodco was charged with Theft by Unlawful Taking, Deceptive and Fraudulent Business Practices and related charges.

The charges are the result of a 21-month Statewide Grand Jury investigation that originated from allegations of theft of wages and benefits from employees on a $16 million public works project in Clearfield County for the Pennsylvania Department of Transportation in 2014. The investigation found that Good and Goodco violated prevailing wage laws by underpaying wages and claiming unlawful benefits credits on the Clearfield County PennDOT project, as well as other prevailing wage projects since at least 2010.

Scott Good previously worked as Vice President for Allied Mechanical and Electrical, Inc. In 2006, the company was found to be in violation of Pennsylvania prevailing wage laws and was sanctioned by the Pennsylvania Department of Labor and Industry for the same practice that he is accused of operating at Goodco.

“Pennsylvania’s prevailing wage laws are designed to protect workers and ensure an even playing field in the bidding process for government contracts,” said Attorney General Josh Shapiro. “The defendants are charged with violating these laws and cheating our hardworking laborers out of thousands of dollars in wages and benefits. Scott Good already knew that his conduct was illegal because his former company was sanctioned for similar violations more than a decade ago, yet he brazenly flouted the law again and continued the scheme at Goodco. I’m proud to work with Clearfield County District Attorney William Shaw Jr. to put a stop to this theft and stand up for workers.”

“Clearfield County laborers deserve to be paid fairly for their hard work,” said District Attorney William Shaw, Jr. “The defendants allegedly took advantage of their workers and violated prevailing wage laws by operating a misclassification scheme inside the company. My office will work alongside the Attorney General’s Office to hold Scott Good and Goodco accountable for their crimes and deliver results for the workers he underpaid.”

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USDOL Wage and Hour Division to Host Prevailing Wage Seminars

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August 2019

Our 2019 seminar will be held in the following location:

  • Indianapolis, IN, August 27th – 29th

The Wage and Hour Division (WHD) Prevailing Wage Seminars (Prevailing Wage Seminars) are three-day compliance trainings designed for regional stakeholders (unions, private contractors, state agencies, federal agencies and workers). In these seminars, conference participants will learn about the following:

  • The Davis-Bacon Act and McNamara O’Hara Service Contract Act
  • Executive Order 13495 “Nondisplacement of Qualified Workers”
  • Executive Order 13658 “Establishing a Minimum Wage for Contractors”
  • The process of obtaining wage determinations and adding classifications
  • Compliance assistance and enforcement processes
  • The process for appealing wage rates, coverage, and compliance determinations

If you have any questions please email WHD-PWS@dol.gov

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Prevailing Wage Requirements Expanded To Private Construction Projects (CA)

Posted by National Alliance for Fair Contracting on

by Richard E. Donahoo
Posted on July 19, 2019
Construction Law Wage and Hour Law

The San Jose Mercury News reported recently that prevailing wage requirements were expanded by San Jose to certain private construction projects. Labor groups herald this decision as a step toward better labor protections.

The San Jose City Council voted in June to require prevailing wage pay from contractors getting subsidies from the city for their projects. There are exceptions to the new ordinance that came in the wake of the sentencing of Silvery Towers project contractor Job Torres Hernandez.

Exceptions to the new requirements include:

  • Some affordable housing projects
  • Certain land-use categories where construction is unlikely without a subsidy

Additional requirements such as local hiring are expected to come up again when the council is back in session. Labor groups are particularly interested in adding local hiring guidelines, apprentice programs and programs for hiring disadvantaged workers associated with downtown high-rise development.

Some business groups including Silicon Valley Organization backed the prevailing wage vote in order to advance the downtown development.

Read the full story in “San Jose expands prevailing wage requirements on private construction projects” …

Prevailing wage rates are set to ensure that workers are fairly compensated for their work and that a strong and skilled workforce remain in place to provide quality construction skills for local construction projects. Prevailing wage rates for specific construction trade classifications (i.e. Laborer, Carpenter, Iron Worker, Traffic Control Technician, Operator and Teamsters) in California are set primarily by the Department of Industrial Relations, and are applied to projects funded by the public and awarded to contractors by public agencies also referred to as the “awarding bodies.” These projects often are also subject to apprenticeship requirements.

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Mendoza signs prevailing wage executive order (IL)

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By Jerry Nowicki
Aug. 14, 2019

SPRINGFIELD – With a $45 billion, six-year capital infrastructure plan becoming law earlier this year, Illinois Comptroller Susana Mendoza signed an executive order Tuesday aimed at refocusing enforcement of state prevailing wage laws for construction projects receiving state money.

“When I took office in 2016, we made sure to let folks know that … our goal is to continue to enforce this executive act. What we’re doing now is just reaffirming it and updating it and getting the word out as we embark on a $45 billion capital plan that this is state law, people need to be aware of it, they need to abide by it.”

Prevailing wage is the rate of compensation determined by the government that must be paid to workers for projects involving state government funding.

At a news conference in her office Tuesday, Mendoza warned of halted checks for any contractor if it comes to her attention workers are not receiving the prevailing wage.

Mendoza said anyone believing a company is in violation of the act could notify her office.

“They would notify us, we would look into that alongside the Department of Labor, and we have the potential to stop payments, further vouchers going out, further warrants, essentially, being sent out until that corrective action is taken,” she said.

Mendoza’s executive order outlines other steps her office will take to ensure contractors pay their employees the prevailing wage as well. The executive order says her office will not accept any grant or contract submissions without proof that the contractor is in compliance with the prevailing wage act, and would have the authority to “pre-audit” any state-funded contracts as well.

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