by Jim Kollaer | May 23, 2019
We have posted in the past about the Wage Theft Game and how rampant it is in construction around the globe. Globally, this game is played through the use of forced labor, conscripted labor, labor trafficking and a variety of other less than honest methods. Government officials in some second and third tier countries around the globe take bribes, kick-backs, endorse nepotism, make deals with the cartels and generally use a variety of illegal and underhanded methods to get projects built. Those projects range in size from major infrastructure projects such as bridges, dams, highways to palaces, second homes, schools and individual homes.
So, it is no wonder that many Contractors and Subs have either borrowed or brought with them the methods of the Wage Theft Game to the construction industry in the United States. Owners and investors may or may not know that these games are being played on their projects and we thought that we would reiterate some of the ways that Wage Theft games are being played on projects in your local market so that you would recognize it when you see it being played.
There are generally four variants of the Wage Theft Game that we see in our markets and that are defined in a recent article in Construction Dive. Those include non-payment, underpayment, misclassification and unauthorized deductions. Let’s take a quick look at each of them to see what they look like.
Non-payment – This one is relatively straightforward. Workers or subs do the work and the contractor or owner refuses to pay for that work. In today’s marketplace where we are seeing tight labor markets, contractors and subs are getting away with it as the result of the wider use of illegal workers – workers who have no recourse when a sub or contractor withholds paychecks and tells the illegal workers that if they complain that the Contractor will call ICE on them and their families and see that they are sent back to their home countries.
Underpayment – Many contractors and subs underpay their workers by using the “sub-sub” method where the prime sub gets a project for a specific bid or negotiated price and then subs the work to another work crew for a lower price and tells that crew that, ” I only have X dollars in this job and you can have it if you take it for that price.” The crew and the craft workers get shorted either by hourly rates or by flat rates for the project while the prime makes profit on the spread.