Prime Contractors are facing stiff fines and penalties when sub-contractors are cheating workers on Prevailing Wage and Davis-Bacon projects. US Department of Labor auditors are finding increasing problems with the work being done on site (Daily Reports) when compared to the certified payrolls that are being submitted. When Daily Reports are completed improperly they can carry real problems for the Prime Contractor. Fines and restitution are becoming a big burden that can be avoided if the Daily Report is accurately completed.
In recent months, Tri State Drywall Systems, LLC of New Hampshire was cited for violating the state Prevailing Wage law and the obligation to maintain payroll records with regard to public works projects, and was ordered to pay more than $928,000 in fines and restitution. National Water Main Cleaning Company of New Jersey was cited for failing to pay Prevailing Wage and failing to submit true and accurate payroll records to the appropriate awarding authorities, resulting in more than $1 million in fines. In addition, Central Mass Disposal of Massachusetts had to pay $870,000 in restitution and penalties for violating the state’s Prevailing Wage laws.
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The Daily Report is both a planning tool and a report card; it lets contractors know how they are performing within the parameters of the project schedule and the future schedules. The submitted Daily Reports must accurately track each worker, and all equipment, as well as work completed, so that funding is paid correctly. Contractors must meet higher standards to make sure that the hours worked on site match the hours that are paid.
With private sector construction at an all time low, contractors are turning to the tens of thousands of public works projects to be awarded in the next few years. Swarms of contractors will be bidding on these public works projects. Contractors with little or no public works experience will do anything to win a job and that means very low bidding will occur. Many of these contractors will look to every nook and cranny to save money and make a profit on the job they just won on low bid. Labor rates and workers will be used as a way to make up the losses. Audits recently have uncovered sub-contractors cheating by having two workers being paid for one, not paying overtime and paying for lower wage crafts but working a higher wage job. Contractors will say they have 5 Carpenter Apprentices on site and only one Journey-level Carpenter to avoid the higher wage rate. Sometimes they just misclassify by paying Plumbers at the Labor rate.
What Can Primes Do About This:
Companies like LCPtracker have software tools like the Daily Reporter. It captures daily log data on all workers on site, the hours worked and the craft being performed. The module verifies that the Daily Report logged matches the certified payroll that is submitted. Reports can be generated for each contractor’s daily activity. A master report of all activity on site that day is also available. The Daily Reporter will ensure the accuracy of the certified payrolls matching the Daily Report, or else will send a notification of discrepancies directly to the contractors, ultimately increasing Prevailing Wage compliance.