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New York Employers: Beware Costly Non-Compliance With Prevailing Wage

Employers contracted to complete a public work project must become informed of local and state prevailing wage law, as the cost of non-compliance is steep. Because fines and penalties are calculated on a per-day basis, a month-long project can result in 30 separate violations.

From January 2014 through July 2014, the New York City comptroller’s office said it has assessed $4 million in prevailing wage violations, plus an additional $250,000 in penalties paid to the city.

There are similar rules for companies that secure federal government contracts, under the Davis-Bacon Act. That measure applies to contractors and subcontractors working on federally-funded or assisted contracts of more than $2,000 for construction, alteration or repair of public buildings or public works. In addition, companies that land federal contracts in excess of $100,000 must pay laborers, mechanics and guards time-and-one-half the regular rate of pay for any hours worked over 40.

Overtime provisions as set forth in the Fair Labor Standards Act and New York Labor law are also applicable to companies that hold government contracts in New York.

Because the prevailing wage law is fluid and ever-changing, it’s not difficult to see how a firm might commit an honest mistake. However, companies that secure government contracts are deemed responsible for educating themselves on their duties upon assuming such work.

Employers first must abide by reporting requirements, which mandate companies keep an accurate record of each employee, their occupational class, pay rate and other details. These records have to be maintained for at least three years after the project is completed, and promptly made available to the state or federal attorney general upon request.

Additionally, employers must be sure to classify each worker accurately according to the type of work they do. Each class of employee is going to receive different pay rates, and those rates vary not only on the basis of job title, but also location. So for example, a boilermaker in Bronx County should expect to make a prevailing wage rate of $51.56 this year. That same worker in Albany County can expect to earn $31.24 hourly.

There are also highly specific provisions with regard to helpers, apprentices and other classifications of worker. Additionally, overtime pay, holidays and vacations benefits are spelled out clearly for each job title, as are regulations on meal periods and break times. A 2013 report by the New York Citizens Budget Commission noted the determination of annual prevailing wages is neither straightforward nor transparent. Variables include title, occupation, expertise and local jurisdiction. For example, the job of “carpenter” has nine different classifications in Bronx County – each with different pay grades – but there are only three carpenter classifications for workers in Albany County. Still, It’s up to the employer to make sure the firm is in compliance with respect to each and every worker.

Failure to abide by prevailing wage law recently cost a New York City security firm $1.3 million, plus an additional $27,000 in civil penalties, according to news reports. AlliedBarton Security Services LLC agreed to settle complaints that it failed to pay the prevailing wage to security guards for more than two years, starting in October 2010. The agreement with the out-of-state company was brokered with the city comptroller’s labor law bureau, which found some 150 guards were being paid at differing rates, many losing out on important benefits because the company wasn’t following prevailing wage law provisions.

Investigators said while the firm began by initially paying the correct rates, it continued to pay its workers the same rates over the course of the contract, even though rates are raised on an annual basis. A company spokeswoman said the error was a result of a misinterpretation of the law, and the violation wasn’t willful.

Even so, the error has cost the company a great deal, and the finding could result in difficulty securing future government contracts.

The Law Offices of Ira S. Newman provides employment litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
6 Things New Yorkers Should Know About Prevailing Wage Law, February 2012, Citizens Budget Commission
More Blog Entries:
New York City Prevailing Wage Lawsuits & Third-Party Breach of Contract, Feb. 18, 2014, New York City Prevailing Wage Lawyer Blog