America is at the beginning of a government-supported building boom. Between 2021 and 2022, Congress invested more than $2.3 trillion across three pieces of legislation—the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act—to enable critical transportation, climate, energy, environmental, broadband, and semiconductor manufacturing infrastructure through a combination of direct spending, grants, formula funds, and tax incentives¹ .

We’re still very much on the front end of this, with about 10 percent, or about $220 billion, disbursed so far according to various news reports.  One of the key themes associated with using these funds is measuring and reporting workforce outputs and outcomes in order to demonstrate the positive impact these funds are having in the communities where the funding is being invested.

On the infrastructure and construction side, we’ve already seen a move for general contractors to track this information to meet prevailing wage requirements, but we’re also seeing an increased focus on addressing liability concerns, and protecting prime contractors against wage theft claims, and tracking the payroll of all the tiers of subcontractors on a project too.  However, one of the really interesting aspects about these federal funds is the breadth of industries that can benefit. These are sectors that haven’t typically had to capture and share workforce information.  There are communities eligible for grants that can capture and report this information while strengthening their local workforce. In addition, there are energy and broadband projects that can access tax incentives while demonstrating the positive workforce affects.

Most important, even though this may be a new concept for your sector or project, capturing the data and providing customized reporting for each endeavor doesn’t have to be difficult.

According to the Center for American Progress (CAP), as agency funding requirements are being developed and implemented many are likely to include language that applicants will be required to meet preexisting workforce standards, if awarded funding, as well as definitions of policy goals, ideally tied to implementation steps, enforcement, and reporting.  CAP further indicates that agencies may require grantees, who are subject to certified payroll requirements, to use software that tracks demographic characteristics of workers along with hours worked and wages paid.  Project owners and grantees can increase visibility by convening project partners regularly to review data and even make the project data publicly available, if the correct technology is deployed.

You can proactively position your organization for success in these areas by implementing workforce and business tracking, software like our InSight product to easily capture, manage, and report the data on one or many projects.  Typically, for less than the cost of a full-time employee you can use an intuitive software to demonstrate your commitment to meeting these key funding objectives, while increasing your likelihood for success in obtaining funding and facilitate meeting the ongoing funding goals and requirements.

Finally, SkillSmart can help you tell the story of success on your project by developing reports to meet the needs of any project that you are undertaking.

The resources exist to build infrastructure, increase manufacturing capacity, and grow communities while positively affecting workers and communities across the country.  At SkillSmart, we can help you easily capture data, meet your goals, and tell your story.

Citation:

¹ Infrastructure Investment and Jobs Act, Public Law 58, 117th Cong., 1st sess. (November 15, 2021), available at https://www.congress.gov/bill/117th-congress/house-bill/3684/titles; Inflation Reduction Act of 2022, Public Law 169, 117th Cong., 2nd sess. (August 16, 2022), available at https://www.congress.gov/bill/117th-congress/house-bill/5376; CHIPS and Science Act, Public Law 167, 117th Cong., 2nd sess. (August 9, 2022), available at https://www.congress.gov/bill/117th-congress/house-bill/4346.

When we founded SkillSmart ten years ago, we had a vision to use technology to make communities stronger by helping workers obtain the skills they needed to be successful working for employers in their community.  We recognized that strong communities need workers who can earn a good wage and employers that can thrive because of their workforce.  Quickly, we also recognized that it’s difficult to achieve in a community without establishing measurable goals, tracking efforts toward meeting those goals, and having the data to demonstrate how workers and employers are improving.  So, we developed additional technology to increase transparency regarding measurable success.

Our organization seamlessly integrates with clients, offering solutions and ideas to advance projects across a multitude of sectors.

We know that in order to help our clients achieve their important goals, that the SkillSmart team has to be one with synergy, understanding of the challenges that our clients face, and to be supportive of each other as we continue to evolve during very dynamic times. Our organization is one that can easily integrate with our clients and comes to the conversation with solutions and ideas to advance the dialogue and help move the project forward. Each of our team members seeks to uphold our principles of innovation, equity, service, accountability, balance and fun.  In order to recognize the efforts of our team and SkillSmart’s commitment to each other, we set aside June 1 each year, the anniversary of our incorporation, to pause and say thank you, re-charge a bit and reflect on how we can support making others stronger.

Over the last decade, we have helped make countless communities across the country stronger.  Tens of thousands of workers in communities like Prince George’s County, MD, Milwaukee and Racine, WI, Springfield and Everett, MA, Detroit, MI, NYC have been matched to the skills training and job opportunities they needed.  We’ve also helped organizations like the Purple Line, the Detroit Pistons, Hampton Roads Bridge Tunnel, Portland Community College, the St. Louis City SC,  Guilford County, NC, the Milwaukee Bucks, the Nashville SC,  and Amazon HQ2 and other large-scale infrastructure projects demonstrate how the businesses and residents in their communities are benefitting from the economic investments in their communities.

More and more organizations and communities are taking steps to be more inclusive to make their communities strong and we’re excited to help them achieve this important objective, document their progress and tell each unique story.

So, this June 1 and SkillSmart Day 2023, Jason (Green) and I (Mike Knapp) want to say thank you to each of our clients that we’ve had the pleasure to serve and grow with during the past decade.  We also want to say a heartfelt thank you to our SkillSmart team who have each chosen to join us on this journey to make stronger communities – we are honored to serve with you and appreciate all that you do each day.

Everywhere you look, from small towns to big cities, and even the federal government, there’s a drive to improve the economy and create more good jobs with decent pay so folks can live well and help the economy prosper. These are great platitudes, but how can it actually happen?  Well, I had two experiences this past month that provide some perspective on this.

First, we brought on a new client, a county in North Carolina, and I had an opportunity to sit down with our contact who had just started her position in December.  Her title is MWBE Program Director and she reports into the County Manager.  We were discussing why she was hired, why it was an interesting job opportunity and what the County is hoping to accomplish with her in this role.  She said, “If you look at my title, it looks like a traditional compliance role – make sure everyone is reporting things correctly.  Yet, the County recognized that with a nearly $900 million budget, they should have a huge impact on their economic growth, particularly small businesses.  However, they also recognized they don’t have the tools or data to know what impact they’re actually having. So, my job is to help our leaders and policy-makers understand our current impact on the local economy and how to make stronger.”

The second experience was my attending the P3 Conference in Dallas, TX where everything you wanted to learn about public-private partnerships (the 3 “Ps” in P3) was on display for three days.  As I participated in the sessions, it became clear that these innovative financing mechanisms are a “newer” way to get projects constructed in communities – everything from schools to roads and transit and to community centers and libraries.  But every public sector partner I heard speak discussed how each of these projects is a catalyst for economic growth in their communities, especially for small and local businesses which drive the local economy.  So, a critical element for these projects is community engagement and local participation, at every level, and it’s vital to track and manage this in order to achieve the desired community impact and growth.

At SkillSmart, we are partners in helping to achieve these outcomes. Our tools are designed to be easy for project participants to input and share information, the data is readily accessible so everyone can see the progress that is being made, or changes that are needed, and ultimately the reports can help managers, leaders policy-makers and residents can see the impact they are having to make the community and economy stronger.

Let us know if we can support you in your efforts to positively impact your community and grow the economy.

The Investment in Infrastructure and Jobs Act (IIJA) was passed at the beginning of 2022, but we are still in the early stages of this funding being available and for the various requirements to be more fully clarified.  Yet, we know that among the key elements of the IIJA and its funding is to revitalize and build new infrastructure in numerous markets to strengthen communities across the country.  Traditional projects like roads and airports top the list, but there is also funding for alternative energy and EV charging projects among many other areas.

No matter what type of project is being funded, there is a significant focus on demonstrating the impact of that project in the community where each project is happening. – By showing participation from local businesses and workers and providing good wages communities, governments and commercial partners may be afforded access to more funds or tax credits for the project.  Many traditional infrastructure projects and general contractors currently track and report on this information, but with such an array of diverse projects, there are many that don’t have the process or tools in place to do this with efficiency and success.

For the past five years SkillSmart’s InSight software has been used to provide business tracking, supplier diversity, and workforce tracking to support large manufacturing projects, transit and highway infrastructure projects, supplier diversity in higher education, commercial real estate, and municipal jurisdictions.  With superior technology that combines the ability to track numerous project goals and multiple projects in an easy-to-use platform, SkillSmart can help track the information that is needed to tell the story about how the community is growing stronger because of your project and the economic impact it is having, with the data to back it up.  It shouldn’t be difficult to tell such a positive story and SkillSmart helps make the process as easy as possible.

For more on IIJA, visit our additional blog posts:

https://www.skillsmart.us/7-things-to-know-about-iija/

https://www.skillsmart.us/the-1-2-trillion-infrastructure-bill-what-the-construction-industry-needs-to-know/

Want to get ahead of the funding and successfully set your firm up for collecting data, assessing insights, and taking actionable steps on IIJA projects? Contact the SkillSmart team to set up a demo of our software or to ask specific questions about how our software can provide a solution to the data and reporting challenges you are facing today.

At SkillSmart, we know that your data is an asset that can develop trust and confidence.  Data that is easily captured on a daily basis and formally structured is vital to making business decisions while bringing transparency to each project and helping present the positive impact it is having.

As we have shared throughout 2022 in our blog posts, our technology platform offers companies, communities, and project teams a level of data accuracy and transparency while encouraging collaboration and the ability to show positive economic impact throughout all aspects of a project.

Here are the series that have been the most popular topics throughout the past year. These posts have not only educated many different sectors on how the correct collection of data can benefit all organizations working towards a common goal but the data, collected through the SkillSmart platform, has brought forth exciting revelations for companies in education, capital infrastructure, local and state governments, construction, airports, mixed-use development, healthcare and others.

Infrastructure Investment and Jobs Act (IIJA)

https://www.skillsmart.us/7-things-to-know-about-iija/

Top Questions to Ask When Researching Construction Technology

https://www.skillsmart.us/top-8-questions-to-ask-when-you-are-looking-for-certified-payroll-reporting-software/

https://www.skillsmart.us/top-8-questions-to-ask-when-you-are-researching-dei-tracking-and-labor-compliance-software/

https://www.skillsmart.us/top-9-questions-to-ask-when-you-are-a-project-manager-researching-construction-data-tracking-software/

Industry Focus: Wage Theft

https://www.skillsmart.us/is-wage-theft-more-prevalent-in-the-construction-industry/

https://www.skillsmart.us/wage-theft-what-to-look-for-and-what-to-do-when-you-see-something/

2022 Client and Project Spotlights:

https://www.skillsmart.us/amplifying-construction-dei-strategies-using-technology/

https://www.skillsmart.us/skillsmart-and-dragados-usa-ohl-usa-to-partner-on-marylands-purple-line-project/

In September, SkillSmart launched a monthly blog post that places a spotlight on topics that demonstrate how working together and using the right technology organizations can make people, communities, and businesses stronger. The last four months of 2022 brought these thought-provoking posts:

The InSight Minute

https://www.skillsmart.us/the-insight-minute-labor-day-reflections/

https://www.skillsmart.us/the-insight-minute-wage-theft/

https://www.skillsmart.us/the-insight-minute-strengthening-communities-by-making-a-bigger-pie/

https://www.skillsmart.us/the-insight-minute-data-insights-action/

Have a question or want to set up a demo to see how our software is working to provide data, insights, and action for companies across the country?

Find out more here: https://www.skillsmart.us/insight-demo/

When we started SkillSmart 10 years ago, there were two important points we hoped to achieve. First, we had a chip on our shoulder about showing the world that a for-profit business, with strong margins, could also have social impact as part of its core strategy.  Second, we recognized that in order to thrive, communities need small businesses and skilled labor, and our solutions could help build pathways to participation and success for local and diverse businesses and workers.

We began by combining our real-world experiences with technology to design a skills-based hiring platform to increase the number of workers getting jobs and the pay they receive. This was impactful, and our technology is being applied more broadly to have an even greater impact on communities.  Through this process we recognized that what really moves the needle is letting people, organizations, and governments collect and use data from their community, and the communities in which they’re operating, and providing the tools to explore that data and make better decisions to make the community stronger based on those insights.

More simply, we believe in:

Data, Insights, Action

Organizations in most markets are looking for ways to better share the impact they’re having in communities, in part by building a strong foundation of diverse, local business partners and ensuring that local workers are earning wages that allow them to live in that community.  In the past, this has been a compliance and regulatory function – a box to be checked – but now this is a dynamic function that can be tailored to each community depending upon its unique needs.  So, technology must be adaptive, easy to use, and most importantly, responsive to the needs of the users.

Our InSight platform is being used on large and impactful projects like Virginia’s Hampton Roads Bridge Tunnel, Maryland’s Purple Line, and Amazon’s HQ2 expansion, and it’s also being used in local community-based projects like the mixed-used community development, Carillon in Largo, MD, the Lehigh University’s Clayton University Center, and the Illinois Medical District in Chicago. We are continuing to see more organizations in education, capital infrastructure, local and state governments, construction, airports, mixed-use development, healthcare and others that are looking for improved tools to move beyond compliance to capture their data, understand the insights in that data, and then take action.

As the end of the year approaches and we look to the promise of 2023, we are heartened to see the number of organizations our InSight and Seeker platforms are empowering to be more impactful, ensuring communities can become stronger every day. We look forward to sharing more around the success of these projects, how our solutions address challenges in different sectors, and the positive economic impact communities are seeing by focusing on the important work being done and the individuals performing that work each day.

Our Best for a Wonderful Holiday Season and a Blessed and Prosperous New Year!

1. Is there project size or contract size requirement to use this technology tracking platform?

When purchasing construction data tracking software, you will want to make sure that it will fit whatever size project or contract you have (especially if you purchase InSight at the enterprise level). Some projects may be massive, while others are on the smaller side. There is no limit to how small or large a project and/or contract can be for SkillSmart InSight technology to successfully track and report. Even if one project needs to track individual component parts, such as Design & Construction, that can easily be done. Multiple contracts for one subcontractor are no problem either. Let the technology do the work for you.

2. Can you track all of the subcontractors working on my project to limit my exposure and liability? How many tiers can you track?
You should expect your software to capture data that can help and protect you. We can track an unlimited number of tiers. Many projects now require that all subcontractors performing any work on site appear in the goal and report tracking data. Most current software on the market only tracks the first tier or two. InSight allows you to track as many tiers as you need for each project. All users receive technical support from SkillSmart’s help team – no extra fees for extra time. All your data, in one place.

3. Can your technology track a project’s diversity & inclusion requirements? If so, can you track workforce hours and wages in addition to the businesses, contractors, and suppliers (WBE, MBE, Small, Veteran, Section 3, Local, etc.)?
InSIght is one platform that provides you a source for all the required and needed data. Having one system for everyone to report workforce hours and wages, along with business spend (MBE, WBE, DBE, Section 3, Veteran, etc.) spend, is crucial in successfully implementing software for your development projects. And just as the requirements change from project to project, InSight can be configured to meet the reporting requirements, including those for local, state, and federal jurisdictions.

4. Do you have ability to set and track specific custom goals?
There are no ‘one-size-fits-all’ set of goals for construction projects as most of them have unique and specific goals based on a number of factors. InSight empowers you to set and track project-specific goals as well as contractor-specific goals. We understand that contractor-specific goals are crucial in accomplishing your overall project goals.

You can set and track workforce goals (Minority Hours, Female Hours, Local, Apprentice: Journeymen Ratio) and business goals (MBE, WBE, DBE, SBE, Section 3, Veteran, Local etc.). You can also hold subcontractors to customized goals because you know they have the capacity, or not, to meet that goal. When purchasing software for tracking purposes, be sure that you can align the tracking to the goals you would like to meet and the story you would like to tell.

5. What happens if a project lasts longer than the initial contract?
Flexibility is important in pricing, especially in the construction industry where projects often have schedule changes. Many software companies will force you to sign up on a yearly basis towards the end of the project, whether you need the product for one month or all twelve months. With SkillSmart, your subscription can be paid monthly or annually. If you go beyond the initial contract, you will simply pay your same monthly subscription fee until your project ends.

6. Are there restrictions or extra charges on getting your data out of the system?
No. SkillSmart doesn’t hold your data hostage or make you pay to retrieve it. We’ve heard that problem before from those that use our competitors. The inability to retrieve all of the data that you have been continuously entering and tracking over the life of a project. SkillSmart DOES NOT hold your data hostage or make you pay to retrieve it. With technology and reporting requirements continually changing, you need a flexible system that can support you through the entire process. Data is always accessible, easily exportable with a few clicks. SkillSmart has automated the most common data downloads and makes them available to all users. Regular reporting needs required by the project can also be automated, making them available with one click. SkillSmart also provides reasonably priced custom reports with a quick turnaround.

7. If I need to collect specific documentation from the contractors on each project, can I customize the documents I need to manage on each project?
Yes. InSight empowers you to customize your document management feature for each project. Don’t get stuck in the trap of having to use many different tools or software for each piece of functionality you need. Not only can you track your projects and manage your goals, but you can also customize reports and collect your documents for each project. On past projects, InSight’s Custom Upload feature has been used to store, upload and report on items like: Lien Waivers, required business filings, non-cash fringe, insurance, employee specific docs & more.

8. How does the software ensure the data is being entered by the subcontractors?
With so many subcontractors working within the software, it’s important to make sure that everyone is entering their data and can be notified when their data is missing. InSIght has numerous configurable and customizable onscreen and email notifications from the subcontractor user all the way up to the Admin users. To ensure the data is being captured, InSight provides a series of Standard Reports to determine what data has been reported and more importantly who has still yet to enter their data.
Technology has proven to benefit many industries by creating efficiencies for the project teams. It’s now time for the construction industry to embrace technology and get more boots on the site and out of the trailer.

9. How quickly can your software be implemented and configured for my project so that I can begin capturing data?
This is a ‘must ask’ question. We have heard of implementation timelines taking months and years, not days and weeks as would be expected. We can have your site configured for you within a week of the beginning of your subscription so that you can begin capturing data from the project as soon as you need it.

If you are interested in learning more about InSight technology and how this technology supports DE&I and labor compliance tracking across a variety of sectors, click here.

We have a rare and exciting opportunity in our country right now, and we’re struggling a bit with how to write about it.  With everything so politicized, sometimes it’s difficult for all of us to see the significant wins even when they’re right in front of us.  So, we’re going to just wade in…

There is an opportunity for working people who have started their own businesses to grow those businesses, expand the economy, create wealth, and help build their communities.  With the passage of the Infrastructure Investment and Jobs Act (IIJA), there is a nonpartisan effort within red and blue states to plan how small and large businesses in communities across the country can help improve our nation’s infrastructure and grow their local economies.  It’s often portrayed that for the economy to improve for one sector, another sector must be losing, but this is one time because of this previously unanticipated federal investment there is now actually a bigger pie that can benefit everyone!

The Equity in Infrastructure Project has brought together a diverse set of jurisdictions –  from Louisiana and Kansas to California and Illinois – to sign a pledge to leverage IIJA funding to create more opportunities for historically disadvantaged construction businesses — with an important emphasis on prime contracting roles.

“We thought that contracting was one of the ways we could use to increase generational wealth in underserved communities,” said Phil Washington, co-chair of the Equity in Infrastructure Project, at a press event on Oct. 11. “These six [DOTs] represent billions of dollars in infrastructure monies, and billions of dollars in terms of the work that they do in their respective states. So, this pledge to significantly increase minority prime contracting is very, very significant.”

Now is a time where our nation’s infrastructure can serve to bring communities together and benefit our largest construction companies and build capacity and economic growth among small, local, and MWDBE firms, subcontractors, and consultants in these communities.  It is unusual for this type of opportunity to come along, and it requires a measure of intentionality to ensure that all can benefit and the Equity in Infrastructure Project pledge is one way to do this.

At SkillSmart, we help track, measure, and demonstrate how the benefits of making investments in local workers and firms can benefit communities and we know that what is measured is what matters.  So, we’re pleased to see the pledge and look forward to seeing other organizations make similar commitments. And our team will continue working with these and other jurisdictions and general contractors to grow our nation’s infrastructure and communities, while positively affecting economic development.

Wage theft is a broad phrase commonly used to describe worker misclassification, as well as wage and hour violations. The U.S. Department of Labor enforces the Fair Labor Standards Act, but many states are increasing their focus on this issue and have stronger wage theft laws. Wage theft can come in many forms and can sometimes be tricky to identify.  In this post, our team discusses what general contractors can do to be proactive in their identification of wage theft.

As a first step, it can be very helpful to conduct some background research on the subcontractors you are considering for the project to review performance on past projects.

Once you have selected a subcontractor for your job, it’s critical that you have visibility into the work that is being done on your project by all your subcontractors and their tiers, and the manner in which they are engaging their workers.

This includes:

• how they are classifying their workers,
• the wages that are being paid to their workers,
• the functions the workers are performing,
• and even if their workers are designated as a 1099 or w-2 employee.

Each of these areas can be ripe for wage theft.  In addition, it’s important you protect yourself by including appropriate language in your subcontractor contracts articulating the subcontractors’ responsibilities to their workers. It is also important for the organization to be able to follow the money by increasing your line of sight into what contractors and subcontractors pay their workers.  This will provide a mechanism to flag potential issues early and get ahead of any inconsistencies that may arise.

Other precursors are often the trades and scope of work. Wage theft can be more prevalent within drywall, landscaping, and carpentry trades where you can see issues like not paying the correct overtime formula. In the MEP trades, you should be aware of worker misclassification, where workers are sometimes identified as an unskilled laborer vs. a skilled laborer.

These are the types of issues where researching the subcontractors during the prequalification phase can be helpful by looking for “flags” that may give indication that data and what they are reporting/inputting do not align. Assessing these issues up front, before the project begins, confirms data and wage classifications prior to issuing the first check.

Another helpful review is to look at the size of the contract being awarded and the employee capacity of that firm doing the work.  For example, if there is multi-million-dollar contract awarded to a firm with a limited number of employees, there is a likelihood they are using contract workers to increase the capacity of the firm. This is not necessarily inappropriate but provides a flag for the contractor to check in. If there is a proportionally high share of laborers to skilled workers you may want to observe the work at the project site that is being conducted, and by whom, to see if there is any worker misclassification.

Observations on the job site can be very informative. For example, the PPE of the workers on the job site.  Does the PPE match or reflect that of the company that the subcontractors are working for on the job?  If there is a mismatch it could be indicative of someone working in a 1099 capacity or a tiered subcontractor that is unaware of the wage rate for the project.

None of these examples necessarily represent wage theft situations but provide you with signs to look for to help you protect your organization.

What tools can an organization use to aid in addressing wage theft issues?

Accessing and reviewing labor data for the individuals working on a project can be a tremendous resource in addressing potential wage theft issues.  Too often, data doesn’t get captured, gets lost, or is incorrectly documented which then inhibits your ability to review any potential issues.  SkillSmart’s InSight technology addresses these organizational challenges around collection of wage and other data from all prime contractors and all subcontractors on any project.  It provides a scalable, single, and secure repository of information that, with the right software, can be configured to flag and alert staff to many of the key issues. This allows the project team to address any issues with a subcontractor in real time.  It will also give your project team a view into which subcontractors to engage with on regular project site visits to get more information and proactively address any potential wage theft issues.

An example of how technology can be used, in addition to capturing wage data, is the collection daily reports, electronically. It is no longer enough to have papers dropped off at the site trailer for someone to review at the end of the week. Dynamic data allows for in time review of who is on site and the work be performed. This ensures that the workers on site match the scope of work to be performed and most importantly the worker has been correctly classified and receiving the correct wage.

There are other technology solutions an organization could consider.  For example, RFID technology can track workers who are accessing the site throughout the project. This data can be correlate to subcontractors’ payroll data and their employees working on the project. This technology along with real time payroll data can confirm and document who is on-site well before the scope of work has been completed.

Finally, the use of consultants or increased staff to either be on site for all of your projects or to do periodic site visits to identify prospective wage theft issues is another avenue for an organization to explore.  They, along with technology, can help to observe and identify trends that may be potential cases of wage theft.

In each of these approaches you’ll want to look at effectiveness, cost and scalability to ensure that which of these best meet the firms needs on the jobsite while providing you with information and ability to be proactive to address items in the moment.

This article builds on our previous posts about wage theft and hopefully provides some insight into how you can better protect your organization by:

• asking the right questions up front,
• setting up the right contractual structure,
• observing actions on the jobsite,
• incorporating tools that give your organization real time insight beyond what is directly observable, flagging certain issues that need further investigation, and
• being proactive, instead of reactive.

Please reach out to us for more information about how SkillSmart’s software solutions can help you address wage theft issues and to discuss the ways we are helping general contractors, developers and owners across the country be proactive in their review of project teams, at all tiers, to try and prevent liability throughout the project.

There has been an increased focus on wage theft in states and jurisdictions throughout the U.S.  In order to be better advocates for ourselves and others, we should all be educated on what wage theft is and why it is relevant to your firm and projects.

What is Wage Theft?

Though not often discussed, wage theft is the largest form of theft in the United States totaling more than $15 billion a year.  It occurs when workers are not paid the appropriate wage. Common types of wage theft are workers misclassified as contract workers instead of full-time employees, or workers that receive a lower salary level than is appropriate, or when an employer withholds some of their pay, taxes, or benefits (including meal or rest breaks).  Each of these circumstances results in a worker not receiving the appropriate payment for hours worked and can broadly be considered wage theft.

Why is there increased attention on Wage Theft now?

A number of states and jurisdictions have passed laws to expand the responsibility of addressing wage theft beyond just an employee’s immediate employer to also include the prime and/or general contractors for whom the employer is contracted. These laws create a right of action for the employee against their employer and any contractor for which their employer is working.  In other words, all contractors are now responsible for making sure that every worker, for each of their subcontractors, is paid the correct, timely wage.

Is Wage Theft more common in the construction industry?

Wage theft can be particularly pervasive in the construction industry where there can be hundreds of subcontractors and workers on a single project.  It can be difficult if all of the firms are paying overtime or tracking their labor compliance by project.  Many construction companies only pay workers a flat, daily or weekly rate that does not include overtime pay. Some firms misclassify employees as independent contractors. It has become increasingly identified that workers are being misclassified as lower-paid job classifications, such as general laborers or apprentices, even if they are doing the work of a higher-paying classification.

Are there different types of Wage Theft?

Yes, there are several different ways that wage theft can occur. Some are more common than others, but all can create havoc and liability issues for employers, including fines and negative publicity.

• Misclassification Violations – incorrectly classifying employees, such as independent contractors
• Minimum Wage Violations – not adhering to minimum wage laws
• Illegal Deductions – when employers take a portion of an employee’s paycheck for items that do not qualify
• Overtime Violations – when employers wrongfully deny overtime pay to an eligible employee
• Rest Break Violations – not adhering to rest break laws, including deductions for meal breaks from an employee’s paycheck

How do I know what my states labor laws are?

Each state has its own labor laws, and these labor compliance laws vary from state to state. Click here to learn more about the labor laws and wage theft reporting in your state. If you qualify as a small business or disadvantaged business, read more on the Small Business Administrations’ state labor law guides by clicking here.

Why should I care about wage theft?

If you’re a general contractor you may wonder why should you even worry if your subcontractors are onboarding their workers in the appropriate fashion, classifying them in the right fashion, and ensuring they get paid the correct wage.  Beyond the morale point of ensuring that individuals receive the wage that they are owed in compliance with the law, the new general contract liability laws make the general contractor liable for incidences of wage theft.  Even more specifically, the general contractor may now be liable for up to 3x unpaid wages, damages, penalties and attorneys fees.  Further, in addition to the financial cost that may come with a wage theft claim, there is also credibility and public relations risk.

Is there an increase in government monitoring of wage theft?

In addition to the new laws in many states and municipalities, the U.S. Department of Labor announced in early 2022 that it will hire new investigators for the Wage and Hour Division to assist with complaints filed with DOL. The infrastructure package passed in 2022 will require an increase in investigations and enforcement for this topic as well. The Build Back Better Act includes more than $4B earmarked for the Wage and Hour division to bolster enforcement activities, along with other measures to protect workers. In addition, there has been increased attention in wage theft enforcement from state attorneys general.

What laws are broken in Wage Theft cases?

There are a number of state and federal laws that can be triggered when wage theft occurs.  The Fair Labor Standards Act (FLSA), which provides for a federal minimum wage and allows states to set their own (higher) minimum wage, and requires employers to pay time and a half for all hours worked above 40 hours per week, is often triggered.

How is the Davis-Bacon Act related to wage theft?

The federal Davis-Bacon Act and many states’ laws require all contractors and subcontractors on most government-funded construction projects to implement a wage standard that exceeds the federal minimum wage.

Coming Next    

In our next post we will begin to discuss ways in which you can preemptively address wage theft issues, and how to look for indications of wage theft on your projects.

In the meantime, read more about InSight and schedule a demo to see how the software functions, click here.

Up to date information on contractor requirements, worker classifications, and protections can be found on the USDOL’s website.