Reducing and Eliminating Wage Theft
Wage theft is a lesser discussed but very pervasive problem in the construction industry, but should be a growing concern for your project. The use of 1099 workers or misclassifying workers is the most often used tactic by these subcontractors. Wage violations occur when contractors fail to pay their employees the legally-mandated wage on a project. And the liability for these violations is growing. Both Maryland and Virginia have passed legislation that exposes the general contractor and owner to subcontractors' wage violations on projects in their respective jurisdictions. Wage theft is a real challenge in that it robs workers of hard-earned money and morale. It has the potential to levy significant fines and jeopardize the status of your project.
It’s critically important the project owner and General Contractor have visibility into payment status for every individual on a project they oversee. Of course, that creates complications. The project owner and General Contractor often don’t have direct visibility into payroll activities in the subcontractors’ lower tiers on a given project.
As a result, if claims are made, it is difficult to refute, creating a significant potential liability, a distraction on the project, and negative publicity, not to mention the impact on the project’s workers. Even more challenging is if a claim is made, how do you make restitution if you can’t even identify when and where the issue occurred?
As a major corporation selected Arlington, VA for its second US headquarters, it was under significant pressure to protect against any potential wage theft and be able to collect and track its payroll and workforce engagement across multiple jurisdictions. The InSight platform operates as the intake mechanism for all payroll and workforce data, evaluates for compliant wages, and produces real-time reports for relevant project stakeholders. Further, SkillSmart acts as the labor administrator for our workforce and data expertise and the technological capability of the InSight system. In this capacity, SkillSmart operates as the primary administrator for the corporation in its negotiations with contractors and stakeholders regarding implementing a consistent labor standard.
Solution & Result
To combat this issue, you must increase transparency on the project in real-time. Hence, you have visibility into all tiers of subcontractors’ compliance efforts. You can be alerted when a subcontractor is out of compliance. InSight provides a platform where owners and General Contractors can set the work classification, wage rates and track 1099 workers to prevent wage theft and prevent costly lawsuits that can lead to large financial settlements.
Over the years, there have been numerous projects in the Washington DC Metro area that have resulted in large settlements paid out by the General Contractor and/or owners. With real time data at the hands of the project leadership team, you can reduce your liability while providing the workers with fair and appropriates wages.