Over the past two years, organizations in the energy sector have become increasingly aware of the concept of prevailing wage, which has arisen from the implementation of the Inflation Reduction Act (IRA), the Infrastructure Investment and Jobs Act (IIJA), as well as an increasing emphasis on this topic by jurisdictions and project owners. While it’s a fairly straightforward concept, many sectors within the industry are encountering it for the first time, leading to some unfamiliarity. Essentially, prevailing wage refers to the basic hourly rate of wages and benefits paid to similarly employed workers in a specific geographic area.

Now, more energy organizations are not only learning about prevailing wage but also finding themselves needing to take action. This is because certain funds, tax credits, and policies now hinge on ensuring prevailing wages are paid and that the associated information is documented and reported regularly. Traditionally, this requirement was mainly associated with construction projects, leaving many other sectors within the industry relatively untouched by such considerations.

Because prevailing wage requirements are becoming more prevalent, specifically in the energy sector, for new and existing energy operations and development projects, we will address two key points: Why meeting prevailing requirements is important; and How to effectively capture prevailing wage data, for compliance and cash flow from federal funding sources.

First, you might find yourself subject to prevailing wage requirements now, even if you haven’t encountered them before. This could happen because the project or organization you’re working with is now pursuing specific tax credits or financing that necessitates compliance. This change could apply retroactively, even to projects previously exempt. For instance, SkillSmart was brought onto a client’s EV battery manufacturing project, ongoing for nearly a year, only to find out that a recent project refinancing required all workers to meet, track, and submit prevailing wage . Working against a three week deadline, over 125 subcontractors and vendors were required to provide their prior-year information. Many initially dismissed it as an error until the project owner and general contractor clarified the situation.

Secondly, since other industry sectors have had to meet prevailing wage requirements previously, this is not a new concept, so there are tools that can help you, and you don’t have to go through this on your own.  That’s where SkillSmart can provide a solution. InSight, our highly configurable and easy-to-use software platform, is at the forefront of supporting our clients and partners in driving positive change and providing solutions to help project teams use their day-to-day data to meet expectations, internally and externally. Based on conversations during the prospecting stage, our team would recommend the following things to look for and specifically ask about during a demo.

1. Ease of Use: Ensure the software is user-friendly, especially for subcontractors and vendors who will be submitting their information. A streamlined interface can save time and reduce errors in data submission.
2. Tracking Multiple Tiers: Look for a solution that can capture information from every organization involved in your projects, whether they report directly to you or to one of your subcontractors. This ensures comprehensive compliance across all tiers of your supply chain.
3. Scalability: Choose a platform that can grow with your business and support your expanding activities and projects. This flexibility ensures that the software remains effective as your operations evolve.
4. Support: Confirm that the product offers adequate support for you, your team, subcontractors, and vendors at no additional cost. Access to timely assistance can resolve issues quickly and minimize disruptions to your workflow.

As we conclude, remember not to overlook the possibility of now being subject to prevailing wage requirements. Take the initiative to inquire with your client or project owner about any recent changes. Additionally, explore resources such as SkillSmart and tools like InSight, which can offer valuable assistance. You’re not alone in this journey; if you need guidance,  reach out to us. Our team is here to help you navigate through this new terrain.

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.

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/

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.

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.