This time of year has your team busy in the field, your office staff fully engaged, and the administrative wheels are rolling. The last person anyone wants to see on a job site or at the office is an investigator from the state or federal labor department, however, they are not there to “get you”. They have a job to do and, like most everyone else, would like to get it done correctly with as little trouble as possible. Here are a few tips I’ve curated from my decades of work in the construction industry, working as a human resources director and a prevailing wage consultant:
- Set a positive tone when you get a notice or inquiry from an investigator. Acknowledge it as soon as possible and let them know you’re eager to resolve any issues. A good attitude goes a long way!
- Be efficient by providing information to the investigators as quickly as you can. The last thing they want to do is comb through each record in your payroll so the best course of action is to help them. The quicker you can give them the information they are looking for, the faster they can close their case.
- Mistakes happen and can be corrected. Do not go back and try to reinvent history by changing or covering up records – this is where some contractors get into trouble and is a one-way road to a vastly expanded investigation, not to mention a willful violation of the labor law and possible debarment.
- Most investigations are the result of an employee complaint related to an underpayment of wages and/or benefits. The investigator won’t divulge the name of the employee who filed the complaint but will ask for certain records to determine if a violation occurred. This is good news because the investigation is likely to be very narrow.
The quick and accurate production of the requested records is one of the key components to a quick resolution. The key records that you should have highly organized at all times include:
- Certified payroll reports
- Signed time sheets documenting hours worked as well as trade classifications
- Payroll registers
Proof of Payment of Fringe Benefits
This can be tricky depending on how you are satisfying the fringe benefit requirement of the prevailing wage law. If you are paying the fringe supplements to a bona fide benefit trust fund (health and welfare plan and/or retirement plan) you will need to show proof of payment to the trust fund for all hours worked.
If you are not making payments for all hours worked, including private work hours, then you will need to show documentation on how you are calculating your credit under the annualization rules.
If you are taking credit for benefits that the company is providing directly, you will need to provide documentation for that credit such as premium statements, etc. If there is a difference between the credit and the amount of fringe owed, you must show verification of the payments to employees for the difference.
Job Site Investigations
Investigators have the right to inspect job sites for proper postings of required notices as well as interview employees about the type of work they are performing, tools they are using, and how much they are getting paid. A job site visit could very likely lead to a payroll investigation if the investigator finds anomalies during the job site visit such as the posting of old or incorrect prevailing wage rates or if employees claim they aren’t being paid the proper rates for their trade classification. Comprehensive pay stubs that document the various rates and classifications of pay as well as an open-door policy for employees to ask questions is the best insurance for trouble-free job site investigations.
Watch our short animated video to learn how you can move prevailing wage dollars out of payroll and increase profits.
How We Can Help
Direct Advisors, LLC, established in 2001 and located in the Albany, New York area, provides bona fide benefit plan consulting and third-party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act and state prevailing wage regulations. Our clients are located throughout the United States.