Whether the State and its taxpayers benefit from mandated wages for construction workers on public projects is the subject of ideological debate. Ideology, however, must give way to the reality that Massachusetts requires every contractor and subcontractor performing public construction to pay prevailing wages
The legal requirement to pay prevailing wages in Massachusetts is not new. What is new is the transfer of enforcement responsibility to the Attorney General, who is launching an aggressive program of enforcement. Also, changes to the law make enforcement easier and noncompliance riskier.
Under Massachusetts law, every public Awarding Authority inviting bids must include a wage schedule listing the prevailing wages in every trade as established by the Commissioner of Labor and Industries. And every contractor and subcontractor hired to work on the project must pay its workers those prevailing wage rates. Since prevailing wage rates are based on collectively bargained rates and benefits, union contractors and subcontractors simply pay their employees what they normally pay on every project, whether public or private. Open shop contractors and subcontractors, on the other hand, must adjust their rates to conform with the prevailing wage schedule contained in the invitation to bid. Since prevailing rates include benefits as well as wages, the open shop employers must also pay the specified benefits either into an established health and welfare plan, or directly to its workers in the form of added wages.
Penalties for noncompliance are stiff. For starters, any contractor or subcontractor who pays less then prevailing wages, or pays them and receives any form of kickback, is subject to a $10,000 fine plus restitution. If caught not paying prevailing wages during construction, the Attorney General has the power to stop the offender's work until it posts a bond in a penal sum established by the Attorney General to insure compliance. The statute also allows any worker who is paid less than the prevailing rate to file a civil suit against his employer on behalf of himself and every other employee in the same situation, and to recover triple the amount of unpaid wages plus attorney's fees. Finally, nonpayment of prevailing rates can lead to disqualification on future public projects. A first offense results in a six month disqualification, and a second offense brings a devastating three year disqualification. In the past, enforcement of prevailing wages was left to the Department of Labor and Industries which acted as a passive enforcer, waiting for complaints of noncompliance before acting.
The Attorney General, while new at the role, takes a more aggressive attitude. He has instructed public Awarding Authorities to investigate bidders who are substantially lower than the competition, and to reject unrealistically low bids that place the contractor's ability to pay prevailing wages into question. And he has instructed those same Authorities to monitor payroll records during construction to seek out potential violators. Adding to the Attorney General's enforcement power is a recent amendment to the statute requiring both the general and subcontractors to submit weekly payroll records to the Awarding Authority, verifying payment of prevailing wages under penalty of perjury. In addition, both must submit to the Commissioner of Labor and Industries, within 15 days of completing work, a signed statement certifying payment of prevailing wages.
Submitting incorrect or false payroll information or certificates of compliance is a prescription for disaster inviting stiff civil and criminal penalties. False statements will eventually come to light either through diligent enforcement, jealous competitors, or dissatisfied employees.
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