Flawed System Lets Contractors Cheat Workers on Federal Building Jobs

AUG 21 2017, 4:58 AM ET

This story was originally published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.

Like many buildings of its vintage, the century-old headquarters of the United States General Services Administration was once lined with asbestos.

The hazardous mineral, used for fireproofing, filled nearly a half-million square feet of the building on F Street in downtown Washington. It took more than a hundred licensed workers almost a year to pry out the substance during a renovation that began in 2011. The workers would log nightly nine-hour shifts, spent mostly in air-tight spaces that reached 100 degrees.

The pay for this grueling task was dictated by the Davis-Bacon Act, a 1931 law that promises specific wages and benefits for construction work on government buildings and infrastructure. The compensation set by the U.S. Department of Labor under the act, based on location and job duties, is often higher than what’s offered on private-sector projects.

Three workers on the GSA job who spoke to the Center for Public Integrity said their employer didn’t tell them what they were owed under the law. They and 124 others filed a complaint with the Labor Department’s Wage and Hour Division in 2011.

Investigators found in the workers’ favor, saying they should have earned $25.47 per hour including benefits, as skilled laborers, a specific category of employee under Davis-Bacon. Instead, their supervisors paid them $15.84 an hour and classified their work as general labor. Six years after the complaint was filed, the investigation remains open on appeal. The workers still haven’t gotten their back pay.

“You feel powerless,” said Luis Fonseca, one of the asbestos removal workers.

But in some ways, Fonseca and his former co-workers already have beaten the odds.

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Bipartisan coalition beats GOP attempt to weaken Davis-Bacon wage protections

July 26, 20171:33 PM CDT BY PAI

WASHINGTON)-By a 183-242 vote, the GOP-run U.S. House defeated the latest Republican assault on the Davis-Bacon Act and its legal prevailing wages for construction workers who toil on federally funded projects. Fifty-one Republicans joined all voting Democrats in backing Davis-Bacon. The other 183 Republicans voted to cut workers’ wages.

And in an indication that even Davis-Bacon foes realize their fight is uphill, Rep. Paul Gosar, R-Az., tried to weaken Davis-Bacon – by lowering the wage base – rather than kill it altogether. But nobody was fooled.

Gosar’s amendment to weaken Davis-Bacon “would hurt the local economy, devalue workers’ pay, and take a very important tool out of the toolbox for Republicans, Democrats, and Americans,” said Rep. David Norcross, D-N.J., an Electrical Worker and former Building Trades Council president in southern New Jersey. He led the debate against Gosar’s move.

“The prevailing wage is based on surveys of local wages and benefits, not whether there is a union or not,” Norcross added. “It keeps the community vibrant, and it takes into account those things that happened” there. ” So when you hear the term ‘if it ain’t broke, don’t fix it,” this is a classic example.”

Besides, “This is about cutting wages in your local community.” He asked colleagues “Why would you ever want to go back and say, ‘I want to hurt the people I represent?'”

The 86-year-old Davis-Bacon Act mandates that locally prevailing wages, determined by the Labor Department, go to construction workers – union and non-union – toiling on federally funded projects such as highways, bridges, airports and subway systems.

For years, construction unions have successfully defended Davis-Bacon against assaults by the anti-worker anti-union Associated Builders and Contractors and its congressional Republican allies, even though two House Republicans pushed Davis-Bacon through in 1931. That scenario occurred again on July 14 during debate on the defense bill.

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The truth about the Davis-Bacon Act

Letters to the Editor – Opinion
June 25 at 7:42 PM

George F. Will’s hit piece on the Davis-Bacon Act, “To create, destroy this law” [op-ed, June 18], was hardly surprising from a columnist who once wrote “the minimum wage should be the same everywhere: $0.”

We take issue with the absurd myth Mr. Will recycled about the intention of the law. As other right-wing ideologues have done, Mr. Will used an 85-year-old quote from Rep. William Upshaw (D-Ga.) to support his charge of racism but neglected to share the response by Rep. Robert Bacon (R-N.Y.) – one of the act’s namesakes – which refutes Upshaw’s comments and shows the Davis-Bacon Act was meant to address the concern that without any wage standards public construction was driving down wages for both white and black workers.

The truth is that the Davis-Bacon Act simply requires payment of “prevailing” wages and benefits when federal money is used for construction projects. These standards have kept public investment from undermining local standards for decades.

The politicians and policy hacks pushing to repeal Davis-Bacon are eager to distract us with baseless charges because if they reveal their true aim – to eliminate all wage and benefit standards – they will have no support.

Terry O’Sullivan, Washington
The writer is general president of the Laborers’ International Union of North America.

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Davis-Bacon and prevailing wage laws have had astounding results since their inception.

by Mark Douglas

Paying workers higher wages means they become self-sufficient instead of becoming dependent on public assistance. This provides a two-fold benefit of improving quality of living and lowering burdens for American taxpayers. In addition, these laws and the technology needed to enforce them have had an unexpected boon-local communities now have the ability to track their disadvantaged worker hiring goals which has proven transformative for both disadvantaged families and for the communities in which they live.

What is Davis-Bacon and Prevailing Wage?
Every American strives to earn a fair wage which allows a lifetime of health and prosperity. Our country was built on this very foundation-that regardless of race, religion, or creed, all of us have the right to life, liberty, and the pursuit of happiness. Today, however, many find themselves unable to live the American dream. Construction workers in particular are earning wages below the poverty line or losing jobs to out-of-state or illegal immigrants willing to work for low wages.

Often times unscrupulous contractors severely underpay their workers in an effort to undercut ethical competition and win government contracts. This results in a multi-billion-dollar tax burden to the American government through increased numbers of people enrolled in health care, welfare, food stamp, and other public assistance programs for these underpaid, uninsured workers.

In 1931, the Davis-Bacon Act sought to protect both federal construction workers and the public from greed driven contractors. Over the next ten years thirty states passed prevailing wage laws that accomplished the same mission in local communities. The purpose of these laws was to create an equal playing field for bidders so that contractors compete based on skill, productivity and safety instead of low bids through paying workers below-the-poverty-line wages.

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Litigation alleged prevailing wage, overtime violations

WHD News Release: 07/14/2016

Release Number: 16-1203-NEW

NEW YORK – Thirty-one workers employed on the federally funded cobblestone reconstruction project on Manhattan’s Peck Slip will receive $431,715 in back wages and interest following an investigation and litigation by the U.S. Department of Labor.

The department’s Wage and Hour Division found that the workers did not receive the proper prevailing wages and fringe benefits required under the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act.

Sam Schwartz Engineering, a first-tier subcontractor under prime contractor MFM Contracting Corp. employed the workers. Investigators found that the employees who worked as flaggers on the project were incorrectly classified. The division alleged that – between August 2011 and January 2014 – they were paid $15 to $25 per hour instead of the prevailing wage rate of $44.49 per hour. The investigation also found workers did not receive all the overtime they were due under CWHSSA when they worked more than 40 hours in a week, did not receive holiday pay and that they were not paid on a weekly basis, as required.

The department’s Office of the Solicitor filed an administrative proceeding in 2015 against MFM Contracting and Sam Schwartz Engineering. The case is now being resolved with a consent findings and order approved by the department’s Office of Administrative Law Judges. Under the order, workers from the Peck Slip project will receive $431,715 in unpaid wages.

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Ninth Circuit Upends Idaho’s Anti-Union Law

Wednesday, September 16, 2015

(CN) – Since federal labor law controls what workers do with their pay, Idaho cannot block union contractors from using portions of wages as a subsidy to better compete for work, the Ninth Circuit ruled Wednesday.

Construction unions developed the strategy, known as “job-targeting” or “market-recovery” programs, as the percentage of workers they represent continued to decline.

The program involve unions collects funds from workers it represents and using those funds to subsidize bids by union contractors, “allowing the contractors to lower their labor costs and so more effectively compete with non-union contractors,” a ruling from the Ninth Circuit says today.

When Idaho banned the practice with a law called the Fairness in Contracting Act, unions filed suit for an injunction.

Before the law could take effect in 2011, Chief U.S. District Judge Lynn Winmill ruled that the law conflicts with Section 7 of the National Labor Relations Act (NLRA).

An appellate panel with the Ninth Circuit in Portland, Ore., affirmed today.

In addition to private jobs, Idaho’s law would apply to federal contractor jobs that are governed by the Davis-Bacon Act, a federal statute that determines labor and pay standards on federal projects.

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US Labor Department recovers more than $87K in unpaid wages, overtime for 39 workers on federally funded construction project in Portland, Oregon

U.S. Department of Labor        Date: January 28, 2015

Wage and Hour Division          Release Number: 14-2311-SAN

PORTLAND, Ore. — Sierra Construction Co. Inc. has agreed to pay $87,239 in back wages to 39 employees who worked on The Prescott apartment building, a federally financed construction project in Portland. U.S. Department of Labor investigators found that Sierra and two of its subcontractors failed to pay the prevailing wages required by the Davis-Bacon and Related Acts.

The department’s Wage and Hour Division determined that Sierra, the general contractor, violated the DBRA by improperly classifying workers in lower-paying positions that did not reflect all duties performed by the employees. For example, on the project carpenters and laborers spent significant time working as ironworkers, but were not paid the proper rate, which can be $7 to $15 more per hour than they were typically paid. Sierra also failed to include information listing the required DBRA wage rates in contracts with two subcontractors, who then failed to pay their employees the required prevailing wages.

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West Virginia’s Prevailing Wage: Good for Business, Good for Workers

January 28, 2015 by Sean O’Leary

Construction workers hired for public projects in West Virginia must be paid a minimum “prevailing” wage and benefits level. This prevailing wage level must equal the market wage rates as determined by the West Virginia Division of Labor, and varies by geographical area within the state and by occupation.1 West Virginia’s prevailing wage law was first enacted in 1933, two years after the federal Davis-Bacon Act, which established a prevailing wage for federal construction projects. Read PDF of report.

Thirty-two states, including West Virginia, have prevailing wage laws for state-funded construction projects, while there is also a federal prevailing wage law for federally funded construction projects.2 These prevailing wage laws help ensure that government-funded construction projects are done with highly skilled workers from the community, increasing productivity and strengthening the economy with good-paying local jobs.

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At an upscale Pearl District apartment project, a union blows the whistle on wage theft

By DON McINTOSH, Associate Editor

The U.S. Labor Department is investigating prevailing wage violations at four Portland-area construction projects that received loan guarantees from the U.S. Department of Housing and Urban Development (HUD). That government help came with conditions: The apartments must be affordable for moderate-income families or the elderly or handicapped, and construction workers must be paid local prevailing wage rates as determined by government surveys.

But an investigation by Painters District Council 5 found that a painting subcontractor at the Parker Apartments construction project paid workers as little as half the amount they were entitled to. Workers who complained about the violation were let go.

Undercover probe
The story begins in March, when Painters union organizer Roman Ramos asked out-of-work union member Marcos Jimenez to go undercover as a painter at the Parker Apartments – a six-story 177-unit apartment building under construction in the Pearl District – and report back any illegal practices he found.

The Parker is named after the toddler son of Bob Ball, a prominent developer who ran for Portland mayor in 2008. To build it, Ball teamed up with Eugene developers Don Woolley and Tom Connor, and with a HUD loan guarantee, they obtained a $35.7 million loan from CBRE, the world’s largest commercial real estate services firm.

Painters District Council 5 has been investigating HUD-sponsored construction projects in the Pacific Northwest, starting in Seattle, says organizing director Jeff Kelley. The goal is to clean up the industry, making it harder for companies to win contracts by cheating workers out of wages.

“Every project we’ve looked at in Washington and Oregon has had issues,” Kelley said. And the biggest issue has been violations of the prevailing wage law, known as Davis-Bacon.

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US Labor Department investigations result in more than $415,000 in back wages for workers on Detroit Palmer Park Square HUD project

DETROIT — U.S. Department of Labor investigations have resulted in over $415,000 in back wages for more than 90 employees performing construction work on the federally funded Palmer Park Square affordable housing in Detroit. The investigations, conducted by the department’s Wage and Hour Division, were part of a multiyear strategic enforcement initiative aimed at combating widespread labor violations on federally funded construction projects in the Detroit area, such as affordable housing construction projects funded by the U.S. Department of Housing and Urban Development.

The investigations found that Malino Construction and several project subcontractors violated provisions of the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act and the Fair Labor Standards Act. The companies failed to pay prevailing wages, fringe benefits and overtime to construction workers on the project, failed to keep accurate time and payroll records for employees, and provided falsified, certified payroll records to the government.

Due to the extent and willful nature of the violations, Detroit-based Malino Construction, the prime contractor on the project, has been debarred from bidding on federal contracts for up to three years

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