Many Georgia construction contractors work on projects that include some sort of federal money. When this happens, it is essential for general contractors to ensure that workers are paid for the work they do — both their employees and the employees of any subcontractors used on the job. Otherwise, the general contractor could find itself in violation of at least one wage and hour law, which could cost the company a significant amount of money.
For example, a large construction firm on the East Coast took on a project to refurbish and renovate three apartment buildings. It turns out that a large number of workers did not receive the correct pay. The Department of Labor became involved, and a settlement was recently reached regarding the issue. The company and others will pay nearly 200 of its own employees approximately $3.8 million in unpaid wages and benefits. Moreover, several subcontractors will pay $1.1 million to approximately 300 workers.
In addition to the monetary compensation, the settlement includes several oversight requirements with respect to MDG Design & Construction, a New York-based general contractor. This includes the responsibility to ensure subcontractors also stay in compliance with federal, state and local wage and hour laws. If the company and its subcontractors do not adhere to the terms of the settlement, it could cost them future contracts with the federal government.
Lawsuits and other actions regarding wage and hour law violations seem to be on the rise. Georgia companies can protect themselves from these actions by having clear contracts with their subcontractors and overseeing their payment processes to ensure employees are receiving all of the pay to which they are entitled. Further, it is important to keep up with any changes in these laws to avoid being out of compliance.
Source: betterroads.com, “Contractor must pay $5 million in back pay”, Tina Grady Barbaccia, June 11, 2014