Construction companies working on a public works project in Massachusetts should be sure to pay their employees the proper prevailing wage rate. Failure to do so will result in not only a violation, but the company’s officers can also be found to be personally liable for three times the amount of money unpaid. A relatively recent case emphasized that, regardless of the reason for failing to pay the proper wage rate, a violation can spell trouble for the employer.
Massachusetts prevailing wage laws
Prevailing wage laws require that anyone working under a public contract be paid a certain rate. This rate is based on the work being performed and the geographical region. When we talk about Massachusetts prevailing wage laws we are typically discussing public construction contracts. However, there are other statutes that apply to the leasing of trucks and vehicles used to execute public works contracts. This is codified in Mass. Gen. Laws ch 149 §27F:
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“No order or requisition under which a truck or any other automotive or other vehicle or equipment is to be engaged in public works by the commonwealth or by a county, city, town or district, shall be entered into… unless said agreements, order or requisition contains a stipulation requiring prescribed rates of wages, as determined by the commissioner.”
Furthermore, Massachusetts case law has long since settled that municipal contracts for refuse collection and disposal are contracts for “public works.” This type of contract is the basis of the following lawsuit brought under the MA prevailing wage laws.
Donis v. American Waste Services, LLC
Th case in questions is Donis v. American Waste Services, LLC. American Waste Services (AWS) was contracted in several towns in Massachusetts to perform hauling and disposal services. At the time of bidding, American Waste knew that the contract would fall under the prevailing wage laws. Donis, one of American Waste’s employees, was offered a contract and was provided with an initial prevailing wage rate sheet.
However, time passed, and the parties extended or renewed contracts. AWS never requested updated wage rate sheets and continued to pay under the initial wage rate sheet. Donis, along with other employees, brought an action against AWS for under the MA prevailing payment laws.
Employer is ultimately responsible for requesting wage rate schedules
The main argument that AWS proposed as a defense was that the awarding public entities failed to provide updated wage rate schedules as the contracts were extended or renewed. The statute appears to put the onus on the awarding authority to request the rates from the department. However, the awarding authority’s failure to comply with the statute, doesn’t relieve an employer of the obligation to pay the proper prevailing wages.
The court reasoned that American Waste could have simply requested the updated schedules themselves. Prevailing wage laws are strict liability statutes, meaning that the intent or reason for violation is irrelevant. A violation is a violation. And the failure by AWS to request updated wage rates is deemed a violation of the prevailing wage requirements.
Day-rate payment doesn’t excuse the record keeping requirements
The other argument that American Waste relied on was that they paid their employees a daily flat rate. And, since the employees didn’t always work 8 hours a day, they were sufficiently compensated. The court also rejected this argument as well. Just because the employer is using a flat, day-rate payment this does not excuse the payroll records requirements under MGL ch. 149 §27B.
AWS’s President and Vice President were held personally liable
The penalty for violating the prevailing wage provisions is 3x the amount of any lost wages and other benefits. The court can also award the costs of litigation and attorney’s fees. That’s a pretty serious penalty!
The court also went further by making the President and Vice President of American Waste Services personally liable for the unpaid wages. Under the MA prevailing wage laws, a president or treasurer of a corporation, or any other officer who controls, directs, and participates to a substantial degree in formulating and determining corporate policy can be held personally liable for violations of the prevailing wage requirements. This same principle applies to managers, officers, or other agents of an LLC, even though the statute does not expressly refer to those entities.
Employers need to be proactive to ensure compliance with prevailing wage laws
As mentioned earlier, prevailing wage laws are strict liability laws. Any violation, for any reason, can make the breaching party liable. This case just reiterates the fact that employers on prevailing wage jobs need to be proactive. It is ultimately their responsibility to ensure that the wage rate sheets are current and updated. The statute may seem like it requires the awarding authority to provide updates schedules. But the employer will still be held personally liable for the failure to do so; in triple, no less.