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Strict Prevailing Wage Laws Can Equal Costly Mistakes

Recently, the Supreme Judicial Court affirmed that the Massachusetts prevailing wage statute is a strict liability statute and mistake or clerical error is no defense. This means that the intent of the company is not a factor in determining liability. The decision in Lighthouse Masonry, Inc., et al. v. Division of Administrative Law Appeals, et al. is a stern reminder to contractors and subcontractors throughout Massachusetts working on public jobs to be meticulous with payroll on prevailing wage jobs.

In Lighthouse, a masonry company, Lighthouse Masonry was hired as a subcontractor for a public works construction project at King Philip Regional High School in Wrentham. The Department of Labor Standards (DLS) issued a schedule of prevailing wage rates for the job. The schedule listed wage rates for the specific job classifications but did not describe the job duties associated with the classifications listed. On July 12, 2006, the Attorney General's Office issued four citations to Lighthouse for failing to pay the proper prevailing wage to employees. Three of the citations were issued because Lighthouse misclassified employees and paid them the wrong rate. The fourth citation charged that Lighthouse paid an employee below the appropriate prevailing wage rate than what was listed on the DLS schedule. Prior to the citation issuing, Lighthouse had noted the error and corrected it. Lighthouse appealed the issuance of the fourth citation claiming a clerical payroll error.

After exhausting administrative appeals and court appeals, Lighthouse argued to the SJC that because it failed to pay an employee the correct wage rate due to a clerical error, it should not have been cited for a violation of prevailing wage law. The Attorney General's Office argued that intent is not a factor in proving a prevailing wage violation because the statute has a strict liability standard.

Ultimately, Lighthouse's argument failed and the SJC held:

The prevailing wage law is a strict liability statute. It specifically provides for civil penalties to be imposed where a contractor or subcontractor has no intent to violate the law....Under a strict liability scheme, an employer's reason for the violation is irrelevant; the fact of violation is sufficient for a penalty to issue....Accordingly, the Superior Court judge was correct in affirming the fourth citation.

Therefore, Lighthouse was found in violation of the prevailing wage statute even though the company had no intention of violating the statute and the error was simply clerical. Such a simple clerical error will be a costly mistake under Massachusetts' prevailing wage laws. The prevailing wage law requires contractors and subcontractors on every public works construction project to pay the "mechanics and apprentices, teamsters, chauffeurs and laborers" the set prevailing wage. The commissioner of DLS is tasked with classifying the jobs and issuing a wage schedule for the various jobs on the public project such as mason, laborer, electrician, etc. The applicable wage rate schedule must be attached to advertisements for bids on every public works project so contractors and subcontractors can factor the prevailing wage rate into bids for work. The Attorney General can pursue civil and criminal penalties against companies and individuals who violate prevailing wage laws include hefty fines and even jail time. Employees aggrieved have a private right of action and shall be awarded treble damages, as liquidated damages, for any lost wages and other benefits and shall also be awarded the costs of the litigation and reasonable attorneys' fees. Consequently, contractors and subcontractors beware of the prevailing wage laws. Educate your bookkeepers and payroll administers accordingly to prevent such costly mistakes.

Contact Attorney Mucci if you are a contractor or subcontractor with questions about prevailing wages and bidding on public work projects.

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