Prevailing wage audit finds issues with Division of Labor Standards’ investigations

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GALLOWAY

Identifies corrective action to prevent working Missourians from being taken advantage of on the job

Jefferson City – Missouri State Auditor Nicole Galloway has issued a report recommending improvements to the Department of Labor’s enforcement of the state’s prevailing wage law, which is designed to protect workers and ensure they are being paid a fair legal wage for work on public projects.

The report issued by the State Auditor’s Office raises concerns with the complaint investigation process, worker safety and notification requirements.

"When we invest in our state through projects that add jobs to the economy, we expect it to be done right the first time,” Galloway said. “That requires the work of individuals with specialized skills and the right training for the job. Missourians should in turn receive a fair wage and a safe job site, and that's what this law was intended to do. My audit identifies a number of weaknesses and recommends corrective action to improve the law and its administration."

COMPLAINTS NOT INVESTIGATED DUE BUDGET CUTS

In fiscal year 2016, the state received 219 complaints related to potential violations of the law.

The audit shows that 24 of the 219 were never investigated by the Division of Labor Standards (DLS) due to budget cuts that resulted in staff reductions.

The DLS received two complaints of prevailing wage violations on the same subcontractor during the 2016 fiscal year. One complaint was not investigated, but the other was, resulting in the subcontractor owing $44,000 in restitution to 42 workers for underpaid wages. The report also showed workers performing carpentry work had been misclassified and paid as laborers.

Another finding by the auditor’s office showed the DLS closed a complaint investigation against a contractor who refused to cooperate with the investigation without pursuing any further action.

COMPLAINTS NOT ENTERED INTO STATE’S DATABASE

About half of the complaints received were not entered into the state's complaint database, which means investigators’ ability to search for patterns or identify high risk employers with multiple prior violations is limited. Adding to that risk, the report found, the part of the law designed to protect workers from unsafe job conditions has limitations that hinder its enforcement.

The DLS responded to the findings, stating that starting on July 1, 2016 (the beginning of the new fiscal year) the DLS implemented a process of entering each complaint as it is received into an Excel spreadsheet for tracking purposes, which they update when the complaint is assigned for investigation or the reason of denial. The DLS also said the complaints are being investigated, and that they are streamlining the process to make sure each step is followed and completed in a timelier manner.

The prevailing wage law applies to all public works projects constructed by or on behalf of state and local public bodies. Of the 22 public works projects reviewed in the audit 20 projects had at least one instance of noncompliance with a prevailing wage law requirement.

GAPS IN PROJECT NOTIFICATIONS

The report also highlighted gaps in project notifications. State law requires public entities to notify the department of Labor prior to starting work on a construction or other public works project, but there is no enforcement and the requirement is often ignored

The law requires public entities to notify the Department of Labor prior to starting work on a construction or other public works project, but there is no enforcement and the requirement is often ignored.

More than half of the projects reviewed did not have a notification form on file, according to the Auditor’s office findings. The notification provides important information to the department about the project, and entities who do not comply with this requirement have been shown to have higher rates of non-compliance in other areas as well.

Fourteen of the applicable projects did not submit project notifications to DLS. More than half of the projects reviewed did not have a notification form on file.

Thirteen project contracts failed to include a statement requiring the contractor to pay a $100 penalty for each worker who is paid less than the prevailing wage rate.

The auditor’s office recommended that DLS work on its outreach and training efforts to ensure the public bodies increase their compliance with the law. DLS responded stating that it will provide a checklist in the future and notify all public bodies with emails to remind them of their responsibilities to maintain compliance with the prevailing wage law.

CONSTRUCTION SAFETY

Finally, the report looked at construction safety training.

The Auditor’s Office found limitations in the law that present issues with effective enforcement of such training and recommended the Department of Labor and Industrial Relations (DOLIR) work with the General Assembly to make the necessary changes to require that all on-site employees are following the training requirements.

The audit of the Prevailing Wage Program received a “fair” rating, taking into account the number of findings for which improvements were recommended.

A complete copy of the report is available on the Auditor’s Office website.

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