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

  

JEFFERSON CITY, Mo. – A newly-released audit shows some issues with Department of Labor’s enforcement of the state’s prevailing wage law.

The report issued Wednesday by the State Auditor’s Office raised 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. That requires the work of individuals with specialized skills and the right training for the job,” State Auditor Nicole Galloway said. “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.”

In the 2016 fiscal year, Missouri received 219 complaints in relation to potential violations of state law. The audit shows that 24 of the 219 were never investigated by the Division of Labor Standards (DLS), due to budget cuts resulting in staff reduction. DLS is required by state law to investigate any claim of violation of prevailing wage law. Only 115 of the 219 complaint investigations were completed, and out of those, 68 violations were found.

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

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

About half of the complaints received were not entered into the state’s complaint database, which means investigators’ ability to identify past offenses and search for patterns is limited.

The DLS responded to these findings, saying 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. They 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 more timely 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 of them had at least one instance of noncompliance with a prevailing wage law requirement.

The report also highlighted the issue of 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.

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 their outreach and training efforts to ensure the public bodies increase their compliance with the law. DLS responded, saying they will provide a checklist in the future, as well as notify all public bodies with emails to remind them of their responsibilities to maintain compliance with the prevailing wage law.

A final facet of the report concerned construction safety training. The Auditor’s Office said that during their review, they found limitations in the law that present issues with effective enforcement of such training. They 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 in compliance with the training requirements.

The audit of the Prevailing Wage Program received a “fair” rating, taking into consideration the number of findings which require improvement.

To review the full audit, click here.