$430,000 in Back Wages for Wage Underpayments by Underpayments on Federally Funded Projects

Monday, October 15, 2012
The U.S. Department of Labor has recovered $430,000 in back wages for 59 employees performing drywall hanging and finishing work on the Uptown at City Walk housing project in Woodbury and the City Hall/Library and Senior Center construction project in St. Michael, following an investigation by the department's Wage and Hour Division that found subcontractors on the projects violated provisions of the Davis-Bacon and Related Acts as well as the Copeland Act.

Stonebridge Construction has paid a total of $370,000 due to 37 employees on the Uptown at City Walk housing project, even though the wage underpayments resulted from the practices of Beck Drywall and Complete Wall Systems. Stonebridge Construction contracted with Beck Drywall in Waconia and Complete Wall Systems in Lonsdale for work on a group of multi-family housing units in Woodbury that were constructed in 2010 and 2011.

The Wage and Hour Division found significant violations of the DBRA and Copeland Act among the subcontractors. Investigators found drywall hangers and finishers employed by the subcontractors to work on the federal construction projects were not paid proper prevailing wages; they earned only about one-fourth of the required base wage and benefits. Investigators also found that Beck Drywall's subcontractor, Complete Wall Systems, concealed workers' identities and failed to maintain accurate records of identities and addresses, made cash payments on a day rate basis and failed to maintain accurate records, in violation of the DBRA. Additionally, Complete Wall Systems falsified documents and payrolls in violation of the Copeland Act.

The Davis-Bacon Act requires all contractors and subcontractors performing work on federal and certain federally funded projects to pay their laborers and mechanics the proper prevailing wage rates and fringe benefits as determined by the secretary of labor. On a Davis-Bacon Act project, the prime contractor is responsible for the compliance of subcontractors and lower-tier subcontractors.

Upon being notified of the subcontractors' violations, Stonebridge Construction accepted responsibility for resolving all back wages and fringe benefits owed to the affected workers. Following the investigation, Stonebridge Construction also began to closely monitor the subcontractors to ensure proper payment of prevailing wages to the drywall workers employed on the project.

A previous investigation of Beck Drywall for its work on the city of St. Michael 2010 municipal project disclosed that the company falsified certified payrolls as well as made substantial underpayments of the base wage and fringe benefits required, in violation of both the DBRA and Copeland Acts. Beck Drywall agreed to pay $60,000 in back wages and benefits to 22 workers on that project. Ebert Construction of Corcoran/Loretto was the prime contractor on that project.

Both Beck Drywall and Complete Wall Systems are being considered for debarment due to violations found in the investigations.

The Copeland (Anti-Kickback) Act makes it unlawful to induce – by force, intimidation, threat of procuring dismissal from employment or otherwise – any person employed in the construction or repair of public buildings or public works, financed in whole or in part by the United States, to give up any part of the compensation to which that person is entitled under a contract of employment. The Copeland Act also requires each contractor and subcontractor to furnish weekly a statement of compliance with respect to the wages paid each employee during the preceding week.

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