Does the Responsible Public Developer conduct investigations to determine whether workers are accurately classified and fully paid?
Yes, but the process is costly to everyone involved: the owner, contractor, the subcontractors and laborers. Here's why.
Prevailing wage law, both Federal (the Davis-Bacon Act, 40 U.S.C. 276a) and State (RCW 39.12) provide that prevailing wages will be paid to workers under rates established by job location (county) and by worker trade classification (carpenter, painter, laborer, etc.). In Washington State the rates are published and updated by the Department of Labor and Industries. The owner and DOL also conduct audits to determine whether workers who are laborers are also performing work that falls under the definition of another higher paid classification. This is called classification jumping and it can be intentional or accidental. Fines accompany intentional classification jumping, and in the worst case, a contractor who repeatedly and/or falsely underpays workers can be barred from public works (debarment).
When a public owner has reason to think classification jumping may have occurred, it will examine payment application and time cards, and conduct worker interviews to determine what specific tasks they performed on a given day, and the total hours worked on each day for each task. The owner will then compare the results to the actual payment records for those workers. A violation may be found where a laborer doing site clean up also spent time assisting other skilled workers but was not paid the higher of the two classification rates.
To get to this point, the owner will have incurred the costs of the persons conducting the audit, the cost of interpreters, the cost of conferring with legal counsel and possible delay depending on the stage of the project.
The general contractor will have incurred the costs of withheld retainage to cover any additional payment due to workers, time spent participating in the audit and the cost of their own counsel. The costs of an owner broadly reclassifying significant laborer hours to carpenter hours on a large project can be devastating to the general and their subcontractor.
The subcontractor may have the most exposure, especially where it owes broad indemnity obligations to the general contractor. If the process is contested, then the DOL will make a final determination. The general contractor may also pass through to its subcontractor the costs to litigate, seek reconsideration or review.
Then there is the cost to the workers, even if they end up being paid at a higher wage. What they incur is the time away from work being interviewed by the owner, DOL and being called to testify about any lost wages. They also risk that their employer may not be in a position to hire them on other projects.
To avoid the entire audit process and the potentially huge costs, best efforts should be made by construction professionals to keep excellent records, perform self audits to ensure all workers are accurately classified and worked only the appropriate hours, were fully paid and were not allowed to perform work that places them in higher wage classifications. Do this, and owners and the DOL should have little reason to investigate.