Missouri, like many states and the federal government, has what’s known as a prevailing wage law. The basic idea is that when the government is paying for public works construction projects in Missouri (such as bridges, roads, and government buildings), it’s in everyone’s interest for the workers on that project to be paid well, because it will help the economy in general. Missouri’s prevailing wage law applies to the state government, and also applies to all Missouri cities and counties. (Missouri’s prevailing wage laws are set forth at Missouri Statute Section 290.210 through 290.340. If you want to read those laws, click here and scroll down to start at Section 210.)
Missouri’s Prevailing Wage Law establishes minimum wage rates that must be paid to “workmen and mechanics” for each classification of worker on that government job. It does not apply to office workers, and only applies to the workers actually doing the work at the jobsite.
It’s important to understand that while the Prevailing Wage laws require high houlry rates to be paid to the workers, that money is NOT coming from the contractor’s own pockets. Instead, the government is paying those funds, by giving it to the contractor to hold, and trusting that the contractor will pay all of that money to the workers, as the contract requires. The contractor is not allowed to keep any of it. The contractors are already making their own separate profits on these government jobs under the other sections of the contract, so there’s never any legitimate reason to not pay the full hourly rate out to the workers.
The way it works is that when Missouri’s government is paying for a public works project, the laws specifies a procedure for certain minimum wages to be paid to specific workers involved in that project. The laws require the Missouri Department of Labor to set those specific pay rates for the different building trades involved in that particular project. These rates are usually very generous, sometimes running up to $40 per hour and more.
Contractors interested in bidding on the project sign promises that they will actually pay their workers that minimum wage amount. The law says that the contractors must pay that amount to their workers (although they don’t have to pay at all in cash). The law says that when figuring out if the contractor met the minimum prevailing wage requirements, you add up both (i) the cash payments made to the worker and (ii) the actual cost of the non-cash “bona fide” fringe benefits paid to the worker. “Bona fide” means “good faith,” and the employer only gets a credit for the actual cost of fringe benefits to the employee if they’re made is good faith. (Sometimes they’re not, and are simply attempts to keep the money – see below.)
For example, if the prevailing wage laws give a contractor $40 per hour to pay an electrician, the employer is meeting that requirement if it actually pays the contractor either one of the following pay packages:
- $40 per hour in the electrician’s check; or
- $30 per hour in the electrician’s check, plus an additional $10 per hour that the contractor is paying into that employee’s individual 401(k) plan.
But a contractor in that situation would be violating the prevailing wage law if they pay the electrician $30 per hour and then give the employee health insurance that only cost the employer an average of $5 per hour, because that only adds up to $35 per hour.
Procedures Contractors Go Through To Get Paid On Prevailing Wage Contracts
Contractors typically don’t get paid all at once on construction jobs, but instead get paid in phases. In order to get each installment payment, the contractors have to file with the government written statements swearing under penalty of perjury that they have passed through to the “workmen and mechanics” on that particular job all of the money that they have been given by the government, and have fully complied with all of the prevailing wage laws.
What Happens If The Employer Violates Missouri’s Prevailing Wage Law?
Missouri’s prevailing wage law provides two different remedies if a contractor fails to pay the full amount to its workmen and mechanics.
The first remedy is that a worker who got shortchanged can sue the contractor. Because the money was already paid to the contractor by the government and the contractor wrongfully kept it, Missouri law says that when a worker has been shortchanged, the contractor has to pay that worker:
- twice the amount the worker was shortchanged; plus
- all of the worker’s attorney’s fees; plus
The second remedy is that a contractor who violates these laws can be criminally charged and can go to jail. In fact, if a contractor is breaking this law, they’re probably committing many different violations, because each time they submit a signed statement falsely representing that they have fully complied with Missouri’s prevailing wage law, they have also committed perjury.
What Are Some Of The Ways That Contractors Breaking Missouri’s Prevailing Wage Laws Do It?
The vast majority of the contractors on Missouri’s public works projects are ethical, law-abiding people who do the right thing and pay their workers the right amounts. But there are always some bad apples, and unfortunately some contractors are determined to cheat their employees by keeping for themselves the money the government gave them to pay to the workers. This is outright theft of money from all of us.
The Simple Way – Just Lie. Some contractors who want to cheat their workers do it plain and simple. They just pay their workers less than the amounts required by the contract, and simply sign false statements swearing that they have paid the correct amount. This is the low-tech way to commit fraud.
To catch people who do this, the government occasionally audits the contractors and looks at the workers’ pay stubs to see whether the contractor paid the right amounts. If this unsophisticated scheme is used, a basic audit will expose the fraud.
But more sophisticated cheaters know that audits sometimes occur and they don’t want to take the chance that an audit will catch them. So they instead concoct complicated structures to try to conceal what is really happening.
Illegal Rebate Schemes – One technique that has been used in the past is a rebate scheme. Suppose that the contractor is required to pay $40 per hour to a worker. On that worker’s paycheck, the contractor will put down 40 hours at $40 per hour, for a total gross paycheck of $1,600. But then the contractor takes it back by making an overblown and improper deduction from the worker’s pay paycheck, simply to take back a large chunk of that money. For instance, a contractor who requires all employees to ride on the company truck to the jobsite might create a charge to workers for $50 per ride each way. Those 10 rides per week lead to a deduction of $500 on that paycheck, so the worker only gets $1,100 instead of $1,600. They just stole $500 from the State of Missouri, from the worker, and from me and you.
The $50 per ride is a ridiculous deduction, but it covers them in case they get audited. In an audit, it will look like the contractor actually paid the required $40 per hour, even though they still really cheated the employee out of a big part of it. Many of these audits of contractors are very superficial and just look at the gross hourly rate paid, so they don’t catch underhanded tricks like these.
To make sure contractors don’t get away with schemes like this, there’s a specific provision in the Missouri prevailing wage law that makes this type of deduction illegal. So while this kind of scheme might slide past an auditor, an attorney for the employees could file a successful lawsuit against this employer. And because of the double damages plus attorney’s fees provisions in the prevailing wage law, the recovery on behalf of a class of those cheated employees could be very significant.
Illegal “Benefits” Schemes – Some even more sophisticated contractors have gone to great lengths to concoct even more complex schemes that at first glance appear to be legal but in reality are nothing more than ways to cheat the employees out of their prevailing wage pay.
One such scheme is where an employer claims on paper to pay its prevailing wage workers the correct hourly rate, but then instead of paying it to the employee sends a huge portion of those workers’ pay into what is essentially an insurance trust that provides benefits to all of the contractors’ employees, even the ones who work in the office and are not entitled to prevailing wage benefits. This scheme has the potential of shifting the employer’s insurance costs for its office workers onto the backs of the prevailing wage workers, wrongfully depriving them of the amount they’re supposed to get. But on its face it can seem legal, until a lawyer really carefully digs into what’s going on.
What to Do If You Think You’re Being Paid Less Than You’re Supposed To Get
At Curran Law Firm, we are proud to represent workers who have been the victims of contractors’ illegal prevailing wage schemes. If you’d like us to take a look at your situation to see whether your employer violated the prevailing wage laws (or any other employment laws), please call us at 417-823-7500. We’ll be happy to discuss your situation with you at no cost, to help you understand whether or not you have been paid the proper amounts.
If your employer has violated these laws, we represent workers against those employers on a contingent fee basis, meaning that you do not have to pay us any money upfront, and only pay us an attorney’s fee out of any recovery in the case.
You should also be aware that it can make a lot of economic sense to pursue your rights even if you only got cheated out of a small dollar amount. Lawsuits can be expensive, and it may not make sense to file a lawsuit if there’s only a small dollar amount in issue. But situations like this are the very reason why class actions were invented. It makes no sense to let someone who’s stealing fifty cents from 100,000 people get away with it. But that’s still $50,000 that they stole! That person should be stopped. But no individual victim has an economic incentive to spend large amounts of money just to get back fifty cents. Class actions let an attorney file one lawsuit on behalf of everyone who lost money, and they’re an important tool that can be used to hold wrongdoers accountable even when each victim has only a small dollar amount at stake.