Eileen I. McKillop Lane Powell PC
Construction has finally picked up after the recession. The Puget Sound Business Journal recently reported that the top 25 construction projects in the Puget Sound region amount to at least $12.5 billion of business for the region. As many major public-works projects move forward there has been an alarming increase in prevailing-wage claims and lawsuits filed by employees of drywall and painting subcontractors. In many cases the same workers are filing Notices of Claim on the general contractor’s public-works retainage and payment/performance bond on several different public-works projects. The allegations are always the same — nonpayment of wages under Washington’s Prevailing Wage Act; failure to pay overtime wages in violation of Washington’s Minimum Wage Act; failure to provide rest breaks and lunch breaks pursuant to RCW 49.12.010; and willful withholding of wages and rebating of wages under RCW 49.52.070.
After five employees of a drywall subcontractor filed a claim of lien for unpaid wages against a general contractor’s retainage and public-works bond on a Thurston County project it was discovered that District #5 International Union of Painters and Allied Trades was funding the lawsuit for these non-union workers through a law firm in Tacoma Washington. Since at least 2010 the union’s organizers have been actively tracking the Department of Labor and Industries’ website of approved prevailing-wage intents and affidavits for drywall applicators and tapers. If a non-union drywall or painting contractor has filed an Intent to Pay Prevailing Wage affidavit a union organizer shows up on the project site and tries to obtain the drywall subcontractor’s workers’ contact information. Several months after the workers have finished their work on the project the union organizer calls the workers into the Union’s office and induces these workers to retroactively create time cards to support excessive wage claims. They then refer the wage claims to the union’s attorneys to file a claim of lien against the general contractor’s retainage and payment/performance bond. The claim of lien is used to threaten and coerce the general contractor and/or drywall/painting subcontractor to enter into an agreement with the union or force the contractor out of business.
Most of the time the employees do not keep their own time records of the hours and days they worked on the project. Even if they sign in and sign out of the project each day the workers claim they worked overtime hours that were not recorded. They also claim they were not given or paid rest breaks of at least ten minutes for each four hours worked and were not allowed at least a 30-minute meal period when they worked more than five hours. The workers substantiate these wage claims with these time sheets that are clearly excessive and in many cases record hours that the workers never even worked on the project. In one case the wage claim was more than the subcontractor’s contract for the entire project.
Issuing joint checks to the subcontractor and his/her workers for their labor is not a guarantee that a wage claim will not be filed. In one case the general contractor issued joint checks to the subcontractor and its workers every two weeks and paid the prevailing-wage rates. However the workers contend that their paychecks were fraudulently endorsed by a superintendent and that they were actually paid in cash on a daily or piecemeal rate. The general contractor even required each worker to sign an unconditional waiver and release form for each payment. The workers claimed that the waiver and release form was unenforceable because they could not read English and also asserted that their signature was forged on the waiver and release forms.
In order to protect your company from potential wage claim of liens on your retainage and/or payment and performance bonds the following are some helpful recommendations for public-works projects:
1. Draft a pamphlet of Basic Workplace Rights on Public Works Projects in both English and Spanish (and possibly Russian) which explains at the following wage hours breaks and privacy rights of each worker on the project. Provide each worker with a copy of this pamphlet on the first day they begin work on the project. Require each worker to sign an acknowledgment form acknowledging they have been given a copy of this pamphlet in their native language and understand their rights. The pamphlet should contain the following minimum information:
• The right to be paid the hourly prevailing wage expected benefits and overtime rates set forth in the Statement of Intent to Pay Prevailing Wage for each employer. Inform the workers that prevailing-wage laws require that you must be paid the prevailing hourly wage. If you do not want to attach the Statement of Intent to Pay Prevailing Wage for their employer or trade then you can refer them to the prevailing wage for the county and trade at www.lni.wa.gov/tradeslicensing/prevwage/.
• Explain their right to be paid for overtime at 1.5 times the regular rate of pay for all hours that they work over 40 in a seven day work week. Their employer is not required by law to pay them overtime to work on a holiday or weekend but some employment and union contracts do include that.
Note: Some types of workers do not have the right to overtime pay including workers who live at their workplace most agricultural employees certain salaried employees and independent contractors.
• Your employer can make you work overtime even if you don’t want to and even on a day that you usually have off.
– However it is important that you have each worker sign in and sign out each day so you have an accurate accounting of worker’s hours worked on each day.
– Always have a representative of the GC on site whenever any workers are working on the project.
– Do not allow workers to work on site on holidays or weekends unless a representative of the GC is also present and the workers hours are accurately recorded.
• You must be paid by payroll check at least once a month on a regularly scheduled payday. When you leave your job your employer must pay you for all unpaid wages no later than the end of the next regular pay period.
– Each time you are paid you must receive a paycheck stub with a written statement from your employer that includes information about the pay period hours of work rate of pay and any deductions. You may not be paid in cash on a daily rate or by piece work.
– If you have not been paid by a paycheck stub at the prevailing wage rate for your industry then you need to immediately notify the GC’s superintendent (recommend listing the name and telephone number.)
• In Washington workers must be allowed a paid rest period of at least ten minutes for each four hours worked. The rest period must be allowed no later than the end of the third hour of the shift. The business may require workers to stay on the work site during their paid rest period.
• You are also entitled to a 30-minute meal break (paid or unpaid at Employer’s choice) every eleven hours total worked and two thirty minute meal breaks if you work more than eleven hours. Workers must be at least two hours into the shift before the meal time can start and the meal time cannot start more than five hours after the beginning of the shift. Your employer is not required to pay for meal periods if the workers are free from any duties for their entire meal period. Workers must be paid during their meal period when they are required or allowed to remain on duty or they are required to be on-call on the designated worksite.
2. If you issue joint checks to a drywall or painting subcontractor for any labor supplied to the project you need to require that each worker sign an Unconditional Waiver of Lien form for each joint paycheck received and the forms need to be in both English and Spanish (and possibly Russian) depending on the native language of the worker. (A draft Unconditional Waiver of Lien in English and Russian can be found here; the Spanish version can be found here.) We strongly recommend that you require that the Unconditional Waiver of Lien forms be signed in the presence of a witness preferably an authorized representative of the general contractor.
Eileen McKillop is an active member of AGC’s Legal Affairs Committee. She is a partner of Lane Powell PC and focuses her practice on construction disputes including contract drafting and review contract disputes lien and bond claims litigation and appeals.