New Jersey Cracks Down on Prevailing Wage Jobs

BY ROBERT P. MADER Of CONTRACTORs staff TRENTON, N.J. The New Jersey Department of Labor is cracking down on contractors performing public work who fail to register with the state or violate wage and hour laws. New Jersey has required contractors to register for years, but the law gained teeth in January when criminal penalties went into effect for knowing and willful violations of labor law. Upwards

BY ROBERT P. MADER Of CONTRACTOR’s staff

TRENTON, N.J. — The New Jersey Department of Labor is cracking down on contractors performing public work who fail to register with the state or violate wage and hour laws. New Jersey has required contractors to register for years, but the law gained teeth in January when criminal penalties went into effect for knowing and willful violations of labor law.

Upwards of 5,000 construction contractors from across the country registered to mine New Jersey’s multibillion-dollar field of public works contracts, one of the most lucrative in the nation. The price tag on slated school projects alone was $15 billion.

The action prohibits them from working on public works projects in the state for three years. The contractors come from New Jersey, New York, Pennsylvania, Connecticut, Florida, Alaska, Delaware, Maryland, Georgia and Minnesota.

As tough as the debarments may be, the penalties are about to become even stiffer: A new law enacted in January creates criminal penalties of heavy fines and prison terms of up to 10 years. In some cases, however, the circumstances surrounding the violations have raised questions of selective prosecution.

New Jersey wage and hour law expert Russell J. McEwan said labor watchdog groups, such as the Foundation for Fair Contracting, have been targeting non-union contractors for special attention and turning their findings of alleged violations over to the DOL. Helping to arm the foundation with ammunition is one of the state’s powerful unions, which augments the foundation’s probes by sending out its own investigators to hunt down suspected violators.

Union organizers of the Northern New Jersey Regional Council of Carpenters are helping the FFC. John Ballantyne, the carpenters’ organizing director, told New Jersey legislators that four members of his staff are specifically assigned to monitor prevailing wage jobs in their region.

The latest available figures showed that in a 15-month period ending in April 2003, the DOL reported recovering $18.4 million in wages owed to workers because of contractor violations. The number of enforcement actions is escalating, according to the department.

In 2001, it charged 700 contractors and subcontractors with violations; 40 of them and 48 of their representatives were debarred. In 2002, the figures jumped to 1,250 contractors and subcontractors cited for violations; 91 of them and 119 of their officers were debarred.

The state’s list of debarred contractors contains the names of more than a dozen mechanical and plumbing contractors. A telephone listing could not be found for most of them. One mechanical contractor reached by CONTRACTOR declined comment.

On Jan. 14, Gov. James McGreevey signed into law a measure that provides penalties of up to $150,000 and a prison term between five and 10 years.

Bob Kordulak, a retired contractor and member of the legislative committee for the New Jersey Association of Plumbing-Heating-Cooling Contractors, noted that contractors simply have to pay prevailing wages on public works projects and keep accurate payroll records. He said that he has heard about some contractors hiring foreign workers, underpaying them for 60 hours, then claiming they worked 40 hours.

“They jackass the numbers around to suit what they’re trying to do,” Kordulak said.

The registration process is a way to make sure that contractors have the finances and manpower to perform the work and are licensed, bonded and insured. It also asks if the contractor is in trouble — filed for bankruptcy, under indictment or debarred by other states, for example.

Union contractors are happy about the law. Alan O’Shea, executive director of the Mechanical Contractors Association of New Jersey, said the recent bill providing criminal penalties was passed because of a joint effort of labor and management to bring credibility to public works construction. The law protects the public and the 95% of law-abiding contractors, he said.

“The Commissioner of Labor Albert Kroll has been a breath of fresh air for public construction in this state and, since his appointment by Gov. McGreevey, he has made every effort to create a level playing field for all contractors and stop the cheating by unscrupulous contractors on public prevailing wage construction projects,” O’Shea said. “In the past there were minor fines allowing for multiple violations. What this legislation does is criminalize it, but only when it is proven that the contractor purposely and knowingly paid his people under the prevailing wage rate.”

The all-out support by organized labor can make non-union contractors feel targeted. Robert V. Roberti, an official of the Associated Builders and Contractors of Northern New Jersey, representing open-shop contractors, rejected any notion that non-union contractors may be cheating by not paying the prevailing wage or in submitting low contract bids.

“We are against anyone who is cheating the system in any way by not paying those wages that we’re supposed to pay,” he told lawmakers. “We try to grab a hold of the members that are doing public work, and we try to educate them in the proper way to handle the paperwork.

“And you have to understand one thing: Some of these contractors are small contractors, father-and-son type of people, and they need to be educated as to the proper paperwork handling and so forth so they don’t violate the law. But we are policing that and we’re trying to educate the membership in that way.

“We always go for the fair bid to get the job and to make money, and that’s what we’re in business for. That’s what all of us are for.”

Labor lawyer McEwan said some of the infractions appear to be minor, but nonetheless subject the contractor to a DOL audit and investigation.

“Given the overlap in work among many construction trades, as well as the complexity of the prevailing wage schedules, it is not uncommon for even an astute contractor to commit technical violations of prevailing wage laws,” McEwan said.

His advice to contractors: “Don’t get in hot water in the first place. With labor organizations watching and waiting for a misstep, public works contractors are wise to pay close attention to payroll practices. While prevailing wage compliance is not always easy, the cost of noncompliance could put you out of business, at least in the public sector.”