Dive Brief:
- A New Hampshire contractor and one of its subcontractors have agreed to pay $420,000 to settle allegations they knowingly inflated, or "front loaded," payment applications to the Massachusetts Bay Transportation Authority, according to the Eagle-Tribune.
- Prosecutors claim that S&R Construction and subcontractor A&S Electrical knowingly billed for work not yet completed — in violation of the Massachusetts False Claims Act — on the Assembly Square Station project located on the MBTA's Orange Line. The Attorney General's office also said S&R did not pay prevailing wages rates on the project and didn't file the required pay records. S&R must also pay $40,000 in compensation to the employees that were underpaid.
- S&R is barred from bidding on or performing public work in Massachusetts for five years, while A&S can't perform work on public contracts for one year.
Dive Insight:
Most publicly funded projects typically include a requirement that contractors pay their employees a prevailing wage, which for some companies is higher than they would normally pay. If a contractor's numbers were low in order to win the bid, or even if they want to just add a little profit to the bottom line, wage rates can be vulnerable to cost-cutting efforts. However, crackdowns on illegal activity in construction are on the rise, and officials hope the publicity that such cases attract may act as a deterrent to similar cases going forward.
Earlier this month, New York City fined New Jersey-based KS Contracting Corporation $3.2 million for underpaying immigrant workers a total of $1.2 million and banned KS from bidding on state or city projects in the future. Comptroller Scott Stringer said KS reported that workers were making $50 per hour, when they were actually being pad $90 a day.
Last year, the New York City Comptroller's office also barred Beacon Restoration from taking part in state public works projects for five years after the company allegedly cheated 24 immigrant workers out of accurate wages and benefits. City officials said Beacon also doctored pay records during the Comptroller's investigation so that it would look like the company had paid the proper amounts. Prior to the Beacon case, New York prosecutors charged Long Island-based Arbor Concrete Corp. and owner Kenneth Padover with 139 counts of fraud for allegedly bilking employees out of union benefits on a project at John F. Kennedy International Airport.
