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Certified Payrolls Submitted to the University of Massachusetts Building Authority’s Owner’s Project Managers Contained Errors in Job Classifications and Pay Rates.

Audit calls on UMBA to establish a payroll policy that includes a documented process to effectively detect, investigate, and (if necessary) report any contractors who may not be complying with the state’s prevailing wage law.

Table of Contents

Overview

We found 1,608 employees of the University of Massachusetts Building Authority’s (UMBA’s) contractors, from a sample of 3,344 who worked on public works projects during our audit period, whose job classifications on certified payrolls did not match the Department of Labor Standards’ (DLS’s) prevailing wage rate sheets, so we could not determine whether they were paid the appropriate prevailing wage. Of the employees whose classification did match DLS’s prevailing wage rate sheets, 90 were paid less by the contractors than the required prevailing wage according to DLS’s prevailing wage rate sheets. The five owner’s project managers (OPMs) who oversaw these contracts stated that they monitored contractor compliance with the Prevailing Wage Law by reviewing project contracts and spot-checking pay rates; however, we could not verify that this was done, because the OPMs did not maintain documentation to substantiate the review. As a result, UMBA and its OPMs cannot determine whether the certified payrolls given to the OPMs by contractors are accurate and in agreement with DLS’s prevailing wage rate sheets.

Authoritative Guidance

The Massachusetts Prevailing Wage Law for public works projects, Sections 26–27H of Chapter 149 of the Massachusetts General Laws, requires contractors to pay the prevailing wage.

The website of the Executive Office of Labor and Workforce Development, in a section titled “A guide to the Prevailing Wage Law for awarding authorities,” states, “During the construction project, it is [the awarding authority’s] responsibility to check contractors’ compliance with the prevailing wage law.”

UMBA’s “Agreement for Professional Services between Owner and Owner's Project Manager” states,

§ 4.3.7 Prevailing Wage. The OPM shall maintain and monitor records of compliance with the Massachusetts Prevailing Wage Law. . . .

§ 6.2 Oversight and Monitoring. The Owner [UMBA] shall endeavor to oversee and monitor generally the performance of the OPM to ensure that the OPM performs its obligations in a satisfactory manner in conformance with the terms and conditions of this Agreement.

Reasons for Noncompliance

UMBA has not established a documented process for its OPMs to use to monitor the accuracy of the certified payroll information submitted by UMBA public works contractors.

Recommendation

UMBA should establish a policy detailing the process for its OPMs to follow when monitoring certified payrolls.

Auditee’s Response

UMBA has established sufficient monitoring procedures for its OPMs to verify whether the private construction companies’ certified payroll submissions are in agreement with DLS’s rate sheets.

UMBA requests from the Commonwealth’s Department of Labor Standards the rate sheets and classifications of work for each project it bids. The rate sheets and work classifications are included in the contract documents.

UMBA hires OPMs to maintain and monitor records of compliance which is done by collecting certified payroll attestation documents signed by contractors and subcontractors under the pains and penalties of perjury pursuant to MGL Ch. 149. The OPM’s are licensed by the Commonwealth’s Inspector General’s Office as a Massachusetts Certified Public Purchasing Official (MCPPO) and receive training on prevailing wage procedures. UMBA’s OPMs collect the certified payroll records on a weekly basis. The payroll records are maintained (M.G.L. c. 149⸹27B) for the statutorily required period of time and are made available for public reviewing.

The Commonwealth’s Attorney General (AG) is the enforcement authority under the prevailing wage statute. If the awarding authority or an aggrieved party becomes aware that a contractor or a subcontractor is not in compliance with the prevailing wage law it shall notify the AG’s office. The AG shall investigate and if such a violation exists, the AG shall bring an enforcement action against the violating party. Results of an investigation by the AG may include: sending a warning to the worker’s employer (contractor), penalize the employer civilly and/or criminally or allow the worker a private right of action to sue [the] employer for unpaid wages.

Along with continuing to collect and maintain certified payroll records submitted by the contractor and subcontractor under the pains and penalties of perjury, UMBA has added language to its OPM guidelines strengthening its monitoring processes.

Auditor’s Reply

The Office of the State Auditor (OSA) acknowledges that UMBA takes measures to ensure that its OPMs are licensed and made aware of current prevailing wage rates and job classifications, but we do not agree that it has established effective monitoring controls over this activity. In its response, UMBA asserts that its OPMs, rather than UMBA itself, are responsible for ensuring that the contractors UMBA hires on public works projects comply with all the requirements of the Prevailing Wage Law. This would include ensuring both the accuracy of job classifications and the rates paid to workers who are subject to the law. Although UMBA is correct in pointing out that its OPMs are contractually required to monitor contractor compliance with the Prevailing Wage Law, it is concerning to OSA that UMBA fails to recognize that as a contracting agency, it is responsible for ensuring  that its OPMs effectively meet all of their contractual obligations, including those related to Prevailing Wage Law compliance.

As noted above, when we reviewed the certified payroll information submitted to UMBA’s OPMs, we found numerous job classifications and wage rates that did not match those established by DLS. Therefore, we are concerned about how effectively OPMs monitor—or even are able to monitor—compliance with the Prevailing Wage Law, particularly for the workers whose job classifications did not match DLS’s prevailing wage rate sheets. UMBA requires that its OPMs “maintain and monitor records of compliance with the Massachusetts Prevailing Wage Law”; however, neither the OPM contract nor UMBA’s policies describe the method to be used by its OPMs to monitor compliance with this law. The current procedure of the OPMs is to collect the certified payrolls and conduct spot checks on job classifications and prevailing wage rates. UMBA’s OPMs relied on the contractors and subcontractors to certify payrolls for the accuracy of job classifications and pay the correct prevailing wage on job classifications. In its response, UMBA does not comment on the specific problems OSA identified with the certified payroll information we reviewed. Further, it is important to point out that UMBA never indicated to OSA, either during our audit or in its response, that it was aware of and addressing these problems; this indicates that it was not effectively monitoring this process and ensuring that its OPMs identified, investigated, and addressed any potential Prevailing Wage Law violations. 

We are aware that the Commonwealth’s Attorney General is the enforcement authority for the Prevailing Wage Law. However, awarding authorities like UMBA must establish effective monitoring controls to ensure that any contractors they hire for public works projects use documented processes designed to effectively detect, investigate, and (if necessary) report any potential noncompliance to the Office of the Attorney General for resolution.

In its response, UMBA indicates that it is adding language to its OPM guidelines that will strengthen the monitoring process over this activity. Since UMBA did not provide OSA with a copy of this new language, OSA cannot comment on how effective this measure will be in addressing the issues OSA identified in this area. However, in OSA’s opinion, at a minimum, as noted above, this language should require that OPMs use a documented process designed to effectively detect, investigate, and (if necessary) report any potential noncompliance to the Office of the Attorney General for resolution. Moreover, simply establishing a better process for its OPMs to follow will not, in OSA’s opinion, fully address this issue unless UMBA establishes effective monitoring controls to ensure that its OPMs consistently adhere to the established process.

Date published: May 21, 2020
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