A recent court settlement offers a hopeful view of government remedies for underpaid workers — and should serve as a warning to companies that turn a blind eye to fraud.

The particular case involved public construction projects in Massachusetts, but California has similar laws — and a much bigger budget for these projects, thus more opportunities for violations by contractors — so the situation is a helpful example. The particular points at issue: Construction contractors paying workers significantly below the prevailing wage and making fraudulent reports to the government about those wages. 

In California, the prevailing wage rate refers to the basic hourly wage rate that must be paid on public works projects.  The prevailing wage rate is often significantly higher than the base California minimum wage rate.  The applicable prevailing wage rate will depend on the type of work being performed.

BPI Construction Management Inc. was handling two public construction projects, and one of its subcontractors didn’t pay prevailing wages to workers on those projects — in fact, it paid them less than half of what they were owed. Yet each week, the companies submitted fraudulent payroll forms to the state certifying compliance with the prevailing wage law.

But here’s the key: The court had no patience for BPI’s claim that it didn’t know anything about the fraud — it simply submitted the forms given by its subcontractor. 

Rather, the court said BPI had reckless disregard for the falsity of the records and ignored obvious warning signs.

This marked the first case in which liability for this type of fraud extended up the payment chain, from the subcontractor to the contractor in charge. BPI will pay $926,898.06 for the violations; the subcontractor, Superior Carpentry, will pay $256,539.92 as restitution to the workers and about the same in civil penalties.

It’s also worth noting that the case came about because of a pattern of wage theft complaints. Workers spoke out about their mistreatment, and the government was able to not only investigate but to get restitution for the workers and punish the companies involved.

At Keller Grover, we work with employees and whistleblowers — whatever the situation might be — to achieve fair treatment for workers. With more than 30 years litigating fraud and employment cases, Keller Grover has recovered billions for clients. If you are being mistreated by your employer, contact us today for a free and confidential consultation.