Allen Smith is the Assistant Director of the Special Projects and Initiatives Department for the International Union of Operating Engineers. He looked at prevailing wage underpayments, and made a clear point that it is a prevalent crime in the US.
Smith showed a picture of company script from 1880. Workers were paid in currency they could use only to buy merchandise at the company store.
“Workers a hundred years ago were regularly paid in company script,” he said. “How’d that work out for the workers? Not so good.”
Smith compared the use of company script to a current practice, where prevailing wage workers, union and non-union, are often paid benefits in lieu of wages.
“That is, in essence, a script for benefits. The problem is those benefit plans are run by the company.”
For example, a company says they will pay a worker $15 an hour in healthcare benefits.
Smith pointed out that there are rules on the books to combat this type of worker fraud. However, he told the NAGLO group that contractors can be creative in how they get around the rules. They often don’t cheat everyone the same way. They’ll have missing workers, where they list five on the payroll but have 10 on the worksite. They will classify workers under the wrong craft. They will use apprentices that are not properly registered.
“When people steal and don’t get caught,” he said, “they steal more.”
Smith advised states to examine how they handle complaints and investigations. He argued that “first in, first worked” is not a good system. He said to give the big cases that impact the most workers more priority.
He also said to examine the complaints and don’t work bad ones. Agencies that are short on resources do not have the time or money to chase down cases that go nowhere.
He urged everyone to approach wage compliance with tremendous zeal. “When wage fraud happens, 100 years of labor laws disappear.”