Case Snapshot: Prevailing Wage Misclassification Identified and Corrected
Client Profile: Project Owner – New York State Energy Construction Project
Scope: Independent prevailing wage compliance review across multiple tier-one contractors and their subcontractors.
The Situation
FAZ Forensics was engaged by the project owner to perform an independent prevailing wage compliance review on a New York State energy construction project subject to prevailing wage rules of Article 8 of the New York Labor Law. Our engagement involved working with several prime contractors and numerous subcontractors to evaluate certified payroll records, worker classifications, and wage payments across the different scopes of the project.
During this review, we identified a potential prevailing wage underpayment affecting workers employed by one of the lower tier subcontractors.
Our Findings
The workers were being paid at a lower rate and were titled “Trainees”, as though apprentices. However, after reviewing the applicable NYSDOL prevailing wage schedule, we determined that the specific craft under which the worker was classified did not have an apprentice rate. We further found that the union representing the posted prevailing craft did not have a qualifying apprenticeship program under New York State Labor Law for that trade and locality.
Because no approved apprenticeship program existed for that classification, the worker could not be classified or paid as an apprentice and was required to receive the full journeyman prevailing wage rate.
To validate our conclusion, FAZ Forensics communicated with the relevant New York State Department of Labor district office. These communications were conducted in a confidential and professional manner, preserving project and contractor anonymity while confirming the correct regulatory interpretation. The NYSDOL confirmed that the worker should have been paid at the journeyman rate.
Resolution
FAZ Forensics documented the misclassification and communicated our findings to the employer-contractor, clearly explaining the regulatory basis for the issue and its financial implications.
We then:
- Calculated the full restitution (rectification) pay owed to the worker, including the wage differential over the affected period,
- Assisted in communicating the findings and corrective requirements to the contractor, and
- Confirmed that the worker would continue to be paid the proper prevailing (journeyman) wage for all future work on the project, as long as the project remained subject to prevailing wage requirements.
The contractor implemented the correction and the worker was retroactively compensated in accordance with prevailing wage law.
The Outcome
By identifying the issue early and facilitating a discreet, well-documented correction, FAZ Forensics helped:
- Protect the project owner from downstream liability,
- Safeguard worker rights,
- Reduce the risk of NYSDOL enforcement actions or penalties,
- Ensure subcontractor compliance, and
- Maintain confidentiality throughout the process.
This case illustrates how nuanced trade classification issues, particularly around apprenticeship eligibility, can lead to prevailing wage violations. It also shows how our review and expertise can help resolve them efficiently and responsibly.