The state of Virginia has made significant changes to its wage laws for state contractors, both introducing a prevailing wage statute and amending the existing law on wage theft. The new law on prevailing wages provides significant penalties for noncompliance; therefore, state contractors will want to ensure compliance.
Virginia’s new prevailing wage statute Virginia Code §2.2-4321.3 requires contractors as well as subcontractors that work on any state project to pay mechanics, workers, and laborers prevailing wages when providing any labor in connection with such a project. This does not apply to contractors on any public contracts with a locality such as a city or a county unless such a locality has adopted its own ordinance requiring contractors to do so.
This statute will also not apply for public contracts that are valued at equal to or less than $250,000. For public contracts of $250,000 or greater, contractors will need to comply with the new prevailing wage requirements. The statute determines a prevailing wage rate by both the geographic area where work on the project will be performed and the class of workers to which the rate applies. These rates will be determined by the Virginia Commissioner of Labor and Industry based on those set by the U.S. Secretary of Labor for the corresponding federal law, namely the Davis-Bacon Act.
The new statute also requires contractors upon being awarded a public contract to certify the pay scale they will use for each craft or trade that will be employed. This certification will include the hourly amount that will be paid, including benefits, an itemization of amounts paid to workers, and information regarding all third parties that will receive benefit payments on an employees’ behalf.
Contractors will also be required to post the prevailing wage rates for all classifications in a prominent and accessible location within the worksite. Records of all employee wages and hours must be retained for a minimum of six years and made accessible for inspection. Upon a request, they must be made accessible within 10 days, and contractors must certify that they represent the actual hours worked by employees and the actual wages paid to employees.
Contractors in violation of these requirements will be held accountable for all back wages plus 8% annual interest and, if found to be a willful violation, potential criminal charges. Additionally, such a contractor will be prohibited from bidding on further public contracts until restitution is paid.
The Virginia Wage Theft Law, which holds general contractors civilly liable in circumstances where they knew or should have known that a subcontractor or supplier was failing to pay its employees owed wages, has been amended. Under these amendments, general contractors will receive some relief.
First of all, these employers will not be held liable if the wage violation was by a supplier that exclusively provided the general contractor with materials. Secondly, the law now accepts written certifications from subcontractors that the subcontractor has paid all of its employees due wages for work performed on a project as well as that to the best of their knowledge, any subcontractors of their own have done the same as evidence of the general contractor’s compliance with the law.
Should a subcontractor falsify such a certification, they may be held civilly liable by a general contractor. So, in order to limit risk, it would be in the best interest of general contractors to routinely pursue these certifications.