By: Christopher W. Morog and Robert T. Ferguson, Jr.

As many of you are aware, the Massachusetts Attorney General established a “False Claims Division” in 2015. The Attorney General’s Office has been aggressively enforcing the laws of the Commonwealth to “ensur[e] that Massachusetts contractors are the national model for quality and integrity” and has reportedly recovered hundreds of millions of dollars in enforcement actions. The Attorney General’s Office recently settled with another Massachusetts construction company for alleged violations of state law.

As reported in an August 2021 press release, the South Shore-based company allegedly “knowingly misrepresented” the status of furloughed employees. Not only did the company continue to employ the workers, the company allegedly: failed to pay the employees prevailing wages in connection with public construction projects; failed to pay overtime required by Massachusetts law; and submitted falsified certified payroll records to several municipalities misstating the number of hours worked and rates paid. The Attorney General expressed her view that the “company lied to our state agencies and municipalities and cheated its workers out of the wages they earned while it constructed taxpayer-funded playgrounds for our communities.”

The settlement will reportedly require the construction company – as well as two of its executives – to do the following:

• Pay $280,000 for alleged violations of the Massachusetts False Claims Act;
• Pay $30,000 in civil citations for alleged fair labor violations;
• Engage an “independent monitor” (approved by the Attorney General’s Office) to “establish and implement an ethics and compliance program for three years to ensure the company is complying with state laws and regulations and audit the company’s payroll records; and
• Conduct annual trainings for all personnel on the state’s wage and hour laws.

According to the Attorney General, “[c]ompanies that do business in Massachusetts have a responsibility to operate with honesty and integrity, and my office will hold accountable those who don’t.”

Notably, the case arose out of an April 2020 whistleblower action. This highlights the importance of: (1) maintaining a robust, written legal compliance program that includes employee training; but also (2) implementing the program and training employees. Given the state’s focus on promoting “integrity and accountability in public contracting,” such efforts are a necessary part of doing business in the Commonwealth.