The Massachusetts Office of the Attorney General Continues to Pursue Subcontractors for Alleged Failures to Pay

Last Fall, we wrote about a judgment entered against a local subcontractor arising out of its sub-subcontractor’s failure to pay prevailing wages on two public projects. At the time, the Massachusetts Office of the Attorney General reported that it was “the first case to affirm that liability under the Massachusetts False Claims Act extends up the payment chain to contractors who, by action or inaction, knowingly facilitate misconduct by their subcontractors.”

This quotation caused a bit of stir among general contractors questioning whether they could be held liable for their subcontractor’s failure to pay prevailing wages. Notably, the Attorney General did not pursue either of the two general contractors working on the public projects at issue in that case. Instead, the Attorney General went after a subcontractor and its sub-subcontractor in a unique situation involving fairly obvious liability. That judgment was appealed and the case remains pending in the Massachusetts Appeals Court.

In the meantime, the Attorney General continues to pursue subcontractors who allegedly fail to pay employees, regardless of whether the project is a public project or a private project. In August of 2024, the Attorney General announced nearly $400,000 in citations against an out-of-state subcontractor for allegedly failing make timely payments, failing to pay overtime, and failing to furnish true and accurate payroll records to the Attorney General in connection with a private project. The subcontractor was engaged to install conveyor belts in a newly-constructed warehouse facility in Massachusetts. The subcontractor brought employees from out-of-state to perform the work, allegedly promising them a per diem allowance to cover housing costs.

A local union referred the matter to the Attorney General for investigation, reportedly asserting that workers were “going weeks without being paid.” Some workers alleged that the subcontractor failed to pay the workers their promised per diems, while other workers alleged that they were not receiving payment of wages, but were only receiving payment of their promised per diems. The Attorney General conducted an investigation, reporting that “as many as 76 . . . workers were routinely denied paychecks” and that not all employees had received all their earned wages, including overtime. The union referred to this situation as “wage theft.”

The Attorney General reported that its citations include restitution for the workers as well as civil penalties. The Attorney General went on to underscore important requirements of wage and hour laws, under which “workers are entitled to payment of their wages in full and in a timely manner, which is six days after the pay period ends.”

No doubt you are familiar with the Commonwealth’s wage and hour requirements. However, not everyone always plays by the rules of the game. Contractors working on public and private projects alike should be mindful that the Massachusetts Attorney General continues to be on the lookout for instances of non-compliance at all levels of the chain of contracting in the interest of protecting individual workers.

UCANE Construction Outlook, September 2024  |  Legal Corner