Certified Payroll Shortcuts May Be An Invitation for Prosecution

Kristi Pronovost The Merit Shop Spokesman Blog

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By: Thomas O. Williams, Esquire, Reager & Adler, P.C.

Contractors working on prevailing wage projects know that the law requires them to complete and submit certified payroll forms indicating the hours each workman worked within each trade classification. What many contractors do not know is just exactly how to classify each hour of a workman’s work. That is, how do they identify with certainty when the workman is performing craft trade work, such as electrical or plumbing, as opposed to laborers’ work. This is not surprising inasmuch as the Commonwealth Department of Labor and Industry, although responsible for enforcing the Pennsylvania Prevailing Wage Act, is not exceedingly helpful in this regard.

While the Department’s website does have a listing of work tasks and activities deemed to be “laborers’ work,” not many contractors monitor each and every minute of their employees’ work, comparing each task performed to the list of “laborer” tasks provided by the Department of Labor and Industry, choosing instead to resort to shortcuts in completing certified payrolls.

Some contractors are of the mistaken belief that the Department of Labor and Industry will condone a practice sometimes utilized by contractors of simply using a ratio of hours per day per workman for trade hours versus laborer hours worked. For example, some contractors have chosen to simply insert seven hours for electrician’s or plumber’s work to one hour of laborer’s work for each day of the week believing that this is “more or less” the accurate depiction of a workman’s day on a particular project, when considering cleanup activities and the moving of materials performed by each workman each day.

In the absence of written direction from an authorized person at the Department of Labor and Industry, this practice is simply not in keeping with the Act or the case law interpreting the Act, and is not accepted by the Department of Labor and Industry. Such a use of ratios on certified payroll forms is an obvious red flag to Labor and Industry investigators, and a potential invitation for prosecution by not only the Department of Labor and Industry, but the Pennsylvania Attorney General as well. Even experienced, well-meaning contractors, not motivated by saving money at the expense of their employees, have resorted to the practice of simply advising their employees to insert ratios when completing certified payrolls.

This seemingly innocent shortcut may be the undoing of your business.

Contractors may recall past instances of fellow contractors being investigated and ultimately debarred from performing public work after being found to have intentionally violated the Pennsylvania Prevailing Wage Act. Indeed, the Courts have upheld decisions of intentional violations where the contractor has directed its employees to use ratios when completing certified payrolls. Even in cases where company owners claimed in their defense they were not aware of this practice being used by its employees, companies have suffered debarment with the Court’s rejecting this defense by stating simply that the owners of the company could not be “oblivious to the obvious.”

Up until recently, debarment was the worst consequence of a finding of intentional violation of the Act. More recently, the Pennsylvania Attorney General has taken things a huge and scary step further. In fact, there are at least two Pennsylvania contractors who have been charged by the Attorney General for theft of wages from their employees, simply by condoning the use of this shortcut ratio practice. Though these charges by the Pennsylvania Attorney General are being vigorously defended, the stakes are exceedingly high, inasmuch as company owners face substantial fines and significant jail time if found guilty.

Now, more than ever, it is critical that contractors not rely on mythology, industry practice or even verbal approvals of the ratio practice by various Pennsylvania Labor and Industry investigators. It should now be clear that such practice comes with great risk.

There are ways that contractors can avoid being on the wrong end of a debarment proceeding by the Department of Labor and Industry or worse a prosecution by the Pennsylvania Attorney General.

The following steps are suggested:

  • Review the definitions of “laborers work” provided on the Labor and Industry website with all workmen and project managers.
  • Provide copies of these definitions to all workmen and project managers.
  • Send a written policy and work directive to all workmen and project managers that timecards should be completed by workmen each day to include the amount of time worked on each activity identifying the time worked in each trade or laborer classification.
  • Hold a meeting where management (along with a qualified consultant, if necessary) explains the proper identification and recording of work hours on prevailing wage projects.
  • Do not direct or tell workmen, project managers, or responsible office staff, to complete certified payrolls using a ratio of hours of craft time versus laborer time.

If contractors follow these steps they will not likely become a target for prosecution, and more importantly, should be armed with viable defenses to any prosecution.


Thomas O. Williams, Esq., a shareholder in Reager & Adler, is the longest-tenured attorney in the firm after Dave Reager and Ted Adler. Tom began his career with Reager & Adler in 1993 in the Litigation and Construction Law practice areas. Tom is the lead attorney in the Debt Recovery practice area.

Utilizing a counselor’s approach to his practice of law, Tom is meticulously thorough in analyzing all aspects of a case in order to develop the best solutions for his clients. Tom embodies the trademark characteristic of a Reager & Adler attorney—“attorney and business owner”—in his recognition that although parties may be adversaries today, they may need to maintain an ongoing business relationship at some point in the future.

Prior to embarking on his legal career with Reager & Adler, Tom served in the United States Army performing with the “President’s Own” Old Guard Fife and Drum Corps. Tom is an active member of the Keystone Chapter of the Associated Builders and Contractors Association. He serves on the Association’s Board of Directors and is a liaison to the Legislative Committee. Tom travels extensively and is an avid gardener and photographer.


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December 3, 2019