Wage Theft in Construction: How to Detect and Prevent It with Kwant

If a worker were caught stealing tools or materials from a job site, it would be a serious problem. But what if it’s the employer taking money from the workers’ paychecks? 

Wage theft is a big issue where workers often don’t get paid properly for their hard-earned money. Unfortunately, it is common and often goes unnoticed, particularly in lower-paying jobs within the construction sector. Most cases of unpaid wages are never reported or recovered, leaving workers at a disadvantage.

This blog covers what wage theft is, how it appears in construction and practical prevention steps. We also discuss how workforce software solutions Kwant AI help workers receive fair and accurate compensation.

What is Wage Theft?

Wage theft is when an employer fails to pay workers the wages and benefits they have earned as outlined by law or contract. It can be not paying overtime, having no lunch break, not being allowed to take meals and rest breaks, or illegal deductions. Wage theft can impact individual employees or affect many workers within a company who experience similar issues. It can cause severe financial problems for the workers involved.

Wage theft is common in the construction industry, primarily through payroll fraud. The theft is common in both commercial and residential buildings. It includes misclassifying workers as independent contractors. Additionally, some contractors pay workers “off-the-books" in cash or personal checks frequently through labor brokers. Subcontractors use these methods to avoid paying overtime and contributing to social insurance programs. They often hire labor brokers to manage these cash-only arrangements.

Common Wage Thefts in the Construction Industry

Underpayment: Workers are paid less than the agreed-upon rate or below the minimum wage. For example, a worker might be promised $25 per hour but only receive $20.

Falsified Records: Subcontractors may alter time sheets or payroll records to show fewer hours worked than performed. For instance, subcontractors might report 30 hours worked instead of 40 to reduce labor costs.

Misclassification: Subcontractors might classify workers as independent contractors. Independent contractors do not receive benefits like minimum wages, overtime, and taxes. Employers might further exploit workers by mislabeling their job roles to pay them less.

Illegal Deductions: These occur when employers take money from a worker's paycheck for costs that aren’t legally or contractually allowed. It includes deductions for tools, safety gear, or other job-related expenses. If these deductions drop the worker’s pay below the minimum wage or break legal rules, they are illegal.

Withholding Pay: It happens when employers delay or completely withhold wages that are owed to workers. A construction worker might finish a job but not receive their final paycheck on time or at all.

Impact of Wage Theft on Union and Non-Union Workers

Wage theft affects workers in the construction industry differently depending on their union status. For non-union workers, wage theft can be a significant challenge. These workers often face greater vulnerability because they lack the collective bargaining power that unions provide. They are often paid in cash, which makes it difficult to monitor and ensure fair compensation. Furthermore, non-union workers may lack awareness of their rights and fear retaliation for asserting them.

On the other hand, unionized construction workers generally experience better protection against wage theft. Unions negotiate detailed agreements that clearly outline wage rates and benefits. It provides a structured framework to address disputes. They work with government agencies to enforce labor laws, making it more likely that workers will get the pay they deserve.

You Must Also Read:- Data Center Construction

How to Detect Wage Theft in the Construction Industry? 

In the construction industry, you can identify wage theft by recognizing several clear signs. One common problem is being requested to work off the clock. It may include performing tasks such as arranging equipment or cleaning the site before or after your official shift. Consistently working outside of your official hours without compensation strongly indicates wage theft.

Another key sign is not receiving the agreed-upon pay. This occurs when a contractor or employer pays you less than what was promised or fails to pay you altogether. Always verify that your pay matches the amount you agreed upon when you accepted the job. 

Additionally, pay close attention to your overtime pay. According to the law, workers should receive overtime pay at a rate of at least one and a half times their regular hourly rate for any hours worked beyond 40 in a week. If you work more than 40 hours but are only paid for 40, this is against the law. It’s important to maintain accurate records of your hours to make sure you’re compensated correctly.

How to Prevent Wage Theft in Construction?

Preventing wage theft in construction requires a few important actions. First, report any wage theft to the relevant authorities to address and prevent problems. The general contractor must investigate any signs of wage theft. It’s crucial for construction companies to clearly outline wage agreements and job expectations from the beginning.

Here are some more practical ways to prevent wage theft in the construction industry:

• ‍Know Your Rights: Familiarize yourself with the legal pay rates and regulations for overtime, breaks, and job classification. Every worker should understand the minimum wage laws and other labor protections that apply to them.
• ‍Maintain Records: Keep comprehensive and accurate records of all employee hours, pay rates, and deductions. It includes timesheets, payroll records, and documentation of any changes to pay rates or work hours. Accurate record-keeping helps identify discrepancies, provides proof in case of disputes, and supports compliance with labor laws.
• ‍Compliance with Labor Laws: Workers must stay informed and comply with labor laws and state legislation to avoid civil penalties, fines, and employee attorney fees. Use resources like the U.S. Department of Labor and state labor departments to stay informed about current wage and hour regulations. 
• ‍Fair Bidding: Make subcontractors follow fair wage practices by including fair bidding requirements in their contracts. Subcontractors must avoid cutting labor costs to win bids, as it often leads to wage theft. 
• ‍Training and Education:  Training workers and management about the wage laws, rights, and the importance of fair pay practices. Regular training helps everyone understand their responsibilities and follow the rules and promotes a fair workplace. 

You Must Also Read:- What is GPS technology?

Using Kwant AI to Reduce Wage Theft in the Construction Industry

Kwant is a powerful construction management software that helps to increase safety and efficiency on the construction site. Since wage theft is a major issue in the United States, using Kwant software for the construction industry can reduce this issue and create a safe working environment. 

Here are the features of Kwant AI that help to reduce wage theft: 

• ‍Automate Attendance Tracking :Kwant employs advanced facial recognition technology to precisely capture and log employee clock-ins and clock-outs. It records the working hours of workers on site including overtime. The attendance reports generated by Kwant AI prevent contractors from altering timesheets or submitting false reports during payment processing. 
• ‍Smart-Wearable Badges: Kwant deploys smart badges for construction workers. These badges are lightweight, durable, and made in the USA. The badges collect real-time data, including location awareness, movement patterns, and interactions with materials and equipment. By tracking workers’ hours and activities, Kwant provides accurate timekeeping and reduces the risk of wage theft.
• ‍Compliance Updates: Kwant AI monitors worker certifications and licenses to confirm they are valid and up to date. It provides real-time updates and alerts about compliance requirements and certifications. Kwant stays informed about employment regulations, legislation, and employment standards to reduce the risk of unintentional wage theft.
• ‍Real-Time Reporting: Kwant AI helps reduce wage theft in construction by providing detailed reports and audit trails for clear oversight of attendance and work hours. With real-time reporting and analytics, you receive instant updates on worker and equipment details, making it easy to spot any irregularities or unauthorized activities quickly. Additionally, knowing who is on your job site at all times makes sure that only authorized personnel are working, helping to prevent fraudulent practices and maintain accurate payroll data.

Secure Your Construction Site with Kwant AI

Are you a construction industry leader struggling with wage theft and its costly impacts? Millions are lost annually due to errors in time tracking and payroll. Kwant AI offers a cutting-edge solution to solve this issue in the construction industry. Our technology provides accurate attendance tracking and compliance, reducing discrepancies and preventing wage theft. Discover how Kwant AI can safeguard your payroll, reduce wage theft, and boost accuracy. Request a personalized demo today to explore how Kwant can transform your construction site. 

‍