Author: Matt DeSarno, CEO, Verfico™ Technology
Wage theft, an alarming issue plaguing the construction industry, demands our attention as we explore its impact on workers and industry stakeholders. Below we discuss the intricacies of wage theft, the risks it poses to developers and top tier contractors, and how Verfico™ can help to mitigate that risk.
Understanding Wage Theft: Wage theft encompasses a range of illicit practices, including worker misclassification, unpaid overtime, and unjust deductions from employee wages. This pervasive issue has substantial consequences, with workers losing over $40 billion annually to wage theft in the United States alone. Employers need to be aware that wage theft carries significant financial and legal consequences, including private class actions and government-led actions. These avenues enable collective compensation claims and legal measures, ensuring that those engaged in wage theft are held responsible, which may lead to substantial financial implications for businesses.
Complexity in the Construction Industry: The construction industry is particularly susceptible to wage theft due to its complex and multitiered labor structure. With numerous subcontractors and workers involved in a single project, it becomes challenging for general contractors and top- tier subcontractors to ensure wage compliance throughout the entire chain. Often, wage theft occurs without their knowledge, when ignorance is no defense against liability. In many jurisdictions, the responsibility for wage compliance flows upward, holding general contractors and sometimes owners accountable and exposing each tier of the industry to financial and reputational risks.
Worker Misclassification Maze: Among the various forms of wage theft, worker misclassification emerges as a prominent concern. Subcontractors often exploit this practice by mislabeling employees as independent contractors, denying them rightful benefits and protections at a cost savings to higher tier contractors and owners. The complex nature of the construction industry makes wage compliance a challenge, leading well-intentioned contractors to unintentionally violate regulations due to the intricate web of rules and classifications.
Navigating Accountability and Legal Hazards: Developers and top tier contractors bear significant responsibility for wage theft prevention. Non-compliance can result in severe repercussions, with general contractors assuming liability and facing substantial fines, penalties, and potential reputational damage to their business. As government agencies, workers’ rights advocates, and plaintiff’s attorneys intensify efforts to combat wage theft, all industry tiers must prioritize accountability to deter illicit practice and reduce liability.
Harnessing Technology to Address Wage Theft: In the digital era, technology plays a pivotal role in combating wage theft and safeguarding businesses and their workers. Enter Verfico™ an innovative software as a service (SaaS) wage assurance tool that empowers organizations to demonstrate their commitment to corporate sustainability and diversity, equity, and inclusion goals. By using Verfico™, companies effectively shield themselves from wage theft liability and mitigate potential financial and reputational risks stemming from legal disputes. By facilitating accurate tracking and reporting of workforce diversity metrics and providing wage assurance, Verfico™ also enables companies to actively demonstrate their commitment to achieving their diversity, equity, and inclusion goals. Advanced analytics and features have the potential to increase efficiency and cut costs by leveraging valuable data, optimizing planning and scheduling, and enhancing safety measures. Adopting Verfico™ not only safeguards business interests but also contributes to elevating a company’s standing within the industry, improving bidding prospects for future projects.
Verfico™ sets itself apart from existing timekeeping systems by not only maintaining accurate records of hours worked for all subcontractors but also reconciling the time worked with each subcontractor’s payroll system. This unique feature ensures real-time and historical transparency and accountability, which is key in mitigating risks that highly visible developers and general contractors encounter in their operations.
Wage theft presents significant challenges and risks to the construction industry, affecting workers and stakeholders alike. To address this issue, it is crucial for developers and general contractors to prioritize accountability and take proactive measures. By harnessing technology, such as Verfico™, businesses can mitigate wage theft liability, leverage valuable data for increased efficiency, and protect their interests while promoting a fair and responsible construction industry.
Click here to read the results of our Wage Theft Survey.
Matt DeSarno is an accomplished leader responsible for guiding all aspects of Verfico™. With a distinguished twenty-seven-year career, Matt’s experience spans various sectors. He served as a senior executive with the FBI for twenty years, culminating in his role as the Special Agent in Charge (SAC) of the Dallas Field Office. Before joining the FBI, Matt gained valuable technology management experience in the private sector. Additionally, his early career as an infantry officer in the U.S. Army played a critical role in his personal and professional growth.
Matt holds a bachelor’s degree from the University of Richmond. His educational background, combined with his extensive professional experience, equips him with a well-rounded perspective in leading successful, mission- focused teams in high-stakes environments. Matt currently resides in Dallas, Texas, with his wife, two daughters, and two dogs, where he continues to drive Verfico’s vision of empowering organizations through innovative technology solutions.
