Worker Misclassification to Evade Prevailing Wage Obligations

$10,000-$50,000+ per audit (staff overtime, administrative delays, audit remediation, potential state liability if certification was falsely accepted, worker back-wage fund shortfalls) • $100,000–$300,000 in back wages + penalties per audit; project delays if misclassification forces reclassification mid-stream; loss of municipal contract eligibility for repeat projects • $15,000-$100,000+ per project (federal clawback risk, MPO administrative costs, contractor re-certification delays, project timeline slippage)

Developer's contract manager requests payroll docs; compares against insurance requirements manually; escalates via email if 1099s exceed threshold; lawyers review after-the-fact • Manual cross-referencing of worker timesheets against county prevailing wage schedules; subcontractor 1099 declarations accepted at face value; Excel-based wage tracking; spot checks of payroll records • Manual Excel spreadsheets with dual payroll tracking; segregated payment channels (direct bank transfer for 1099 vs. formal payroll); selective omission from certified payroll filings; informal classification records