March 3, 2021

Home Builders Face U.S. Inquiry on Wages

The federal government’s top wage enforcement official said on Thursday that the Labor Department had begun a far-reaching investigation into possible minimum wage and overtime violations in the residential construction industry.

In her first interview on the investigation, Nancy J. Leppink, acting director of the department’s wage and hour division, said the government was focusing on the residential construction industry because it had so many vulnerable immigrant workers and because some construction contractors had been misclassifying workers as independent contractors to circumvent wage laws.

Executives in the residential construction industry criticized the investigation, saying it was an example of overaggressive regulation just when the Obama administration has signaled it would scale back some regulation in response to business complaints that it was undermining job creation. Thus far, the government has sent out broad demands for records on wages and hours on the home builders’ direct employees and those working for their contractors.

The Leading Builders of America, an association of 19 major home builders, called the document demands overly broad and said the inquiry was “especially troubling given that no issues have been identified to warrant an investigation.”

“These demands could require significant resources and thousands of hours of work,” the association said in a statement.

Ms. Leppink defended the inquiry as a straightforward effort to assure compliance. “This is not regulation in the sense of it’s not promulgating new rules,” she said. “This is enforcement, with the objective of achieving compliance with the law. There’s a strong commitment by this administration and the Secretary of Labor to protecting workers’ rights, and this is what we’re doing here.”

Labor Department officials said there should be no surprise that the division was focused on home builders, saying that it announced plans for the inquiry as part of its annual enforcement strategy. Ms. Leppink said her division’s investigations were no longer just complaint-driven and looked especially at industries with many “vulnerable workers” and various layers of contractors and subcontractors often trying to minimize labor costs.

She said that last year in individual investigations the Labor Department uncovered widespread violations by residential construction companies, imposing more than $7 million in fines involving 4,000 workers. Among the violations found, officials said, were failing to pay for all hours worked and paying piece-work rates that resulted in pay below the minimum wage.

The investigation was first reported by The Wall Street Journal on Thursday.

Travis Parman, a spokesman for the Pulte Group, one of the nation’s largest home builders, said his company had received an inquiry for documents and was working to evaluate its scope. Pulte and several other companies said the builders association would present their broader response.

Many construction unions have urged the Labor Department to crack down on wage violations in part to embarrass nonunion contractors that unions hope to organize.

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