CHARLESTON, W.Va. — For the first time since the West Virginia Jobs Act was passed by the Legislature in 2001 to encourage skilled residents to be hired for state-contracted jobs, the state Labor Department has written a violation.
On Dec. 2, the Labor Department issued a $34,300 fine to International Rigging Group, based in Tarpon Springs, Florida.
International Rigging was the low bidder on a million-dollar spot painting project last summer on Charleston’s Yeager Bridge, which allows Interstate 64/77 to flow over the Kanawha River. The project was bid out by the state Parkways Authority because the bridge is part of the West Virginia Turnpike.
During the course of the project, the Labor Department started looking at how many of the workers on the payroll are West Virginia residents or residents of the local labor market, which is defined as from any county outside of the state that is within 50 miles of the West Virginia border.
Companies that win state public improvement construction project bids have to have at least 75 percent of their workers from the local labor market, according to the West Virginia Jobs Act. Companies can have at least two employees from outside the local labor market as long as the 75 percent threshold is met.
International Rigging racked up 343 violations over the 11 weeks it worked on the Yeager Bridge project.
The Labor Department may collect penalties of $100 a day per violation, which accounted for the total of the fine.
“What happened in this instance is when they filed their certified payrolls, they didn’t have hardly any West Virginia workers on the job,” said Greg Barr, general manager of the West Virginia Parkways Authority.
International Rigging won its bid by about $10,000 over another company, KMX of Lowellville, Ohio, Barr said.
Contracts between Parkways and companies performing work state that the companies must follow the West Virginia Jobs Act and that it is enforced by the Labor Department, Barr said.
Companies may receive a waiver if WorkForce West Virginia is unable to refer qualified applicants in the local labor market, but no waiver was issued in this instance.
“There were 14 local industrial painters that I know wanted to work there, and none were hired,” said Brian Stanley, organizing director of Painters District Council 53, a union associated with the Affiliated Construction Trades.
“Some went to the job site and asked to be interviewed. The company pushed them off.”
Instead, said Stanley, who kept an eye on the project and the payrolls, the company brought in workers from Texas, Louisiana, New Hampshire and Florida.
“They broke the law. They refused to hire anybody,” Stanley said.
The West Virginia Jobs Protection Act was passed by the state Legislature in 2001 and then renewed in 2006.
The text of the law says it’s meant to combat unemployment in West Virginia.
“The Legislature finds that the rate of unemployment in this state is significantly higher than that of most other states and that a majority of West Virginia counties are designated as labor surplus areas by the United States department of labor,” the law states.
“The Legislature finds that the employment of persons from outside the local labor market on public improvement construction projects contracted for and subsidized by the taxpayers of the state contributes significantly to the rate of unemployment and the low per capita income among qualified state residents who would otherwise be hired for these jobs. Therefore, the Legislature declares that residents of local labor markets should be employed for the construction of public improvement projects which directly utilize taxpayer funding, in whole or in part.”
The law is useful because it spells out the value of hiring skilled West Virginia workers and because it lays out what the standard is, said Steve White, director of the West Virginia Affiliated Construction Trades.
“Just having it on the books is very helpful. People understand that’s what you care about then they address it,” White said. “When they understand the state cares about local hiring, then they find a way to do it. There’s been a number of times where we would make sure companies knew that was the requirement and they dealt with it. It’s not that hard to meet.”
But the state Labor Department, through state Department of Commerce spokeswoman Chelsea Ruby, confirmed that this past month was the first time it had ever levied a penalty for a company in violation of the act.
Even when the act was being renewed and extended permanently in 2006, union leaders acknowledged that enforcement had been an issue.
A major limiting factor is the standards that apply.
One is that only projects of more than $500,000 are subject to the law.
Another complication has always been projects of mixed funding. Most projects under the state Division of Highways receive significant federal funding, which muddies the waters for applying fines under state law based on state boundaries.
“There are very few public improvement projects that meet the criteria of greater than $500,000 with no federal funds included,” Ruby stated.
Barr concurred with that assessment.
“Most of the contract work done on bridge painting is done through DOH, and there’s federal matching money involved,” Barr said. “The West Virginia Jobs Act doesn’t apply; the Davis Bacon Act applies.”
In this particular case, International Rigging won a bid to oversee cleaning and coating of the structural steel surfaces on the bridge. Barr said that meant painting the main girders beneath the bridge and enshrouding the bridge with canvass to contain the lead-based paint was it was sandblasted off.
He said about three or four bids came in for the project.
It’s unclear to Barr whether a fine of about $34,000 on a million-dollar project would be a deterrent.
“On a million-dollar job, the fear is the company would just factor that into their bids and still get the fine,” he said.
Stanley and the painters union are pushing for International Rigging to be disqualified from bidding on future contracts.
The officers of the company were recently in other trouble in West Virginia.
In July, Nomiki and Michael Vavlas, now of International Rigging, were charged September with fraud conspiracy and mail fraud in U.S. District Court in the Northern District of West Virginia.
The two pleaded guilty to accusations that four years ago, while working on a federal bridge repainting project in Braxton County, the company then known as VHP Enterprises falsified payroll records.
The project was subject to the Davis-Bacon Act, which requires employers to pay a minimum hourly wage rate to all employees. The Vavlases did not pay the full wage rate for overtime hours worked by project employees and falsified payroll reports that were submitted to the state Division of Highways by mail, according to the court filing.
The Vavlases face up to five years in prison and a fine of up to $250,000 on the allegations over the Braxton County project.
“The jobs act has been useful in the sense that most companies, when they recognize what the law is, they obey the law,” said White of the Affiliated Construction Trades. “In this case, we’ve got a company related to a convicted felon and they were not going to obey the law and therefore got fined.”