Are Ghosts Haunting Your Payroll?
Some ghosts are benign, Casper the Friendly Ghost comes to mind. Some entertaining - remember Pac Man? Our ghosts are far scarier: they are more expensive and dangerous; they haunt your bottom line:
Ghosts on the payroll come in all sorts of shapes and sizes but can generally by put into four distinct categories:
- Not on site / multiple sites at once
- Not as many hours worked
- Undocumented workers
- Wrong rate
If these ghosts are haunting you, they may be doing so at the cost of thousands of dollars a day.
There is the ghost who is paid but not on site. A common scheme is for workers to show up on a site, sign in, take a car to another site, sign in there, etc. At the end of the day, the pattern is then reversed. In this instance the risk is not just simply that you are paying for services not received. By not having the correct number of workers on the site may be a violation regulations. Who's missing, are workers there without supervisors? This scheme can be indicative of more serious corruption.
The ghost who works "not as many hours" holds the same risks as the worker not on site. This ghost bills you for hours not worked. What may happen is that a worker is automatically charged an 8 hour day even if they leave early. Many times a contractor may try to show a worker that is working on a holiday, reimbursing for lunch, or working overtime even though it was not authorized. The main risk here is financial. One hunted ghost was a diligent worker who clocked 32 hours for one day!
Let’s examine the undocumented worker: employees that exist on the payroll and may be getting paid, though often a lower rate then is billed or is legal. The risks associated with this ghost go beyond just the financial aspects of paying more than the actual cost to the vendor. The undocumented workers may be ineligible to perform the work required of them due to age, citizenship, background, education qualifications, or licensing. This can open the project up to many regulatory issues that may result in fines or mandatory work stoppages. If they are not properly trained work quality may be substandard.
The wrong rate ghost is getting invoiced at a higher rate than is actually paid to the employee. This could be dangerous if what the worker is receiving is less than minimum wage or prevailing wage. Recently in New York, they held the project owner liable when workers were not paid prevailing wage even though the vendor was paying them. The Attorney General ruled that by not auditing for prevailing wage the owner was jointly and severally liable.