On July 5, 2012, Governor Corbett signed into law the "Public Works Employment Verification Act" (also known as Act 127), which becomes effective January 1, 2013. The Act applies to "public work," as that term is defined in the Pennsylvania prevailing wage law, and includes the construction, reconstruction, demolition and/or repair work (other than maintenance work) paid for in whole or in part with state, municipal or county funds where the cost of the project exceeds $25,000.
In a nutshell, the Act requires public works contractors and subcontractors of all tiers to use the federal E-verify system for all new employees. The E-verify system can be found on the Department of Homeland Security's website. The Act does not require E-verify be used for existing employees, and it specifically exempts entities that only supply material suppliers.
A contractor must provide a written verification to the public body that he has complied with the Act prior to being awarded any public work. The verification form which contractors can use will be posted on the Pennsylvania Department of General Services' (DGS) website. A subcontractor must provide the public body with a verification form prior to commencing work on the public project. In addition to the verification forms, any contract between a contractor and a subcontractor must contain information about the requirements of the Act. Although the Act does not expressly require this, it may be good practice to include similar information in contracts between subcontractors because of the verification requirements.
The Act empowers DGS to conduct audits of both contractors and subcontractors that perform public work. While DGS is given the power to conduct the audits, the Act specifically states that it can seek
cooperation from other state agencies (e.g., the Pennsylvania Department of Labor and Industry). The Act contains protections for employees who report violations and/or who participate in investigations.
If a contractor or subcontractor fails to comply with the Act, the penalties include a warning letter for a first violation, a thirty-day debarment for a second violation, a 180-day to one-year debarment for a third violation, and a three-year debarment from public work for a willful violation of the Act. DGS can also impose civil penalties of up to $1,000 for each violation. In grading a violation as a first, second or third offense, the Act gives DGS the power to look back ten years for prior violations.
Finally, the Act contains a "good faith immunity" defense. If a contractor or subcontractor can demonstrate that they relied in good faith upon the E-verify system and can produce written evidence that they used it, they will not be liable under the Act for any penalties imposed by the Act. Therefore, when you use the E-verify system, you should keep the written confirmation in your files. If you engage an employment service to perform background checks for your employees, then you should request and retain copies of the E-verify records.
This post was written by Tom Beckley of Beckley and Madden law offices. Mr. Beckley is also the legal counsel for the American Subcontractors Association of Central Pennsylvania. Mr. Beckley can be
reached at email@example.com or contact the construction professionals at McKonly and Asbury, LLP.