Authored by Matt DeSarno, CEO, Verfico Technology, and Jeoff Williams, CRO, Verfico Technology
Wage theft is a pervasive issue in the U.S. construction industry, causing significant financial and reputational damage to companies while exploiting vulnerable workers, including many immigrants. Verfico Technology, a Texas-based company dedicated to combating this problem, offers an innovative solution that can help businesses protect their workforce and ensure compliance with labor laws.
The Scale of the Problem
In the U.S., wage theft accounts for approximately $50 billion in lost wages annually. This not only affects workers who are denied their rightful earnings but also impacts companies through uncollected payroll taxes, legal liabilities, and reputational damage. The construction industry, with its complex, multi-tiered labor structures, is particularly vulnerable to this illegal practice. Misclassifying workers as independent contractors (1099) instead of employees (W2) is a common occurrence that often results in wage theft.
The Broader Impact of Wage Theft
Stolen wages are not just a loss for workers; they are taken out of the tax base while our education and healthcare systems struggle to keep up. This means fewer resources for schools, hospitals, and essential public services, ultimately affecting everyone in the community. We all pay a price for the grift and greed that often lies beneath the surface. When workers who should be treated as employees are misclassified as independent contractors at scale, they are not paying taxes, and neither are their "employers." This removal of wages from the taxable income pool diminishes the funds available for public services, contributing to the strain on already overburdened systems and making it harder to provide adequate education and healthcare. Worker misclassification also allows these unscrupulous “employers” to significantly undercut workers and employers who follow the rules and pay their fair share of taxes.
Verfico's Solution
While we wait for and hope our federal and state elected leaders develop a solution that allows for the identification and taxation of currently undocumented workers who have no viable way to obtain legal work authorizations and are often misclassified as independent contractors or paid off the books in cash, Verfico provides immediate protection for companies. Verfico offers a comprehensive wage assurance solution that enhances transparency and compliance in multi-tiered labor environments. By leveraging mobile apps and desktop tools, Verfico allows companies to monitor and verify labor costs and compliance in real-time. Workers log their hours through the Verfico app, and this data is automatically reconciled against payroll information uploaded by subcontractors. This ensures that all workers are paid accurately and on time.
Verfico vs. Traditional Methods
Traditional methods of ensuring fair wages in the construction industry often rely on labor unions and prevailing wage scales. While these approaches have their merits, they come with significant costs and regulatory burdens. Labor unions, for example, require substantial membership fees and can be highly bureaucratic, often leading to increased project costs and delays. Similarly, prevailing wage laws mandate wage rates for public works projects, adding layers of regulation and complexity that can stifle efficiency and innovation while increasing costs for taxpayers.
In contrast, Verfico presents a free market alternative that is both cost-effective and less regulated. Verfico's technology-driven solution ensures wage compliance without the heavy hand of union mandates or government-imposed wage scales. By providing real-time visibility and automated reconciliation of labor data, Verfico helps companies avoid the pitfalls of traditional methods while promoting a fair and transparent labor market.
Benefits for Companies and Workers
Financial Protection: By preventing wage theft, Verfico helps companies avoid the financial losses associated with unpaid wages and potential litigation. In areas like Washington D.C., settlements for wage theft litigation have averaged over $1 million in recent years.
Enhanced Compliance: Verfico's platform provides visibility to all employees and subcontractors on a job site, ensuring compliance with wage laws and reducing the risk of legal action. This is particularly important in states where general contractors (GCs) can be held directly liable for wage theft committed by subcontractors.
Increased Productivity: With accurate labor tracking and payroll reconciliation, companies can optimize workforce management, leading to increased productivity with less administrative overhead.
Positive Community Impact: Ensuring fair labor practices not only protects workers but also demonstrates a company's commitment to corporate responsibility. This can enhance a company's reputation and foster trust with clients and the community.
Attracting Workers in a Labor Shortage: In an environment where there is a labor shortage, demonstrating a commitment to treating workers with dignity and respect is crucial. By using Verfico, companies show that they value and protect their workers, which can attract more skilled laborers who are looking for fair and transparent working conditions.
Addressing Immigration Issues
Immigrant workers are often the most vulnerable to wage theft due to their precarious legal status and limited access to legal recourse. By implementing Verfico, companies can protect these workers from exploitation and ensure they receive fair wages for the work they perform. This not only supports immigrant workers but also helps to stabilize the labor market and contribute to the local economy by ensuring that all workers are compensated and taxed equitably.
Ultimately, Congress must also create a method for long-time undocumented immigrants who can pass background checks to earn legal status so that they may legally work for employers who deduct and match taxes and so the federal government can ID and Tax them properly.
If such a policy were coupled with widespread implementation of Verfico and increased enforcement against employers who are breaking the law, it would greatly benefit our nation and its economy by helping to:
- Disincentivize illegal immigration
- Reduce worker misclassification, wage theft, and payroll fraud
- Alleviate workforce shortages
- Increase tax revenues without raising taxes on law abiding U.S. workers and businesses ($4.75B into Social Security annually for every 1M workers who are allowed to work for tax-paying employers)
- Level the playing field for U.S. workers and businesses that are playing by the rules
Conclusion
Verfico provides a robust solution to the pervasive issue of wage theft in the construction industry, protecting both companies and workers. By ensuring compliance with labor laws and optimizing workforce management, Verfico helps businesses mitigate financial and reputational risks while demonstrating a commitment to fair labor practices. This is especially crucial for addressing the exploitation of immigrant workers and ensuring a fair and transparent labor market. For companies looking to safeguard their operations and uphold their values, Verfico is an essential partner in the fight against wage theft.
Author: Matt DeSarno, CEO, Verfico Technology
matt@verficopro.com
Matt DeSarno is an accomplished leader responsible for guiding all aspects of Verfico™. With a distinguished twenty-seven-year career, Matt's experience spans various sectors. He served as a senior executive with the FBI for twenty years, culminating in his role as the Special Agent in Charge (SAC) of the Dallas Field Office. Before joining the FBI, Matt gained valuable technology management experience in the private sector. Additionally, his early career as an infantry officer in the U.S. Army played a critical role in his personal and professional growth. Matt currently resides in Dallas, Texas, with his wife, two daughters, and two dogs, where he continues to drive Verfico's vision of empowering organizations through innovative technology solutions.
Author: Jeoff Williams, CRO, Verfico Technology
jeoff@verficopro.com
Jeoff Williams is a native Texan, a combat veteran United States Marine, and a 30-year veteran of the Texas Department of Public Safety where he held every job from Trooper to Lieutenant Colonel. Jeoff leads Verfico’s sales, marketing, and outreach efforts. Having spent his life solving complex problems under challenging circumstances, Jeoff brings strategic vision and focus along with tactical execution capability to Verfico’s mission of increasing accountability and transparency in complex labor markets. Jeoff has lived and worked all over Texas. He and his wife live in North Texas where he keeps bees and maintains his RV when he’s not protecting companies and protecting workers with Verfico.
