Employment Law

Minority Fraud in the Construction Industry Part 1 featured image

Minority Fraud in the Construction Industry Part 1

There are a myriad of state and federal laws that must be followed in order for a construction firm to stay in business. Unfortunately, when it comes to laws that encourage diversity, many construction firms are buckling under the pressure and committing minority fraud. In this two-part series, the Fort Lauderdale construction lawyers at Cotney Construction Law will be describing minority fraud as it appears in the construction industry, the penalties for committing it, and how minority fraud can be avoided.

What is Minority Fraud?

Minority fraud is the false representation of a workforce. A business may fail to meet contractual requirements that stipulate a mandatory number of minority or women workers, or it may fail to comply with minority-owned business requirements. Minority fraud can occur by way of the falsification of records, bribery, or by unintentional misrepresentation. By whatever means, minority fraud is a serious offense that carries with it penalties that can be up to hundreds of thousands of dollars, as we’ll explore in part two.

How and Why Does Minority Fraud Occur in the Construction Industry?

Contractors are constantly under duress from tight deadlines and labor shortages. In order to secure a contract or finish a project, some construction firms are willing to lie at the risk of an investigation and heavy fines. In order to meet the minority requirements on government contracts, contractors will take the role of a “pass-through” and appear to be compliant while subcontracting the work to a company that does not meet these minority requirements. Other times, contractors will create fake disadvantaged business enterprises (DBEs) or steal the identity of DBEs and use them as administrative fronts. All so that they can secure contracts or do the work themselves on a project without having to pay minority-owned businesses.

Minority fraud is not to be taken lightly as it can bring a construction firm to the brink of bankruptcy. Even a contractor with the best of intentions can accidentally commit minority fraud. To ensure that you are always compliant with state and federal laws, consult with a Fort Lauderdale construction lawyer.

For more information on minority fraud and staying compliant with state and federal laws, please read part two.

If you would like to speak with a Fort Lauderdale construction lawyer, please contact us today.


Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.