Scottish Labour leader Richard Leonard has accused Nicola Sturgeon of having "no idea" how many workers on Scottish Government funded contracts are charged to access their wages.
Mr Leonard said the practice by umbrella firms "exploits" workers and called for further government action while the First Minister said he should join in requesting more devolution to tackle the problem.
Addressing concerns over workers on the flagship Aberdeen bypass scheme having to pay to access their own wages, Ms Sturgeon said this is something they "choose".
Speaking at First Minister's Questions, Mr Leonard asked what action had been taken since he raised the issue the previous week.
Ms Sturgeon said Transport Scotland ordered an urgent investigation into the practice and found charging for access to wages happened through agency for a subcontractor on the Aberdeen Western Peripheral Route (AWPR) project.
She said: "It is at the discretion of individual employees if they choose to work through an agency.
"At the AWPR, there is no requirement to do so because the subcontractor offers to directly employ all employees working on the project.
"That means any worker who wishes to be paid directly by the subcontractor can be, which avoids any of these practices which I would condemn by agencies being applied."
She said the contractor confirmed more than 90% of workers paid through an agency and all direct employees are paid on the standard Pay as You Earn basis, avoiding charges.
"This exploitation is not confined to just one contract," Mr Leonard said as he raised the case of a railway worker on a project at Edinburgh's Waverley Station being charged to access wages.
He added: "First Minister, isn't it the case that you have got no idea how widespread this practice is on the public projects that you fund?"
Ms Sturgeon said although the Scottish Government funded the Waverley scheme, it has no control over the contract.
She said the contract is with Network Rail, a wholly-owned subsidiary of the UK Government, and pressed Mr Leonard to back Scottish Government calls for control over Network Rail to be devolved to the Scottish Parliament.
She added the Scottish Government expects companies delivering public contracts to adopt fair and ethical businesses practices, despite employment law being reserved.