As part of the Department of Labor’s ongoing goal to audit and verify that the correct prevailing wage rates are paid on federally funded construction projects (including projects that involve partially funded by federal funds), the Wage and Hour Division (WHD) of the DOL can perform independent investigations.

Investigations follow the following procedures; any contractor may fall under these investigation procedures:
  1. A responsible official of your firm will be contacted by an official from WHD. If a subcontractor is being investigated, both the sub and the general contractor will be contacted at the start of the investigation.
  2. The firm will be notified that the purpose of the investigation is to determine compliance with wage regulations. The official will notify the firm about the scope of the investigation, Including employee interviews, inspection of records, physical inspection of the project etc.
  3. The investigator will ask for the legal name of the firm and any trade names; the full address, full
    names of owners or officers and their titles; number of persons employed, and name and address of any subcontractors.

During the Investigation

DOL officials will examine certified payroll reports and verify that correct prevailing wages and fringes have been paid to workers on the project. Investigators will validate whether employees have been classified correctly and thus the correct prevailing wages have been paid. In addition, verify that fringe credits have been taken correctly and verify any discrepancies, such as a disproportionate number of laborers, apprentices, or helpers on the project.

Employee Interviews

Employee interviews are typically conducted. WHD investigators will verify that interviews with employees cover a sufficient number of workers at the site and also include workers of different classifications. All interviews are done confidentially during working hours, in a setting that doesn’t allow for the interference of the current employer or any person associated with the employer.

If discrepancies are uncovered, interviewers will seek out other employees who can corroborate the same accounts. In cases of larger amounts of violations or falsification investigators may reach out to former employees.

Basic information that will be collected during employee interviews include:
  • Place and date of interview
  • Name and address of employer/employee
  • Employment status and job classification, including specific duties performed and tools/materials used
  • Period(s) of employment, rate of pay and wages received
  • Alleged violations

HUD Interview Forms-

Conclusion of Investigation

The contractor will be informed of the findings of the investigation and any violations that have been uncovered. The investigator will provide details on what steps need to be taken to reconcile the violations. The contractor has an opportunity to provide documentation and evidence supporting its side of the investigation.

DOL investigators will determine if there is a need for back wages and will request the payment of back wages and any damages.

Debarment from the contract and future contracts can occur:
  • If the certified reports were purposely falsified
  • Required kickbacks
  • Committed repeat or serious violations
  • The prime contractor can be debarred for violations done by the subcontractor

The prime contractor is responsible for compliance on the contract and is responsible for back wage payments if sub-contractor hasn’t paid for back wages.

Investigations are unavoidable so make sure you are staying compliant with a powerful certified payroll management tool!

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.