Davis-Bacon Act (DBA) compliance is complicated, and errors can be incredibly costly. Not only is there a risk of being sued by your employees, but non-compliance can also cause penalties and sanctions from the government. These include contract payments being withheld, contract terminations, and even being banned from future contracts for up to three years. Sanctions like these could be devastating for any business, since it is easy to make mistakes when filling out WH-347 forms. Calculating fringe benefits for an employee who did a diverse portfolio of work can be complicated and cause a violation if not done correctly, especially when submitting weekly reports. Mix in local regulations and the entire situation can be incredibly complicated and lead to accidental mistakes. In extreme cases, a mistake in paying prevailing wages could lead to a ban for three years from bidding on government contracts, which can be devastating for a business whose primary customer is the government agencies.
The construction industry is especially prone to these violations. There have been over 100,000 violations of the Davis-Bacon Act in the construction industry alone. Various job functions and subcontractors increases the likelihood of violations. Often subcontractors are unfamiliar with federal prevailing wage rates because they are not being provided with specifications of the original bid. Contractors usually do not knowingly violate prevailing wages laws. Regardless, violations and fines are real. A southern California contractor was ordered to pay more than $92,000 in back wages and fringe benefits while working on government contracts at March Air Reserve Base. In the case of the United States of America ex rel. Brian Wall v. Circle C Construction, LLC, a subcontractor “paid two of its electricians about $9,900 less than the wages mandated by the Davis-Bacon Act”, and the government sued for $1.66 million in damages and fines. A lawsuit like this could devastate your business and tarnish your reputation. You are put at risk by both lawyers encouraging whistle blowing in your company and by government auditors looking for inconsistencies within your records. This can put your business at risk and issues in reporting can be exposed.
Correcting errors on WH-347 falls to the prime contractor or administrators when a subcontractor is involved. As a prime contractor you are responsible and liable for Davis-Bacon Act compliance. If you make a mistake on your weekly reported WH-347, such as a data entry error or underpaying an employee, you have 30 days from the time you submitted the report to fix the error. This will cause government payments to your company to be delayed, as the correction of the error can add up to 30-90 days to the process. There are specific requirements for correcting errors on paper and electronic submissions. On paper submissions you will need to create a new report, or if only a single error was made you can cross out the error and make the correction. For digital submission, you need to re-enter all the employee data and make the correction. All employee data needs to be consistent for the correction to be accepted. For specific instructions visit the FAQ.
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.
