Certified payroll is tricky, so it is easy to see how Davis-Bacon violations can occur. There are so many factors involved, each of which has to be correct in order for a contractor to stay compliant. Adding to the complication is the fact that an investigation into a single issue can uncover multiple, unrelated but problematic issues.

Recently the Department of Labor (DOL)’s Wage and Hour Division (WHD) took a closer look at a Michigan-based electrical subcontractor and found them in violation of Davis-Bacon and Related Acts.

Learn what happened and see how you can prevent it from happening in your organization.

Here’s what happened

An electrical subcontractor in Chesterfield Township was investigated by the DOL for Davis-Bacon and Related Act violations. The investigation involved renovation work on the Patrick V. McNamara Building and concluded that the specialty contractor underpaid eight workers, totaling $94,000 in owned back wages and fringe.

It seems as though the prevailing wage rate for the workers involved was for low-voltage installers or technicians, however their work was not actually restricted to only low-voltage. The resulting pay differential between these two roles resulted in tens of thousands of dollars in back pay and fringes.

Additionally, the investigation also found Contract Work Hours and Safety Standards Act violations regarding record keeping and overtime pay.

How to prevent it

Hourly prevailing wage rates correspond closely to specific job descriptions for each work classification. Workers must track not only their hours, but the type of work they do. If they do something that is outside the norm for any single work classification, that needs to be recorded and the corresponding prevailing wage and fringe rate should be paid.

Mistakes can happen by omission when workers simply don’t track their different work roles through the day. This is why it’s important that workers are well-versed in what is needed from them in terms of tracking hours and work roles. Unfortunately, this can be hard to do for those using spreadsheets or hand-written timecards. Switching to a digital time and attendance system can reduce this type of mistake.

Contractors required to do certified payroll should also have a checklist and system in place to verify the worker’s time and work data. Checking to make sure time and work roles reported match what is expected for each worker can catch and resolve mistakes before payday.

Recording keeping and overtime violations usually come down to sloppy practices or unfamiliarity with the law and your responsibilities. Check with your state and in the language of your government contract to be sure you’re following overtime pay rules closely. You can learn more about record keeping for construction companies in our recently published article on the topic.

At the end of the day, staying compliant on government contracts comes down to understanding and following the laws closely. That requires ongoing education, constant diligence and a system of checks and balances to continually keep your company in line. Additionally, using software the helps keep you on track can also streamline compliance while reducing the likelihood for mistakes that leave you with a big bill.

Read the official DOL statement about this case, and bookmark these resources to help you stay ahead of prevailing wage laws:

Fringe trust info
Fringe benefit FAQ
Certified payroll FAQ
Certified payroll resource list
Compliance tips for government contractors

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.

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