Subcontractors working on an affordable housing development in DC had to pay $633K in back wages for violating the Davis- Bacon Act, the Contract Work Hours and Safety Standards Act, and the Fair Labor Standards Act. The case involved multiple subcontractors and 84 affected workers that were paid below prevailing wages and benefits.

Here’s what happened

The Bridge is a large affordable housing project funded by the District of Columbia, making it subject to federal prevailing wage laws. The development’s general contractor used several subcontractors for various aspects of construction. Some of these first-tier subcontractors further contracted work out to additional subcontractors. 

Upon investigation, the Department of Labor’s (DOL) Wage and Hour Division (WHD) uncovered many violations among the groups of subcontractors. This required multiple divisions of the DOL to fully investigate since it included overtime, pay and recording keeping violations. 

Here is a breakdown of the violations found and cited by the DOL: 

  • $292,193 owed due to an electrical subcontractor misclassifying workers as independent contractors, failing to pay prevailing wage rates, failing to pay fringe benefits, not paying overtime, not keeping records, omitting workers from certified payroll records and falsifying certified payroll records.
  • $253,146 owed in back wages for failing to pay prevailing wages, failing to pay fringe benefits, omitting workers on certified payroll records and falsifying certified reports.
  •  $53,451 owed for failing misclassifying workers and failing to pay overtime.
  • $19,460 owed for back prevailing wages and fringe benefits, falsifying certified payroll records, omitting workers from records and overtime violations.
  • $10,051 owed for back prevailing wages and fringe benefits.
  • $4,728 owed for back prevailing wages and fringe benefits. 

These violations were spread out among various subcontractors for the Bridge project. Some violations are related directly to the Davis-Bacon Act, but other labor laws such as Contract Work Hours and Safety Standards Act (CWHSSA) were also cited in the case. 

Read the official press release here.

How to prevent it
This is a complicated case since it involves a prime contractor and a network of first and second tier subcontractors. Some violations seem to be due to intentional actions, like omitting workers on reports and falsifying certified payroll records. Other issues, however, are easy to make because they involve misclassifying workers or record keeping.  Here are a few tips and resources to help you avoid preventable mistakes on your next prevailing wage project:

Work classification
Make sure you understand work classifications and that you take care to match every worker’s classifications with the actual work being done. Workers must also change their work classifications in the field to match the world they do through the course of a shift. So if a worker does some low-voltage electrical work, high-voltage electrical work and some drywall work, each must be tracked and paid according to their individual work classifications.

This resource walks you through worker classifications in detail.

Certified payroll reporting
Make sure you understand certified reporting requirements and that you carefully complete and submit reports that are accurate. For federal projects, weekly certified payroll reports are required. State prevailing wage reporting regulations are determined by each state, so make sure you know the rules pertaining to your project and state.

This resource shows you how to fill out form WH-347 for federal certified payroll reports.
This resource highlights four common mistakes to check before submitting certified payroll.
This video walks you through completing form WH-347. 

Overtime rules
Make sure you understand and follow overtime rules as they apply to both prevailing wage work and non-prevailing wage work. Keep in mind that federally-funded projects must follow the overtime rules under Davis-Bacon, but state-funded projects need to comply with state guidelines. Non-prevailing wage work falls under federal overtime outlined in CWHSSA. You’re responsible for knowing and following whichever law your work falls under.

This resource covers overtime regulations under CWHSSA.
This resource talks about overtime and prevailing wage work.

Record keeping
Make sure you understand and follow all record keeping regulations for your projects. This falls under several laws, including Davis-Bacon and CWHSSA. While record keeping doesn’t seem like a difficult or risky administrative task, it can still be problematic. If your project is investigated by the DOL for prevailing wage violations, they look into your processes in general. This often leads them to find and cite for additional problems, especially with recordkeeping and overtime.

This resource covers record keeping for construction companies. 

This particular case involved a mix of mistakes and seemingly intentional violations. For most companies though, simple errors or misunderstandings of how the law applies is all it takes to create a serious problem. Your best bet to avoid these types of problems is to make sure everyone on your payroll team is well versed in regulations and what it takes to be compliant. Use certified payroll software designed to reduce errors and create a system of checks to find and fix mistakes before they make it to official reports. General contractors may want to look into software designed to streamline compliance among their subnetwork to prevent similar issues.

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.