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By: Kamy Molavi
Recently, we at FMG’s construction law group have seen several cases involving the Davis Bacon Act. Davis Bacon is the federal law that requires all workers to be paid the “prevailing wages” on federal contracts. The law also applies to a non-federal contract if the project is at least partially paid for from certain federal funds.
Our clients in the recent cases are either general contractors or subcontractors. The Department of Labor claimed our clients’ first-tier or second tier subcontractors had failed to pay the prevailing wages, and sought to collect the shortfall from our clients even though the unpaid or underpaid workers were not employees of the clients.
This indirect liability is not new. What seems to be new is the prevalence of DOL investigations in the past two years. Some attribute the recent focus to the political climate, and others blame unions for instigating the investigations. We do not know what is causing the recent investigative vigilance, but the trend is undeniable.
If the Davis Bacon Act applies, contractors and subcontractors cannot rely on certified payrolls from downstream employers. They should take steps to understand the wage requirements of their projects, especially the classification of workers needed on the job, and the proper rate for each classification. It is also prudent to make sure all employers on the project maintain good time records, and to the extent feasible, also to monitor payments to all workers.