Davis-Bacon Act Violations Under the False Claims Act

The Davis Bacon Act was enacted in 1931 to provide wage protections for construction workers, as wells as equal opportunities for contractors, when bidding and working on federal projects. It requires contractors and subcontractors to pay their employees the prevailing local wage and fringe benefits for work on a federally-funded or federally-assisted construction project involving public buildings or public works. The law covers a wide array of public projects involving construction, repairs, or improvements on projects involving highways; airports; railways; subways; streets; and power lines. The Department of Labor sets the prevailing wage for each locality. At a minimum, contractors are required to pay the prevailing wage, but they are free to pay their employees more than the prevailing wage.

A contractor must certify compliance with the Davis-Bacon Act when working on federal project. Failure to pay the prevailing wage after certifying compliance is a violation the False Claims Act. A company could be liable for three times the government’s damages, and an eligible whistleblower could potentially receive as much as 30 percent of the amount recovered by the government.

In United States ex rel. Wall v. Circle C Const., L.L.C., 697 F.3d 345 (6th Cir. 2012), the Sixth Circuit Court of Appeals held that certain violations of the Davis-Bacon Act create liability under the False Claims Act. Circle C Construction was contracted to construct buildings at a U.S. Army base. Circle C hired a subcontractor to perform the majority of the electrical work on the project. After failing to initially include the subcontractor’s employees on its payroll certifications, Circle C subsequently included them to certify compliance with Davis-Bacon. However, the subcontractor paid its employees less than the prevailing wage for electrical workers in that area. The Sixth Circuit upheld the district court’s finding that Circle C’s original and subsequent payroll certifications were expressly false because (1) they stated that they were complete, when no employees of the subcontractor who worked on the project were listed, and (2) the certifications wrongly represented that the prevailing wages were paid to the subcontracted employees. The Sixth Circuit found that Circle C made false statements, acted in reckless disregard of the truth or falsity of the information, and that the false statements were material to the government’s decision to make the payment to Circle C. Based on those findings the Sixth Circuit affirmed the district court’s grant of summary judgment in favor of the relator’s claim under the False Claims Act.

Certain aspects of the Davis-Bacon Act, such as the appropriate classification of an employee, fall within the purview of the Department of Labor Prior.  See, e.g., Foundation for Fair Contracting, Ltd. v. G & M Eastern Contracting & Double E, LLC, 259 F.Supp.2d 329 (D.N.J. 2003). However, even when an employer is accused of misclassifying workers, qui tam litigation may still be permitted if the Department of Labor has “previously determined the type of work within each classification” because the adjudication of whether a certification is actually a false statement “‘is not dependent on interpretation’ of classifications and wage determinations.” U.S. ex rel. International Broth. of Elec. Workers, Local Union No. 98 v. Fairfield Co., Civil Action No. 09-4230, 2013 WL 3327505, *7 (E.D. Pa. 2013).

Violations of the Copeland Act

The Copeland Act was passed by Congress and signed by President Roosevelt in 1934 as a supplement to the Davis-Bacon Act. Federal contractors and subcontractors covered by the Copeland “Anti-kickback” Act must provide a weekly statement of wages paid to employees during the preceding payroll. If a company induces its employees to give up compensation for which they are entitled by law, the company may be liable under the False Claims Act.

Regulations for Overtime Pay

The Contract Work Hours and Safety Standards Act and the Fair Labor Standards require contractors and subcontractors to pay overtime to eligible employees on certain government contracts. If you are not receiving one and one-half times your regular pay for working more than forty hours per week, consult an attorney at McEldrew Young Purtell Merritt to determine whether your employer is violating the law. You may be entitled to backpay as well as a reward for providing information to the government.

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