Living Wage Whistleblowers Could Be Next For False Claims Act

There could be more whistleblowers under state and city False Claims Act in the coming years if recent initiatives to tie the payment of a living wage to government contracts and business subsidies takes hold in other jurisdictions.

A Hudson Yards office tower in New York City is the first in the Big Apple to strike a deal for construction tax breaks since Mayor Bill de Blasio raised the hourly wage to $13.13 and expanded the living wage law to include employees of commercial tenants on construction projects receiving more than $1 million in subsidies.

Because New York City has a whistleblower law which rewards individuals for reporting false claims against the local government, whistleblowers may be able to report companies which do not follow the terms of deals like this and earn a reward. Of course, more research would be necessary into the specific terms of the law, because tax enforcement actions are sometimes excluded from versions of the False Claims Act.

Although we have used New York City in this example, it similarly apples to the Philadelphia False Claims Act and the living wage law here. The executive order issued by Mayor Michael Nutter requires contractors receiving government contracts from the City of Philadelphia to pay a specified minimum wage to its employees working on the contract. If the individuals are paid less, the submission of a payment request is a false claim.

As with any law, there are exclusions which limit the application of the rules to certain parties and certain employees. For example, individuals in summer job programs and bona fide student internships are excluded from the coverage of the law in Philadelphia. So any particular case will require careful review by an attorney to determine whether the law applies to the individual.

In the past, minimum wage laws have typically been enforced by employees bringing collective claims for their unpaid wages. However, the Federal False Claims Act has been applied in several cases where federal contractors or subcontractors are not paying the prevailing wage required by the law.

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