The Department of Labor's Wage and Hour Division (WHD) performs routine (usually random) audits of Government contractor compliance with the Davis-Bacon and Service Contracting Acts and performs investigations when warranted such as those from whistleblowers. We've discussed the results of a few of those audits/investigations on these pages. Usually, when violations are discovered, contractors pay employees the shortages and life goes on. Companies that have been found to be in non-compliance however, are placed in a higher risk category where their chances of being audited more frequently, increase.
One recent WHD investigation found that a contractor filed to pay a total of $4,715 in back wages to eleven employees. As a result, the Labor Department "debarred' the contractor which means no further Government contracts for three years. That, to us, seemed a bit extreme - getting debarred over less than five thousand dollar noncompliance. There must be more to this story we surmised.
There was. The contractor, Pro-Fit Development Inc., was a repeat offender. The company had been found to be in violation of prevailing wage obligations back in 2017. A follow-up "visit" by the WHD found that the company had continued to short-pay its employees. Not only that, but Pro-Fit also failed to notify its subcontractors of their prevailing wage responsibilities, causing its subcontractors to pay their employees at rates lower than those that corresponded to the work they actually performed.
After Pro-Fit refused to pay back the $5 thousand to affected employees, WHD requested the contracting authority to Withhold funds due to the contractor under the contract. Those withheld funds will instead, be transferred to the employees who are owed back wages.
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