$435 Thousand Settlement for Violating Prevailing Wage Law

The Department of Labor's Wage and Hour Division (WHD) and Office of Federal Contract Compliance Programs (OFCCP) are two Departments that focus their compliance efforts and investigations almost entirely upon Government contractors. The WHD wants to ensure that contractors meet minimum compensation levels, especially those required by the Davis-Bacon and Service Contracting Acts while the OFCCP makes sure that contractors comply with laws and regulations requiring nondiscrimination in all its various forms.

We've reported on a number of Labor Department settlements where contractors have been found to be in noncompliance with one or more of the many labor related regulations. Most of these settlements have been small or have been a promise to correct a record-keeping deficiency, perhaps. And most of them, to us, have appeared to be the result of an oversight on the part of the contractor or a failure to know all the intricacies embedded into a particular regulation.

Sometimes however, we find examples where contractors intentionally violate labor laws. Take the case of Nagan Construction of New York where the Justice Department just announced the settlement of a civil fraud lawsuit against the company.

Nagan admitted to violating federal prevailing wage requirements (i.e. the Davis-Bacon Act) by paying 20 employees the wage rate applicable to 'laborer' work when in fact, the employees performed skilled work, such as carpentry and bricklayer tasks. Obviously, skilled workers will justify higher wages than common laborers. As part of a settlement with the Justice Department, Nagan agreed to pay the Government $435 thousand of which $242 thousand will be distributed to current and former Nagan employees who were underpaid. The remainder, we presume, was a penalty for violating the law. Nagan also agreed to implement specific measures designed to ensure future compliance with applicable federal prevailing waage laws, including internal compliance audits and training its supervisors on how to comply with federal labor standards.

One bit of irony here is that one of the federal construction projects for which Nagan submitted false certified payrolls for was a Department of Labor contract for renovating a Job Corps Center.

In this case, Nagan knew there were contractual requirements to pay workers prevailing wages but falsified payroll records when submitting invoices for payment. The settlement agreement pointed out that this was not an inadvertent oversight but a deliberate act. The implication here is that the company did so in order to enhance its profits.

The full Justice Department press release on this settlement can be accessed here.