Thursday, March 12, 2015

Davis-Bacon Violations Cost Big Money

One contractor employee is $72 thousand richer today as a result of "blowing the whistle" on a practice of short-changing workers on a Government construction project.

Two Maryland companies agreed to pay a total of $400 thousand to settle False Claims Act allegations in connection with a contract to renovate a building being leased by the Government. This $400 thousand was a settlement only and there was no determination of civil liability.

The construction contract was awarded by GSA and subject to the requirements of the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act (CWHSSA). The Davis-Bacon Act requires government contractors to pay the prevailing wage to workers as set by the Secretary of Labor for the corresponding class of laborers in the state in which they are employed. The CWHSSA requires time-and-a-half pay for hours in excess of 40 per week.

Lend Lease Construction was the prime on the job. Lend Lease hired Cindell Construction to to the drywall work. Cindell hired lower-tiered subcontractors to do the actual work. The lower-tiered subcontractors underpaid its workers (paid them less than prevailing wage) and did not compensate them for overtime. Then everybody, Lend Lease, Cindell, and the lower-tiered subcontractors, got together and submitted certified payrolls to the Government saying that they had complied with Davis-Bacon and CWHSSA.

These companies forgot to consider one thing. There was an insider lurking within one of the companies who knew what was going on and had the conscience to alert the authorities - well, conscience and the prospect of a big payday.

The U.S. Attorney stated concerning this case: "We encourage whistleblowers to come forward in instances where the government is a victim. This case exemplifies the important role whistleblowers can play in recovering money for the government." Maybe the Government was harmed in a round about way but it was really the underpaid workers that were harmed in this case. Perhaps the $400 thousand collected by the Department of Justice will be re-distributed to those workers.

You can read the DOJ press release on this case here.

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