The Davis-Bacon Act applies to employees who have contracts over $2,000, and to construction projects worth $100,000 or more.
Davis-Bacon Act fraud misuses taxpayer dollars and robs construction workers of their legal wages. The Davis-Bacon and Related Acts (DBRS) apply to federally funded and federally assisted construction projects such as public housing, schools, highways, transportation systems and water systems.
According to this law, employees working on federal construction projects must be paid at or above prevailing wage standards. Those standards, based on a survey of similar projects within the relevant geographic area, are determined by the Department of Labor.
The law also contains overtime provisions, which require that employees be fairly compensated for working more than 40 hours per week.
Davis-Bacon Act cases
Construction fraud is unfortunately common, and in federal projects it can cost taxpayers millions of dollars, in addition to cheating hardworking employees of the wages they deserve.
In August 2014, a construction company owner and one of its subcontractors pleaded guilty to FCA violations and conspiracy to commit mail fraud. Both individuals were involved with renovating Boston’s John W. McCormack Post Office and Courthouse.
The two defendants, Wael Isreb of Taunton Forms, and Alusio Dasilva of Suffolk Construction Company, admitted to deliberately submitting false reports to the Department of Labor, among other official agencies. They also falsely claimed that some employees had been laid off, in a scheme to use unemployment benefits to bolster overall revenue.
In 2013, a New York construction company was accused of defrauding over $32 million during public school building projects. The charges included money laundering and paying workers less than the prevailing wage.
SM&B Construction was not only alleged to have systematically overcharged the government for these projects; the company may also have used $3 million of defrauded funds to finance the construction of an amusement park and resort in Pakistan.
Similar to other federal fraud detection programs, the Davis-Bacon Act is not designed to prosecute involuntary errors or inconsistencies. Its purpose is to target deliberate fraud schemes and conscious efforts to pay construction workers less than prevailing wage requirements.
Reporting Davis-Bacon Act fraud
The Davis-Bacon Act has whistleblower provisions under the False Claims Act (FCA). The FCA allows private citizens to sue companies, individuals and organizations that are defrauding the federal government. A successful lawsuit can lead to the whistleblower being rewarded 15-30% of the total amount recovered from the fraudulent party.
Attorney James D. Young stresses the importance of the DBRA in combating fraud and protecting construction employees. “The Davis-Bacon Act is vital to ensuring that those who actually undertake the work on federal contracts are paid the correct, fully loaded wage.
Unscrupulous contractors and subcontractors can make more money by paying their laborers less than what they bid on, and less than what the law requires.
By requiring posting of the prevailing wage rates the law serves to level the playing field between management and employees and educate everyone on the job-site about the correct wage amounts for each position.”
Learn more about Davis-Bacon Act fraud here.
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