FALSE CLAIMS ACT CASE STUDY: PREVAILING WAGE EDITION

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Employees who work on federal projects are entitled to a particular wage, called the prevailing wage, under a federal law called the Davis Bacon Act. Fraud occurs when government contractors fail to pay their employees the correct wage and yet charge the government for the full amount they should be paying. Thankfully, recent cases indicate that workers who are cheated out of their wages on federal projects can use the False Claims Act to stop wage theft and recover a reward as a whistleblower. That’s a critical protection that encourages workers to speak up when they’re not compensated fairly or lawfully.

In 2005, an electrician for a subcontractor was working on buildings at the U.S. Army Fort Campbell base in Kentucky. Under the prevailing wage law, the electrician was entitled to $19-21 per hour for his work, as laid out in the contract with the government for the project. But he and some of his fellow employees were only paid about $16 per hour. Even worse – the company billed the government for the full amount that the workers should have been paid.

The electrician blew the whistle. He filed an action under the False Claims Act, alleging that he and seven of his fellow workers had been paid about 30 percent less than they should have paid been under the law.

The court determined that the contractor had submitted expressly false payroll certifications that represented that the prevailing wage was paid to subcontracted employees, and that the contractor had improperly failed to ensure that subcontractor employees were properly compensated.

The electrician’s case is illustrative of aggressive enforcement of the False Claims Act. Many courts are allowing prevailing wage claims to be brought as claims of fraud against the government. That’s good news, as it means that government contractors will do more to ensure that they—and their subcontractors—are in full compliance with all rules about paying workers prevailing wages for federal construction projects.

Key takeaways:

  • If you are an employee on a project using government dollars, you are probably entitled to a particular prevailing wage. Mehri & Skalet has prosecuted a number of prevailing wage claims and can help you determine if you have a case.
  • If you believe or know that you or others have been paid less than you should, you may be able to receive compensation for bringing to light fraud against the government. Using the False Claims Act for prevailing wage violations is relatively new, so speak with an attorney experienced in the matter, who can help you decide if you do have a claim.
  • The False Claims Act is an excellent tool for whistleblowers, but it typically only rewards the first person with knowledge who files a claim. If you believe you have knowledge of government fraud, speak with an attorney immediately. See the For Whistleblowers page for more information.