Debarment Becoming More Reality Than Threat for Federal Contractors

It's no secret that enforcement has increased and many companies have faced recent audits, resulting in fines and penalties for the first time, but for most, debarment has only been a mere threat for non-compliance until now.  Previously, Department of Labor (DOL) officials explained that debarment would be more widely sought as punishment for federal contractors who fail to comply with the law because in their opinion, contractors do not take fines seriously and consider fines as only a cost of doing business. In a recent case, the DOL’s Administrative Review Board (ARB) upheld an administrative law judge’s determination that a New York construction contractor, Pythagoras General Contractor, violated the Davis-Bacon and Related Acts (DBRA) with the “willful underpayment of wages due to misclassification of workers and failure to pay for all hours worked.”  The contractor was originally investigated beginning in 2002 after workers complained of not being paid prevailing wages.  The DOL investigation concluded that the contractor misclassified several employees as performing the work of laborers rather than mason tendors and carpenters and failed to compensate them for work performed prior to their scheduled start time.  As a result, the contractor was debarred from doing business with the federal government for three years and a decision to increase the penalty award from $447,670 to $792,397 was also upheld, stating that the contractor’s record keeping was “incomplete and inaccurate” causing DOL to find the noncompliance “aggravated and willful.” Another case resulted in debarment when CAL Construction, a Massachusetts-based construction contractor violated the DBRA by failing to pay workers on a New York housing project the required level of prevailing wages, fringe benefits, overtime pay, or the cost of lodging.  The housing project was funded by the American Recovery and Reinvestment Act of 2009, which required the application of the DBRA to all projects funded wholly or in part by the Act.  Both of these cases serve as reminders the importance of diligent and thorough preparation and retention of payroll records. AGC recently met with DOL’s Wage & Hour Division acting director, Nancy Leppink, who is responsible for enforcing such laws as the Fair Labor Standards Act, the Family & Medical Leave Act, the Davis-Bacon Act, and other laws that govern how wages are paid to workers.  During the meeting, AGC explained that its members want to be in compliance with the law and asked Leppink for additional guidance and in-depth training for the often complicated and confusing wage laws to which construction contractors must adhere. For AGC-related compliance assistance tools for federal construction contractors including publications, white papers, webinars, links to government resources and sample forms and policies, visit the Labor and HR Topical Resources webpage on the AGC website.  For an in-person experience, the 2011 HR Professionals Conference and corresponding Federal Contracting Compliance Construction HR Workshop will feature sessions by HR professionals of AGC member companies who will share experiences of surviving both a Wage & Hour Division and an OFCCP audit.   In addition, special panel discussions on compliance with the Davis-Bacon and Related Acts and OFCCP will take place and experts will share their knowledge of E-Verify compliance, the ethics rule, and sub-contractor training for federal contractors. To register for the HR Professionals Conference and the Federal Contracting Compliance Construction HR Workshop or to see full session descriptions and speaker information, visit www.agc.org/hr_ted.