It turns out what you don’t know can hurt you. Recent changes to the Davis-Bacon and Related Acts Regulations (DBRA) significantly affect the way prevailing wages are determined, imposed and, perhaps most importantly, enforced. Contractors who are unaware of the new regulations or do not comply with them, run the risk of suffering serious consequences ranging from retention to the loss of their eligibility for public works projects. And with $1.3 trillion in federally funded work on the table stemming from the Infrastructure Investment and Jobs Act (IIJA), the stakes are high.
what he does DBRA Do?
Originally enacted in 1931, DBRA regulations provide local workers and contractors a fair opportunity to participate in construction programs when federal funding is available and protect local wage standards by preventing bids based on wages lower than prevailing wages in that area. An estimated 1.2 million construction workers in the US are affected by the DBRA’s prevailing wage regulations.
The consequences of non-compliance
More than 50 significant changes to the DBRA’s prevailing wage regulations came into effect in October 2023. One of the biggest changes is the ability of recruiting agents to enforce prevailing wage standards. The original act had no enforcement provisions in force, but now allows retention, termination or disqualification as consequences of non-compliance.
Other important changes to consider:
- A new requirement for contractors to provide weekly certified payroll records and maintain them for a period of three years
- Broader definition of “principal contractor” which now reads “any person who enters into a contract with an agency”
- More activities defined as construction, including transport
- New worker classes are added, for example
- couplers
- truck drivers
- Prefabrication
- Material suppliers
- The standards for determining wage rates are variable and fixed
Could you be connected to a fake claim?
Beyond the new enforcement capabilities, there is an additional motivation for contractors to be vigilant in understanding and complying with the new DBRA regulations: potential False Claims Act (FCA) liabilities. FCA was created to prevent or penalize government fraud. A violation of the False Claims Act is defined as directly or indirectly submitting, or causing to be made, a false or fraudulent claim to the federal government for payment. The law allows individuals, known as whistleblowers, to report fraud against the government. Those related can file confidentially and are incentivized to report with a possible financial reward, which could explain the recent surge in claims reported by the Justice Department.
Failure to comply with DBRA regulations could qualify as a false claim, so anyone with knowledge of a breach (whether the breach was intentional or not) I could report a contractor. And just alleging a false claim can trigger an extremely costly and lengthy civil investigation, something contractors should avoid at all costs.
For example:
Contractor Smith gets work on a federally funded project. Submit an invoice to the controlling agency for payment of the project. But contractor Smith did not adhere to the prevailing wage standard and ended up collecting and keeping money that should have actually gone to the workers on his payroll. This is tantamount to making a false claim to the government. A subcontractor reports the incident to the government agency, which launches an investigation into the contractor’s practices, tying up the contractor’s valuable time and resources and putting its business at risk.
Any contractor working on public projects would be wise to review and understand the changes to the DBRA regulations and implement procedures to comply with them to minimize risk and protect its operation.
Do you have questions about the DBRA? learn more here.
