Contractors should beware of strings attached to stimulus funds from the American Reinvestment & Recovery Act. Both contractors and subcontractors receiving stimulus dollars must comply with Davis-Bacon Act requirements for paying wages and fringe benefits not less than the minimums established by the U.S. Dept. of Labor.
Under Davis Bacon, contractors are strictly liable for subcontractor reporting. So, if the subcontractor is reporting it paid $10 per hour and really paid only $5 per hour, the DOL will require the government agency that hired the contractor to collect the difference. Additionally, contractors and subcontractors receiving stimulus dollars are subject to the federal False Claims Act, which includes criminal penalties for false statements connected with grant applications and use of funds, and encourages whistleblower suits.
Davis Bacon Act
Davis-Bacon applies to all contracts over $2,000 to which the federal government is a party. ARRA has expanded Davis-Bacon to apply to contracts with state, local and private parties who receive stimulus funds from the Feds. The most significant provision of the act requires all contractors to pay their employees at least the prevailing wage. This means the same wages paid by union and non-union shops in the geographic area.
