What to expect in a Davis-Bacon audit or Wage and Hour investigation

A Davis-Bacon audit can start with a letter asking for records on one project, or with an investigator on the job asking to talk to the crew. Either way the reviewer is checking the certified payrolls you signed against what your workers say they did and what your records show you paid.

Who does the review

The contracting agency. Under 29 CFR 5.6(a)(3), the federal agency must investigate its contracts as often as needed to assure compliance, and must give priority to complaints. On assisted projects, such as a city job with federal money, payrolls go to the applicant, sponsor or owner that maintains them for the agency (5.5(a)(3)(ii)(A)), and the review may come from that office.

The prime contractor. The prime is responsible for every sub's compliance and pays the back wages if a sub doesn't. A prime can return a payroll for correction and ask for the records behind it. The prime's duties.

The Wage and Hour Division. WHD investigates covered contracts as it decides is needed, and contractors must cooperate in the inspection of records and interviews with workers (29 CFR 5.6(b)(2)).

What they look at

Section 5.6(a)(3) tells agency investigators where to look: the correctness of each worker's classification, whether laborers or apprentices are doing a disproportionate share of the work, and evidence of fringe benefit plans and the payments into them. DOL's investigation guidance has the investigator compare the certified payrolls against timecards or time sheets for a sample of workers in each classification, the method you used to compute fringe credit, and any written DOL approval of an unfunded plan.

The records they will ask for

The basic records under 5.5(a)(3)(i)(B), for each worker on the site:

• name and Social Security number
• last known address, telephone number and email address (phone and email were added by the 2023 rule)
• the classification or classifications of work actually performed
• hourly rates paid, including fringe contributions or cash in lieu
• daily and weekly hours worked, in total and on each covered contract
• deductions made
• actual wages paid

Expect them to ask for the documents behind those entries too: timecards, the payroll register, paystubs or cancelled checks, and the contract with its wage determination. The clause covers "any other documents" the agency or DOL deems necessary to determine compliance.

Fringe benefits. Plan documents, the summary given to workers, invoices and proof each contribution reached the plan. Credit for a plan is figured by annualizing: total contributions divided by all hours worked, private and Davis-Bacon, under 29 CFR 5.25(c). Defined contribution pension plans are excepted when they meet that section's conditions. Fringe credit in detail.

Apprentices. Written evidence of the program's registration, each apprentice's individual registration, and the ratios and wage rates in the program standards (5.5(a)(3)(i)(D)).

Full identity details on request. The weekly payroll carries only an identifying number. When the agency or WHD asks, you must provide each worker's full Social Security number, address, phone and email.

All of it is kept for 3 years after all work on the prime contract is completed, a date that can be years after your last week on the job. Retention rules.

Deadlines and what happens if you can't produce records

If you fail to make records available or refuse worker interviews, the agency can suspend payments after written notice, and the failure can be grounds for debarment. Since 2023 there is a second consequence: records you don't give WHD within the time it requests can't be introduced later as evidence in an administrative proceeding. WHD will consider a reasonable request for more time; make it in writing before the deadline.

Worker interviews

The contract clause in 5.5(a)(3)(iv)(A) requires you to "permit such representatives to interview workers during working hours on the job." The clause gives agency and DOL representatives access to your crew. It says nothing about workers seeing your records.

Interviews are taken in confidence (5.6(a)(3)). DOL guidance says workers should be interviewed individually and not in the presence of the contractor or its representative, including a lawyer. Investigators ask each worker what work they did and with what tools, and about hours and pay, and compare the answers with the payroll. Workers are told that what they say is confidential to the fullest extent the law allows. The identity of a worker who gives a statement is not disclosed outside federal officials without the worker's consent (5.6(c)).

Don't coach the crew and don't ask afterward what they said. Under 5.5(a)(11) it is unlawful to discharge, demote, threaten or otherwise retaliate against a worker for cooperating in an investigation, filing a complaint, or telling coworkers about their rights.

What reviewers look for

These follow from the regulation's own focus and from the rules that most often decide a back-wage figure:

• Misclassification. A worker paid as a laborer for time spent running equipment or doing a trade's work is owed the higher rate for those hours. Timecards that split hours by classification are your evidence. Two trades in one week.
• Fringe credit errors. Credit taken at the plan's monthly premium divided by Davis-Bacon hours only, instead of all hours, overstates the credit and leaves a shortfall. DOL guidance also says each classification stands alone, and overtime premium paid can't be used to make up a shortfall in the basic rate.
• Overtime. Hours over 40 at 1.5 times a basic rate that is at least the determination's basic rate (29 CFR 5.32). Fringe is not multiplied. Overtime rules.
• Apprentices. A worker listed at an apprentice rate who isn't individually registered, or any apprentice beyond the allowed ratio, must be paid the journeyworker rate for the work performed (5.5(a)(4)(i)(C)). Apprentice rules.
• Deductions. Anything other than the deductions 29 CFR part 3 permits. Permitted deductions.

When it ends

DOL's guidance has the investigator close with a final conference that spells out what must be done to correct any violations and how future compliance will be kept. Back wages found due are paid to the workers, with interest under the 2023 rule, and the agency can withhold contract payments until they are. Paying back wages.

How to prepare

For each Davis-Bacon project, keep one folder that could go to a reviewer today:

1. The contract or subcontract, the wage determination with its modification number, and any conformance approvals.
2. Every certified payroll as submitted, in sequence, including revised ones, with signed statements.
3. Timecards showing hours by day, project and classification for every worker.
4. The payroll register and proof of payment for each week.
5. Fringe plan documents, the annualization worksheet, invoices and remittance records.
6. Apprentice program and individual registrations and the program's wage and ratio schedule.
7. Written authorizations for any deductions beyond taxes.
8. Each worker's full SSN, address, phone and email, kept off the weekly payroll and ready on request.
9. Correspondence with the prime and the agency, including rejection notices and corrections.

Before a scheduled review, check 2 or 3 weeks yourself: pick a worker, match the timecard to the payroll line, the line to the paystub, and the rate to the determination. If you find a shortfall, pay it and file the revision before the reviewer finds it. Correcting a payroll.