A prime contractor is ALWAYS the guarantor of prevailing wages due to a worker on a project. That means if your subcontractor goes out of business, leaves the country or just flat does not pay his/her workers the correct prevailing wage rate, the prime contractor will be responsible to see that those wages are paid. Whether or not the prime contractor may be subject to any penalties imposed by the DOL will most likely depend on whether the prime contractor had reason to believe the proper wages were not being paid and did nothing to correct the situation. It is strongly recommended that a prime contractor include a contract provision which requires its subcontractors to submit full and complete certified payrolls to the prime contractor as a requirement (condition precedent) before any progress payment or final payment is released.
A prime contractor would be wise to review the certified payroll for errors and inconsistencies. Debarment only occurs after the contractor has been given the right to an administrative hearing. Debarment is for 3 years and prohibits a contractor from working on any Davis-Bacon project during that time frame. Debarment is usually invoked for contractors who falsify certified payrolls, take kickbacks from employees or who have repeat violations.
The information above is brought to you by: Deborah Wilder’s “What Every Contractor Should Know About Prevailing Wages”