Guides / Penalties for small subs
On a Davis-Bacon job, a mistake on your certified payroll does not stay with you. It lands on the prime first, then comes back down. Here is what the prime, the agency and the Department of Labor can each do, straight from the regulation.
Under 29 CFR 5.5(a)(6), the prime contractor and any subcontractor responsible are liable for unpaid wages, with interest, owed to the workers of lower tier subs. The prime also has to turn in the certified payrolls for every sub on the job. That is why the prime chases your WH-347 every week, and why a late or sloppy one gets noticed.
So the first person to feel your mistake is usually the prime. Read your subcontract for an indemnity or backcharge clause. That clause is how a prime passes the cost back down to you.
The contracting agency can hold back enough of the money due on the contract to cover the back wages and interest. It can also withhold from any other federal or federally assisted Davis-Bacon contract the same prime holds. The 2023 rule made clear that works even when a different agency awarded that contract. The Department of Labor's claim on that money comes ahead of the prime's sureties and a bankruptcy trustee.
For a small sub, that means a prime with its own payments frozen over your workers. Expect it to hold yours until the problem is fixed.
The base bill is the gap between what you paid and what the wage determination required, for every hour it touched. Since the 2023 rule, interest runs from the date of the underpayment at the IRS underpayment rate, compounded daily (29 CFR 5.10). A mistake that sits for a year costs more than the same mistake caught in week two.
If the job is also covered by the Contract Work Hours and Safety Standards Act and a worker went over 40 hours in a week without time and a half, you owe liquidated damages on top of the back wages. The amount is $33 per worker for each calendar day in that workweek on which the worker was required or permitted to work over 40 hours. It went from $32 to $33 on January 15, 2025, and DOL made no inflation adjustment in 2026. The overtime guide covers the split that causes most of these.
Every week you sign the Statement of Compliance. The regulation says falsifying it may lead to civil or criminal prosecution under 18 U.S.C. 1001 and the False Claims Act, 31 U.S.C. 3729. The DOL form page spells out 18 U.S.C. 1001 as a fine, possible prison time of up to 5 years, or both.
A breach of the labor clauses can be grounds for the agency to terminate the contract. The far end is debarment under 29 CFR 5.12. A contractor or subcontractor found to have disregarded its obligations to workers or subcontractors can be barred from covered federal work for 3 years. The bar reaches its responsible officers and any firm they have an interest in. The names go on SAM, where contracting officers look before they award.
Before the 2023 rule, jobs under the Related Acts, the federally funded ones like many highway and housing projects, needed an aggravated or willful violation for debarment. Now the same disregard standard covers both kinds of jobs.
The regulation tells federal agencies to give priority to complaints (29 CFR 5.6). A worker who thinks his rate is short can start a review. Since 2023, firing, demoting or threatening a worker for raising pay questions or cooperating with an investigation is its own violation under 29 CFR 5.5(a)(11). Remedies include reinstatement, back pay with interest, and compensatory damages (29 CFR 5.18).
In fiscal year 2025, the Wage and Hour Division closed 641 Davis-Bacon compliance actions and recovered $26,754,050 in back wages for 5,812 workers. That works out to about $4,600 per worker. In fiscal 2024 the total was $14,115,932.
The cheap fix is catching one wrong line before it repeats every week, like a worker in the wrong classification or fringe credit worked out on the wrong hours. Check both against the wage determination before you sign. If you already filed one that is wrong, fixing it yourself costs far less than having an investigator find it. The fix guide walks through how.
Sources: 29 CFR 5.5; 29 CFR 5.6; 29 CFR 5.8; 29 CFR 5.10; 29 CFR 5.12; 29 CFR 5.18; DOL Form WH-347 page; WHD government contracts data; DOL 2026 penalty notice. Checked September 27, 2026.
Filed one and not sure it holds up? Send me that WH-347 and I will check it against the wage determination for the problems an investigator looks for, before one does.
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