Web sites abound advising employees they can make “millions” by blowing the whistle on their employers for alleged violations of laws, rules, or regulations. The federal law known as the False Claims Act (FCA) also contains antiretaliation provisions prohibiting employers from discriminating against employees who make such claims.Many employers do not realize that claims of violations of certain wage and hour laws could lead to FCA whistleblower lawsuits. One recent case, United States ex rel. Brian Wall v. Circle C Construction, L.L.C. , highlights that certain violations of the Davis-Bacon Act can give rise to claims under the FCA, exposing government contractor employers to potential civil and criminal penalties. The Davis-Bacon Act requires contractors on federal construction projects to pay prevailing wages and fringe benefits for laborers and mechanics for the area in which the project is performed.

In Circle C, an employee of an electrical subcontractor on an Army construction project filed a qui tam  whistleblower action alleging that his employer and the general contractor submitted false or inaccurate payroll certifications to the government in violation of the Davis-Bacon Act. The complaint alleged that the payroll certifications were knowingly false and inaccurate. 

After the government intervened in the case, the trial court ruled in favor of the whistleblower employee, finding that the employer violated the FCA by knowingly submitting false payroll certifications for the employees of the subcontractor. The trial court awarded the employee more than $500,000 in damages, after trebling the award and awarding attorneys’ fees to the prevailing employee. The appellate court affirmed the lower court’s decision.

This case is significant because it demonstrates the expanding ways that lawsuits under the FCA could create potential liability for wage and hour violations. Interestingly, the case would have been dismissed if the employee had asserted only a claim under the Davis-Bacon Act. This is because there is no private cause of action under the Davis-Bacon Act. In other words, employees who believe a contractor is violating the Davis-Bacon Act can report those violations only to the Department of Labor, which will investigate and could potentially bring a claim against the contractor. The employee cannot sue the contractor directly for a Davis-Bacon Act violation.

However, as this case makes clear, an employee can also assert a viable qui tam whistleblower action under the FCA when the person believes the employer has certified inaccurate or false payroll records to the government on Davis-Bacon Act projects. The court held that as long as the alleged Davis-Bacon Act violation does not require interpretation of the Department of Labor’s regulations concerning misclassification of employees, jurisdiction is proper in the federal court. This was the case in Circle C, where the issue considered by the federal court was only whether the contractor had improperly certified pay records. Presumably, this holding also would apply to similar inaccurate or false reporting under the Service Contract Act , which also requires payroll certifications for contractors providing services to the government.

This decision could encourage whistleblowers to assert more FCA violations when they believe that their contractor or subcontractor employer has failed to pay them in accordance with prevailing wage determinations set forth in their government contracts. Contractors must review their own payroll practices and those of their subcontractors to make sure they comport with the Davis-Bacon Act. Any certified amounts must be the amounts actually paid. Federal contractors also should audit their past payroll certifications to see if there are any potential Davis-Bacon Act issues. When auditing, however, it is probably best to involve an attorney in the investigation to try and prevent the information created from becoming discoverable by a potential whistleblower later.