Once again a contractor covered by the Davis-Bacon Act has been penalized for not maintaining adequate payroll records. In Pythagoras General Contracting Corp. v. Dep't of Labor, ARB Nos. 08-107 & 09-007, ALJ No. 2005-DBA-14 (Feb. 10, 2011) [pdf], the DOL’s Administrative Review Board upheld a determination to debar the contractor from getting any future federal contracts for up to three years and increasing the monetary penalty significantly.

The case arose from a $23.4 million construction contract subject to the prevailing wage requirements in the Davis-Bacon Act. In response to complaints that the contractor was not paying prevailing wages, the DOL investigated and concluded that the contractor failed to pay prevailing wages by misclassifying several employees and by failing to compensate employees for work performed prior to their scheduled start time. The contractor was unable to rebut the evidence offered by the government because of its incomplete and inaccurate payroll records, some of which had been discarded.

The ARB increased the amount of the unpaid wage award from $447,000 to $792,000. And because the contractor's record keeping was so incomplete and inaccurate and there were so many worker misclassifications, the ARB affirmed the Administrative Law Judge's finding that the noncompliance was "aggravated and willful," invoking the mandatory debarment requirement in 29 C.F.R. 5.12(a)(1).

While debarment is obviously a severe remedy, the issues addressed in the decision are not novel. This decision will serve as reminder for all contractors as to the importance of diligent and thorough preparation and retention of payroll records.