Non-compliance with prevailing wage requirements can result in several penalties for contractors, including:
Financial Penalties
- Back Wages: Contractors must pay back wages to underpaid workers, ensuring that employees receive the correct prevailing wage for their work.
- Fines: Substantial fines can be imposed based on the severity and duration of non-compliance. These fines can range from thousands to millions of dollars.
- Interest: In addition to back wages, contractors may need to pay interest on the unpaid wages.
Contractual Penalties
- Contract Termination: Persistent non-compliance can lead to contract termination, resulting in lost revenue and potential legal disputes.
- Payment Withholding: Agencies may withhold progress payments until compliance issues are resolved, affecting the contractor’s cash flow.
Reputational and Regulatory Penalties
- Debarment: Contractors can be debarred from future public works projects for a set period, typically three years, severely impacting their ability to secure new contracts.
- Legal Action: Contractors may face lawsuits from underpaid workers or enforcement agencies, leading to additional legal costs and reputational damage.
Other Consequences
- Negative Publicity: Non-compliance can lead to negative media coverage, deterring future clients and hurting business relationships.
- Strained Relationships: Government agencies may be hesitant to work with contractors who have a history of non-compliance, even if they rectify their practices.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-penalties-for-non-compliance-with-prevailing-wage-requirements/
