Client Alerts

Strings Attached: Enhanced Enforcement of Federal Prevailing Wage Laws Against Recipients of Federal Stimulus Funds

September 17, 2009

Dara Freling, Peyton Snyders and Michael Steele

Companies signing up to receive federal funds under the recently enacted stimulus package may wind up with more than they bargained for; namely increased Department of Labor scrutiny.

The Federal Stimulus law, the American Recovery and Reinvestment Act (ARRA or Stimulus Law), contains a little-noticed provision that requires all recipients of funds or federally assisted bonds under that law to pay prevailing wages and benefits to employees on federally funded projects. The prevailing wage, determined by the U.S. Department of Labor (DOL), usually means pay will be based on the standard wage paid to union members for that type of work (union scale). Many employers will be surprised to learn that, due to the massive size and scope of the Stimulus Law, they are now subject to these federal prevailing wage requirements if they accept federal funds, or federally assisted bonds, for such projects as varied as weatherizing buildings, building new power plants, or paving roadways.

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