What Happens During a Davis-Bacon Audit
— WH347.io Team
A DOL audit of your certified payroll records can feel overwhelming — but contractors who keep clean, complete records have nothing to fear. Here's exactly what auditors look for and how to be ready.
The Department of Labor's Wage and Hour Division can open a Davis-Bacon investigation on any federal project at any time — and enforcement has been on an upward trend. For many contractors, the first audit feels like a crisis. For contractors with clean records, it's a paperwork exercise. The difference between those two experiences comes down almost entirely to how you've been managing your certified payroll records from week one.
What Triggers a Davis-Bacon Audit?
- Worker complaint — the most common trigger by far. A single worker who believes they were underpaid or misclassified can file a complaint with the WHD.
- Routine compliance review by the contracting agency — federal agencies are required to monitor contractor compliance and may refer cases to the DOL.
- Referral from the contracting officer — if the agency notices missing or irregular certified payroll submissions, they may escalate to WHD.
- Pattern of late or incomplete WH-347 submissions — consistent issues with your weekly submissions raise flags.
- Tip or complaint from a competitor or union — particularly in unionized trades, competitors sometimes file complaints as a competitive tactic.
What Do Auditors Actually Look At?
The Wage and Hour Division will issue a request for records covering the audit period. Their job is to compare what you reported on the WH-347 against your actual payroll practice. Discrepancies — intentional or not — are what they're looking for.
- WH-347 forms for every week of the project, including any 'no work performed' weeks.
- Payroll registers or records showing actual wages paid to each worker.
- Daily time and attendance records — hours worked each day, by worker, including any overtime.
- Worker classification documentation — evidence of what each worker actually did on site and the wage determination that applied.
- Fringe benefit documentation — insurance statements, pension remittance records, or cash-in-lieu calculations.
- Subcontractor certified payroll records, if you are the prime contractor — auditors will want to see subs' compliance too.
How Long Does an Audit Take?
A straightforward audit where records are complete, organized, and consistent with what was reported typically resolves in a matter of weeks. Investigations involving back wage calculations across multiple workers, disputes over worker classification, or uncooperative contractors can drag on for months. The DOL has a two-year statute of limitations on back wage recovery, so audits can reach back two years from the date a complaint is filed — meaning an audit can cover work that ended long before it started.
What Are the Penalties?
- Back wages owed to workers — the most common outcome. You pay the difference between what workers were paid and what the prevailing wage required.
- Debarment from federal contracting for up to three years — this is the most severe business consequence and applies to willful or repeat violations.
- Contract termination — the contracting agency may terminate your contract if violations are serious enough.
- Liquidated damages — in cases of willful underpayment, damages can equal the total back wages owed, effectively doubling the financial penalty.
- Criminal referral — in cases involving falsified Statements of Compliance or deliberate fraud, the DOL can refer the matter for criminal prosecution.
Frequently Asked Questions
What triggers a Davis-Bacon audit?
The most common trigger is a worker complaint filed with the DOL's Wage and Hour Division. Other triggers include routine compliance reviews by the contracting agency, referrals from the contracting officer due to irregular or missing certified payroll submissions, and tips from competitors or union representatives.
What records do auditors request in a Davis-Bacon audit?
Auditors typically request WH-347 forms for every week of the project, actual payroll registers showing wages paid, daily time and attendance records, worker classification documentation, fringe benefit records (insurance statements, pension remittance confirmations), and subcontractor certified payroll if you are the prime contractor.
How long does a Davis-Bacon audit take?
A straightforward audit with complete, organized records typically resolves within a few weeks. Audits involving back-wage disputes, classification disagreements, or uncooperative contractors can take months. The DOL has a two-year statute of limitations on back wage recovery, so audits can reach back two full years from when a complaint was filed.
What are the penalties for Davis-Bacon violations found during an audit?
The most common outcome is a back-wage order requiring payment of the difference between what workers were paid and what the prevailing wage required. Willful or repeat violations can result in debarment from federal contracting for up to three years and liquidated damages equal to the total back wages owed. Knowingly falsified Statements of Compliance can lead to criminal referral.
How long must certified payroll records be kept?
Contractors are required to retain certified payroll records for at least three years after project completion. The DOL recommends this buffer even though the statute of limitations for back wage recovery is two years.