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Federal Contracts-Working Conditions: Prohibition Against "Kickbacks" in Federally Funded Construction


 
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Updated: September 2009


Copeland Act
(
18 USC §874(http://www.dol.gov/whd/regs/statutes/copeland.htm) and 40 USC §3145(http://www.dol.gov/whd/regs/statutes/copeland.htm); 29 CFR Part 3(http://www.dol.gov/cgi-bin/leave-dol.asp?exiturl=http://s.dol.gov/5W&exitTitle=www.ecfr.gov&fedpage=yes))

Who is Covered

The Copeland Act is administered by the Wage and Hour Division (WHD). The "Anti-Kickback" section of the Copeland Act applies to all contractors and subcontractors performing on any federally funded or assisted contract for the construction, prosecution, completion, or repair of any public building or public work, except contracts for which the only federal assistance is a loan guarantee. This provision applies even where no labor standards statute covers the contract.

The regulations pertaining to Copeland Act payroll deductions and submittal of the weekly statement of compliance apply only to contractors and subcontractors performing on federally funded contracts in excess of $2,000 and federally assisted contracts in excess of $2,000 that are subject to federal wage standards.


Basic Provisions/Requirements

The "Anti-Kickback" section of the Act precludes a contractor or subcontractor from in any way inducing an employee to give up any part of the compensation to which he or she is entitled under his or her contract of employment. The Act and implementing regulations require a contractor and subcontractor to submit a weekly statement of the wages paid to each employee performing on covered work during the preceding payroll period. The regulations also list payroll deductions that are permissible without the approval of the Secretary of Labor and those deductions that require consent of the Secretary of Labor.


Employee Rights

The "Anti-Kickback" provisions of the Copeland Act give covered workers on subject federal contracts the right to receive the full pay to which they are entitled for the work they perform. The Act also gives such workers the right to receive pay on a weekly basis. The Wage and Hour Division(http://www.dol.gov/whd/) accepts complaints of alleged Copeland Act wage violations.


Recordkeeping, Reporting, Notices and Posters


Notices and Posters

There are no notice or poster requirements.


Recordkeeping

Contractors and subcontractors are required to keep payroll records for each laborer and mechanic on covered projects, recording accurately and completely the following:

  • Employee’s name and address
  • Correct classification and rate of pay
  • Daily and weekly number of hours worked
  • Deductions made and actual wages paid

Contractors or subcontractors are required to preserve the weekly payroll records for a period of three years from the date the contract is completed. Employers are required to make the payroll records available at all times for inspection by the contracting officer or authorized representative, and by authorized representatives of the Department of Labor.


Reporting

There are reporting requirements under the Copeland “Anti-Kickback” Act for contracts in excess of $2,000. Each covered contractor and subcontractor must provide the federal agency contracting officer with a weekly statement of wages paid to each of its laborers and mechanics during the preceding weekly payroll period. Each payroll submitted shall be accompanied by a “Statement of Compliance.” This statement must be signed by the contractor, subcontractor or the authorized officer or employee of the contractor or subcontractor who supervises the payment of wages. Statements of Compliance are to be made on the Form WH-347 "Payroll (For Contractors Optional Use)"(http://www.dol.gov/whd/forms/wh347instr.htm) or on any form with identical wording. This must be submitted within seven days after the regular pay date for the pay period.


Penalties/Sanctions

Any contractor or subcontractor who induces an employee working on a covered contract to give up any part of the compensation to which he or she is entitled is subject to a $5,000 fine, or imprisonment for up to five years, or both. Willful falsification of the statement of compliance may subject the employer to civil or criminal prosecution and may be cause for contract termination or debarment. Contractors may challenge determinations on debarment before an Administrative Law Judge. Decisions of Administrative Law Judges may be appealed to the Administrative Review Board. Final Board determinations on debarment may be appealed to and are enforceable through the federal courts. Civil and criminal sanctions are pursued through the federal courts.


Relation to State, Local, and Other Federal Laws

The "Anti-Kickback" provisions apply to any contract assisted in whole or in part by loans or grants from the federal government, except those contracts where the only federal assistance is a loan guarantee. The provisions of the Act and the regulation pertaining to the weekly statement of wages and payroll deductions apply to federally assisted contracts that are subject to federal wage standards.


Compliance Assistance Available

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with the Copeland “Anti-Kickback” Act. Compliance assistance related to the Act — including the Copeland “Anti-Kickback” Act Compliance Assistance Web Page(http://www.dol.gov/whd/contracts/copeland.htm) and regulatory and interpretive materials — is available on the Compliance Assistance "By Law"(http://www.dol.gov/compliance/laws/comp-copeland.htm) Web page. Also, the “Wage Determinations OnLine (WDOL)(http://www.wdol.gov/)” Web site provides a single location for federal contracting officers to obtain Davis-Bacon wage determinations for use in covered contracts, and the WDOL Web site “library” provides a variety of links that relate to compliance with the prevailing wage laws that apply to federal and federally assisted contracts.


DOL Contacts

Wage and Hour Division(http://www.dol.gov/whd/)
Contact WHD(http://www.dol.gov/whd/contactform.asp)
Tel: 1-866-4USWAGE (1-866-487-9243); TTY: 1-877-889-5627

The Employment Law Guide is offered as a public resource. It does not create new legal obligations and it is not a substitute for the U.S. Code, Federal Register, and Code of Federal Regulations as the official sources of applicable law. Every effort has been made to ensure that the information provided is complete and accurate as of the time of publication, and this will continue. Later versions of this Guide will be offered at www.dol.gov/compliance or by calling our Toll-Free Help Line at 1-866-4-USA-DOL (1-866-487-2365) (1-866-487-2365).

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