In early March, the United States Federal Court for the Southern District of Ohio unsealed a complaint filed by the Painters and Allied Trade’s Council No. 6 against a painting contractor under the False Claims Act. (A copy of the complaint can be viewed here: Complaint) The Complaint is brought against a non-union painting subcontractor performing painting work on a project subject to the Davis-Bacon Act (prevailing wage). According to the Complaint, the Painters Union “organizing” effort (meaning picketing, hand-billing, and bannering) at the project, where it learned that the painting subcontractor was allegedly not paying Davis-Bacon wage rates to its employees but was submitting certified payroll to the general contractor that it was (a big no-no).
As we have talked about before, the False Claims Act applies to claims submitted by contractors and subcontractors on a project receiving federal funding. The False Claims Act permits the party bringing the claim to recover up to 30% of what is recovered for the government. As we have said, it makes bounty hunters out of former or disgruntled employees with knowledge of a contractor’s transgression. Moreover, the False Claims Act does not require actual knowledge. A contractor can violate the Act through deliberate ignorance (see no evil, hear no evil, speak no evil) or reckless disregard (I do not know if it is false, but its non of my business).
Damages under the False Claims Act are also significant and the party bringing the action on behalf of the government is entitled to up to three times the actual loss, plus per claim penalty and attorneys fees. As we have said, with a False Claims Act action, even when you win you lose because of the expense in defending such a claim.
The defendant in the Painters Union case has not yet filed an answer so it is unclear what its defense will be. However, as we have seen, unions are increasingly aggressive in increasing their shrinking market share. We will have to see if this case is a one-off isolated incident or signals a more organized effort on the part of Big Labor.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
