In an evident acknowledgement that its interpretation is not supported by the provisions of the Act or the published regulations, the DOL has compromised its position on an ad-hoc basis by requiring that lodging be paid only for those workers who are not specifically hired for the prevailing wage project. However, this position is not universally accepted by DOL investigators. Assuming there is not an adequate number of qualified applicants at the site of the job, the employer would be left to staff a remote project with new employees who have been told that as a condition of the job, they will be required to temporarily relocate in the site of the job.

An employer that has been assessed unpaid employee benefits by a DOL investigation may seek an equitable adjustment of its contract. In theory, the project owner has required the contractor to incur a cost (employee lodging expenses) not set forth in the project bid documents (wage determination). By assessing these additional costs, the owner has, in effect, imposed an additional condition upon the contractor for which the contractor should be compensated. Equitable adjustments and change order requests have been met with varying degrees of success.

The assessment of unpaid lodging costs can be significant. The only reasonable resolution of the problem would be to have the DOL publish in its wage determination the employer’s reimbursement obligation. The DOL could set the amount based upon the same type of wage survey currently conducted and published in the wage determination.

Without such certainty, there is no assurance that competitive bids are based upon the same wage and benefit obligation criteria.

D. Kim Lough is a partner with Jennings, Haug & Cunningham, whose practice focuses on construction litigation matters, including employment issues for the construction industry.