Prime Contractor Liability for Subcontractor Payroll

29 CFR 5.5(a)(6) states: "The prime contractor is responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in this section." There is no qualification about knowledge, no carve-out for tiers you did not select, and no distinction between a first-tier sub you negotiated with and a specialist two levels down you have never spoken to. The clauses referred to are the Davis-Bacon labour standards clauses, which include the payment of prevailing wages, the payroll and recordkeeping requirements, apprentice conditions, and the overtime provisions.

The structure makes sense from the agency's side. The government has a contract with the prime and nobody else. When a worker three tiers down is underpaid, the agency's remedy runs through the party it actually contracted with. That is why the labour standards clauses flow down and why the prime carries the compliance responsibility for all of them. It is a familiar structure in construction contracting, but it lands harder here because the underlying obligation is a worker's wages.

In practice the risk concentrates in the lower tiers, and for unglamorous reasons. A second- or third-tier specialist — a small crew doing a few weeks of work — is the least likely to have a payroll system that produces certified payroll, the least likely to have updated to the revised WH-347, and the most likely to be filling in the form by hand from a spreadsheet. None of that is bad faith. It is a small business doing something unfamiliar, occasionally.

The January 2025 revision of the WH-347 makes this sharper than usual. The revised form asks for information many payroll systems do not export: funded versus unfunded fringe detail with plan names and numbers, apprentice registration and registering body, a wage determination number. A lower-tier sub still submitting on the older layout, or hand- transcribing the new fields once a week, is precisely the pattern that produces inconsistent submissions — and those submissions are your responsibility.

Four things, none of which require new authority. Tell every tier which form version to use and confirm they have it. Ask for the first submission early enough to review it before it becomes a pattern — the first payroll from a new sub is worth reading line by line. Check the fields that are new rather than the ones everyone has always filled in, because that is where the errors will be. And keep the flow-down explicit in your subcontracts, so the obligation is contractual as well as regulatory.

You are not auditing their business, and you cannot verify what they actually paid. What you can check is whether the submission is internally coherent, which catches a surprising share of problems. Do the daily hours add to the weekly total. Is gross for the project no greater than gross for all work. Does gross minus deductions equal net. Are classifications real classifications from the determination rather than internal job titles. Is anyone marked as an apprentice, and if so is the programme named. Those checks take a few minutes and need no information you do not already have.

One area worth flagging because it carries its own remedy. Under 29 CFR 5.5(b)(2), liquidated damages for overtime violations are computed "in the sum of $33 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours" without proper overtime compensation. That accrues per worker per day. On a crew of a dozen over several weeks it stops being a rounding error, and the overtime rule itself is weekly and mechanical enough that a reviewer can spot a breach from the payroll alone.