🗞️ Federal Contractor Debarred After $596K Kickback Scheme on DC Affordable Housing Projects
The U.S. Department of Labor recovered $596,443 for 31 construction workers victimized by an illegal kickback scheme on federally funded affordable housing projects in Washington
The Wage and Hour Division investigated J. Solano HVAC LLC, a Silver Spring, Maryland-based HVAC subcontractor, and discovered systematic violations of the Davis-Bacon and Related Acts during work on two District of Columbia affordable housing developments: Carl F. West Estates (creating 179 units for seniors and grandfamilies) and Northwest One Phase 2 (a six-story multifamily development).
The scheme operated through verbal agreements where J. Solano HVAC agreed to pay sheet metal workers and pipefitter mechanics the full prevailing wage rate via check, then required workers to return any wages exceeding $30 per hour in cash—a classic kickback violation under the Copeland Anti-Kickback Act of 1934. Additionally, the company deliberately misclassified skilled workers as lower-paid laborers to further reduce labor costs, denying workers their rightful basic hourly rates, holiday pay, and fringe benefits.
This case exemplifies the "willful nature" standard that triggers the harshest penalty available: three-year debarment from bidding on any federally funded construction project. District Director Nicholas Fiorello emphasized that uncovering such schemes ensures workers receive fair compensation while protecting compliant contractors from unfair competitive disadvantages.
The violations are particularly significant given recent updates to Davis-Bacon regulations that took effect in October 2023, which strengthened enforcement mechanisms including expanded "cross-withholding" authority, daily compounding interest on back wages, and a unified three-year mandatory debarment period replacing the previous "aggravated or willful" standard with a broader "disregard of obligations" standard.
Kickback schemes like this one undermine the fundamental protections of prevailing wage laws, which have required fair compensation on federal construction projects since 1931. When contractors force workers to return portions of their earned wages, it effectively invalidates these protections, reduces workers' spending power in local communities, and creates an atmosphere of fear that prevents reporting violations. The increased DOL enforcement in 2025 signals a continued focus on protecting construction workers from such exploitation.
Key Points
- $596,443 recovered for 31 workers victimized by systematic wage theft on DC affordable housing projects
- Kickback scheme required workers to return wages exceeding $30/hour after receiving full prevailing wage checks
- Worker misclassification denied skilled workers their proper wage rates, holiday pay, and fringe benefits
- Three-year debarment imposed on J. Solano HVAC LLC and owner Jose Williams Solano from federal contracts
- Davis-Bacon enforcement demonstrates DOL's strengthened approach under 2023 regulatory updates with stricter penalties
Primary Source Media Contacts: Eric R. Lucero, Erika Ruthman, Juan Rodriguez
Primary Source: U.S. Department of Labor, Wage and Hour Division
Primary Source Link: https://www.dol.gov/newsroom/releases/whd/whd20251210
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