FAR 22.406-8 Investigations: Labor Standards Explainer
On federal construction projects governed by the Construction Wage Rate Requirements statute, compliance reviews can quickly shift into formal inquiries. When discrepancies surface on certified payroll records or during jobsite interviews, the contracting agency or the Department of Labor can launch an in-depth investigation. Federal procurement regulations under FAR 22.406-8 govern how these labor standards investigations are opened, conducted, and resolved. For commercial trade subcontractorsâincluding framing, drywall, and acoustical ceiling contractorsâunderstanding the investigative framework is essential for handling compliance issues before they escalate into formal enforcement actions.
What Triggers a Labor Standards Investigation?
Under federal rules, a labor standards investigation is not initiated at random. An investigation is conducted when available information indicates that such an action is warranted. Specifically, a contracting agency must conduct an investigation when a routine compliance check indicates that substantial or willful violations may have occurred, or when previously identified violations have not been corrected. Subcontractors can review common payroll audit issues in our guide on FAR 22.406-6 certified payroll mistakes on federal bids.
Investigations can also originate directly from the Department of Labor. Under FAR 22.406-8, the Department of Labor may conduct an investigation on its own initiative or may formally request that the contracting agency perform the investigation.
Investigation Scope: Why Inquiries Expand Beyond Initial Complaints
A common misconception among trade contractors is that an investigator will examine only the single worker or specific classification named in an employee grievance. Federal regulations strictly prohibit this narrow approach. According to FAR 22.406-8(a)(1), the investigation must:
- Include all aspects of the contractor's compliance with contract labor standards requirements;
- Not be limited to specific areas raised in a complaint or uncovered during compliance checks; and
- Use personnel familiar with labor laws and their application to federal contracts.
Because the investigation must encompass all aspects of compliance, an inquiry that begins with a single disputed wage rate can expand into a complete audit of all trade classifications, apprenticeship ratios, and overtime calculations across the entire workforce on that site.
Employee Confidentiality and Contractor Access to Files
Federal rules maintain strict safeguards surrounding worker testimony. Officials conducting the investigation are prohibited from disclosing contractor employees' oral or written statements, or the identity of any employee, to anyone other than an authorized government official without the employee's prior signed consent.
When the investigation concludes, the contracting officer reviews the report and makes preliminary findings. The contracting officer normally must not base adverse findings solely on statements from employees who did not consent to disclosure. However, if the inquiry reveals a pattern of possible violations supported by undisclosed employee statements, the pattern itself may support an official finding of noncompliance.
When notified of preliminary findings, the contractor has the right to request the rationale for the findings. However, under no circumstances will the contracting officer permit the contractor to examine the actual investigation report. Furthermore, the contracting officer must never reveal the identity of an employee who filed a complaint or participated in an interview without prior consent.
The 60-Day Rebuttal Window and Liquidated Damages
When an investigation indicates violations, the contracting officer provides the contractor with written preliminary findings and proposed corrective actions. The contractor then has specific procedural rights to challenge or resolve the matter:
- Rebuttal timeline: The contractor may rebut the findings in writing within 60 days after receiving a copy of the preliminary findings. The written rebuttal becomes part of the official investigation record.
- Failure to respond: If the contracting officer does not receive a rebuttal within the 60-day window, the preliminary findings are officially considered final.
- Restitution and damages: If appropriate, the contracting officer will request restitution for underpaid wages and assess liquidated damages under the Contract Work Hours and Safety Standards statute.
- Relief requests: If liquidated damages are assessed, the notification must state that the contractor has 60 days to request relief from the assessment.
Understanding these timeframes is critical, especially when wage discrepancies involve payment deductions, as outlined in our overview of wage rate requirements and fund withholding in federal bids.
Enforcement Reports, SF 1446, and Criminal Referrals
Following the review and notification steps, the contracting officer prepares an official report using Standard Form 1446, Labor Standards Investigation Summary Sheet, as the first page. Under FAR 22.406-8(d), a detailed enforcement report must be sent to the Administrator of the Wage and Hour Division within 60 days after completing the investigation if any of the following apply:
- A contractor or subcontractor underpaid workers by $1,000 or more;
- The contracting officer believes violations are aggravated or willful (or there is reason to believe obligations under the Construction Wage Rate Requirements statute were disregarded);
- The contractor or subcontractor has not made restitution; or
- Future compliance has not been assured.
If substantial evidence shows that violations are willful and violate a criminal statuteâgenerally 18 U.S.C. 874 or 18 U.S.C. 1001âthe report is forwarded to the Attorney General of the United States for potential prosecution, and the Wage and Hour Division Administrator is notified.
Sources
Published October 30, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.