Government contractors who improperly bill for labor costs commit fraud against taxpayers. Such schemes involve charging for unworked hours, misrepresenting employee qualifications or creating “ghost” employees. Employees who witness this activity can use the federal False Claims Act to report wrongdoing and protect public funds.
Common schemes involving labor cost fraud
Inflated labor billing often takes specific forms. Employees with knowledge of a company’s payroll, project staffing or accounting records may spot this fraud.
Frequent methods include:
- Billing for unworked hours: A contractor charges the government for a full 40-hour week when an employee worked only 30 hours.
- Falsifying qualifications: The company bills for a senior engineer’s time when a junior technician performed the work, charging the government the higher rate.
- Listing ghost employees: A contractor creates fake employees and bills the government for their supposed salaries, pocketing the funds.
- Cross-charging labor: An employee’s time is billed to a government contract while they work on a private project.
These examples violate a contractor’s agreement with the government.
The impact of False labor Billing on taxpayers
Inflated labor charges directly steal from government programs funded by taxpayers. This fraud depletes budgets for public services. It also creates an unfair advantage over honest contractors. The U.S. Department of Justice pursues these cases to recover stolen funds.
Using the False Claims Act to report fraud
Under the provisions of the False Claims Act, individuals can initiate qui tam civil lawsuits acting for the government. If the case results in a successful recovery of funds, the person who filed the claim, known as the relator, is eligible to receive a percentage of the amount recovered. The law also includes anti-retaliation provisions to protect employees who report fraud from being fired, demoted or harassed. Employees suspecting fraud must have detailed, non-public information to support their claim.
Steps for a potential whistleblower
Reporting government contract fraud involves specific legal procedures. The first step involves understanding the evidence required for a successful qui tam case and the protections available. An attorney familiar with the False Claims Act can evaluate a potential claim’s strength and explain the process.