The Labor Department says it dropped an investigation of alleged wage violations at the Old Post Office Pavilion, which Donald Trump is renovating into a luxury hotel. | AP Photo Labor Department drops Trump investigation

The Labor Department said Thursday that it dropped an investigation of alleged wage violations at the Old Post Office Pavilion, which Donald Trump is renovating into a luxury hotel.

POLITICO first reported on the investigation, which focused on a subcontractor to the project, in June. The Trump Organization was never deemed likely to be held liable had DOL cited the subcontractor, The Craftsmen Group.


In a statement, a Labor Department representative said "the department’s Wage and Hour Division determined that construction work performed by The Craftsmen Group at the Trump hotel was not covered by the Davis-Bacon Act" and cited a recent federal court decision for a similar project.

Because Trump is leasing the property from the General Services Administration, the Old Post Office is a government construction project. Typically government construction projects are covered under the Davis-Bacon Act, which requires workers to receive so-called prevailing wage. The Labor Department determines prevailing wage based on a survey of unions and contractors.

Under Trump’s lease agreement, the Trump Organization’s contractors and subcontractors are required to pay Davis-Bacon rates. A GSA representative previously told POLITICO that “the Trump Organization is required to comply with Davis-Bacon and this includes subcontractors working at the project.”

But a federal court decision in April concerning construction of CityCenterDC, a building complex that includes condominiums, apartments and a hotel, found that if a federal building was leased to a private developer and the project received no public funding, Davis-Bacon did not apply. The Old Post Office was leased to the Trump Organization and has received no federal funding, apparently freeing it from Davis-Bacon obligations.

The Labor Department spokesperson said the agency "determined that under that decision the hotel is not a public work covered by the Act."

But Terry Yellig, who represented the workers in the CityCenterDC case, did not see a direct parallel between the two cases.

“There is a key distinction in the two situations," Yellig said. "In the [CityCenterDC] case, the District failed to incorporate a Davis-Bacon contract clause in its agreement." But in the Trump contract, Yellig said, "you've got the prevailing wage requirement in the contract from the get-go."