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Three Compliance Violation Nightmares for Government Contractors

04/11/2019 Written by: Caitlin Kennedy

There are many entities and regulations that preside over government contractors and the subcontractors they work with. The Davis-Bacon Act of 1931. The McNamara-O’Hara Service Contract Act of 1965. And that’s just to name a few!
When it comes to government contractors and their work, compliance is key. These rules are in place for a reason and failure to pass muster can come with some dire consequences. Check out these three examples of actual violations from contractors and the steep penalties they’re paying!
1. DOL Investigation Results in Security Contractor Paying Millions in Back Wages and Benefits
A security company and two subcontractors in Huntsville, Alabama will pay $1,184,772 in back wages to 236 employees after a Department of Labor (DOL) investigation found the companies to be in violation of the Fair Labor Standards Act (FLSA), Service Contract Act (SCA), and the Contract Work Hours and Safety Standards Act (CWHSSA).
The investigation found the primary contractor and its subcontractors violated the SCA by paying less in employee rates and benefits than what is required by law. Additionally, the CWHSSA was violated by not paying the employees time and one half their regular rates for their overtime hours. Beyond that, two of the companies failed to record the overtime hours of their employees in payroll records thus violating the FLSA.
2. Medical Transportation Company Pays $154,404 in Back Wages and Damages
Following a DOL investigation, AWAB Transport Inc., a Newark based medical transportation, must pay more than $70,000 in back wages to 38 employees due to violations of the overtime provisions of FLSA. Additionally, they will owe liquidated damages to these employees bringing the total penalty to a whopping $154,404.
The company paid drivers a flat daily rate without weighing the number of hours the drivers worked. The result was overtime violations when employees worked more than 40 hours in a workweek with no overtime premium. The company also failed to pay overtime to salaried employees who did not qualify for exemption.
Per the requirements of FLSA, non-exempt employees must be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates for overtime hours worked.
3. Alabama Roofing Contractor Owes Big in Back Wages
A roofing contractor based in Tuscaloosa was found to be in violation of three sets of federal regulations: The Davis-Bacon Act (DBA), the CWHSSA, and the FLSA. As a result they’ll be paying more than $50,000 in back wages, overtime, and fringe benefits to 41 employees.
According to the investigation, the company failed to pay one employee for overtime hours worked on a contract covered by the DBA. This same employer also failed to pay several employees overtime when they worked more than 40 hours in a workweek on a commercial project.
Additionally, the roofing contractor failed to submit accurate payroll records and failed to maintain accurate records of the hours worked.
Compliance and Government Contractors
Compliance goes well beyond just following the rules; it’s about having the administrative expertise to keep up with all of those loose ends. That includes proper reporting, varying fringe rates and local/state/federal laws, and much more. It’s hard to deny that this presents a daunting task for the government contractor.
How can your business avoid a disaster like the ones we discussed in this blog?
That’s where we come in. At Boon, we offer an array of compliant benefit solutions for government contractors with a full suite of administrative services.
AssuredPartners Government Contractor Solutions brings together a team of experts to provide a single-source complete solution specializing in fringe and insurance management for government contractors. We provide business and insurance solutions to contractors working Service Contract Act (SCA) and Davis-Bacon Act (DBA) federal contracts, as well as contractors at the state and local level that have fringe dollar requirements.

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