Three Compliance Violation Nightmares for Government Contractors

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.

Get to know us! You can find Boon on Facebook, Twitter, and LinkedIn.

The Boon Blog is your source for the latest in industry news and updates, tips and tricks for government contractors, and all things Boon. Make sure to give us a follow so that you don’t miss out.

Sources:

https://www.dol.gov/newsroom/releases/whd/whd20180312-1

https://www.dol.gov/newsroom/releases/whd/whd20180227

https://www.dol.gov/newsroom/releases/whd/whd20190108-0

About The Boon Group

The Boon Group® is a full service employee benefits company specializing in the design, implementation and administration of cost-effective fringe benefit plans for federal, state and local government contractors. Since 1982, The Boon Group has developed a partnership philosophy that expands beyond the products and services we offer. We stand with the employers and employees who, just like all who work at The Boon Group, are faced with the daunting task of navigating the U.S. healthcare system. Together, we can find a better way for all Americans to access healthcare. The Boon Group, Inc. is the parent holding company of The Boon Insurance Agency, Inc., Boon Administrative Services, Inc. (formerly named CEBA), Boon Insurance Management Services, L.P., Health & Welfare Benefit Systems, Inc. and Boon Investment Group, Inc. The Boon Group was formed to support and strengthen the position of these companies as a wholesaler of exclusive products and services. www.boongroup.com
This entry was posted in compliance, Davis-Bacon Act, employee benefits, federal contractors, fringe benefits, government contractors, health care, labor laws, overtime pay, Service Contract Act, wage and hour violations. Bookmark the permalink.

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