Companies that violate the federal government contractor laws risk not just fines and citations from the U.S. Department of Labor, but also debarment that prevents them from bidding on any other federal contracts for a specified period.
For a company that relies predominantly on federal contracts, or that was depending on a financial infusion from potential contracts, debarment can bear a steep financial cost that lasts long after initial fines.
But the learning curve for staying in compliance can be steep, because companies that provide goods and services to the federal government are subject not only to federal minimum wage and hour standards, but also to a set of labor laws that apply solely to federal contractors. The interaction of these laws can be confusing, leading to a long learning curve. But understanding these laws is crucial because as demonstrated by several recent DOL enforcement actions, violations of these laws are being taken very seriously.
For example, in November alone DOL forced federal contractors to pay more than $1 million in back wages and fringe benefits to workers and debarred two contractors from seeking further government contracts for a few years. Over the summer the agency collected additional wage and benefit payments that also reached more than $1 million.
There are several laws that apply specifically to federal contractors and subcontractors in addition to the FLSA including the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act, the McNamara-O’Hara Service Contract Act and the Walsh-Healey Public Contracts Act. The laws overlap in some instances, and in others add additional provisions that companies need to be aware of. The size of a specific contract also impacts which laws are applicable, and additionally there may be state and local provisions not covered here that employers should brush up on.
More information about DOL’s enforcement efforts can be found at www.hrcomplianceexpert.com. Additional information about complying with federal contractor laws can be found at www.dol.gov/whd/govcontracts.