Service Contract Act: Non-Compliance Can Be Costly

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Service Contract Act SCA Wage and Hour Alabama Employment Law
Failure to comply with the Service Contract Act can be expensive for government contractors.

My firm helps government contractors comply with a broad array of regulations imposed by the federal government.  Here is a link to our firm’s new Government Contracts Lawyers web site:  Wilmer & Lee Government Contracts.  Within our government contracts group, I am frequently tasked with assisting government contractors in their efforts to comply with the McNamara-O’Hara Service Contract Act (“SCA”).

The United States Department of Labor (“DOL”) enforces the SCA.  Frequently, the DOL issues press releases when companies agree to pay for violations of the SCA.  Following are a series of press releases issued by DOL this Spring.  Hopefully, they can provide you with some guidance on what not to do in administering an SCA contract.  The title of each release links to the DOL web site.

18-630-ATL.  May 8, 2018.  A company based in my hometown of Huntsville, Alabama agreed to pay $95,000 in back wages to 12 employee for failure to pay prevailing wage rates for work performed on a federal contract.  Y-Tech Services, Inc. categorized employees as aircraft workers when they actually performed the duties of sheet metal employees, which required higher rates.

18-625-BOS. May 8, 2018.  This is actually a Davis-Bacon Act case and not an SCA case.  Gilliam Co. LLC of Franklin, Connecticut was debarred from future federal construction contracts.  Gilliam failed to make required fringe-benefit payments — primarily 401(k) contributions.  Gilliam also took payroll deductions from a non-existent vacation fund, failed to pay employees for their last two weeks of work, and submitted falsified payroll records.  The total amount paid to 12 employees was $125,348.

18-0658-SAN.  May 1, 2018.  United States Auto Club, Inc. (“USAC”) provides emergency roadside assistance to the United States Postal Service.  The SCA contract required that employees be paid $20.84 per hour.  USAC subcontracted the work to Norbert’s Towing Service, which only paid employees half that rate.  As a result, USAC owed 29 employees $377,512 in unpaid prevailing wages; $165,116 in required health and welfare benefits; and, $107,367 in overtime.

18-04650-ATL.  March 29, 2018.  Insight Global, LLC worked as a subcontractor for Hewlett Packard on an information technology contract with the U.S. Department of the Navy.  Insight Global erroneously categorized and paid 14 employee as computer operators, when they actually performed the work of personal computer support technicians.  As a result, Insight Global agreed to pay $354,978 in back wages.

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