Government Contractors: President Bans Certain Diversity Training

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President Trump’s new Executive Order prohibits government contractors from training employees on certain “divisive concepts.”

On September 22, 2020, President Trump issued an Executive Order which prohibits government contractors from conducting training which it calls “race and sex stereotyping and scapegoating.”  Here is a link to the Executive Order: Order on Race and Sex Stereotyping

What Training is Prohibited?

Every new federal contract must include a clause that prohibits training by government contractors for employees on the following “divisive concepts”:

  1.  One race or sex is inherently superior to another race or sex;
  2.  The United States is fundamentally racist or sexist;
  3.  An individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
  4. An individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;
  5. Members of one race or sex cannot and should not attempt to treat others without respect to race or sex;
  6. An individual’s moral character is necessarily determined by his or her race or sex;
  7. An individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
  8.  Any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or,
  9. Meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.

The order also prohibits training that includes “race or sex stereotyping,” which means “ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to a race or sex, or to an individual because of his or her race or sex.”  Additionally, training cannot include “race or sex scapegoating,” which means “assigning fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex.”

While not explicitly called-out, the Order appears to take square aim at stopping diversity training programs teaching about “white privilege” and/or critical race theory.

What Other Obligations Are Imposed On Contractors?

Federal contractors must flow-down the requirements of this Executive Order to their subcontractors and vendors.  It is not clear whether subcontractors must further flow-down these requirements to their subcontractors.

Contractors must post a notice about these training obligations in “conspicuous places” available to employees and job applicants.  Each contracting officer is supposed to give that notice to the contractors.  Contractors must also provide the notice to any applicable labor union.

When Does the Order Become Effective?

The Order’s training prohibitions are supposed to be placed into ever new contract issued on or after November 21, 2020.  It is not clear whether the requirements will be placed into contract renewals.

What Are the Consequences of Violating the Order?

The Order does not mandate any specific penalty if a contractor conducts prohibited training.  Nevertheless, the contractual language notes the possibility of punitive measures such as terminating, suspending, or canceling contracts, and potentially debarring contractors.

What’s Next?

Almost certainly, this order is going to be challenged in court.  In the interim, government contractors should pay close attention to new contracts (and even contract renewals) to determine if the training provisions have been included.  If so, then contractors should carefully review any diversity training to ensure that they do not run afoul of this new order.

Coronavirus: What Employers Need To Know.

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Employers have fears about the spread of coronavirus in the workplace.

I’ve gotten a few calls this week from clients concerned about coronavirus.  My clients have employees returning from travel to China/Korea/Japan and want advice on protecting the employee, their customers and co-employees.  From a practical perspective, the Centers for Disease Control have issued guidance for business owners on responding to coronavirus in the workplace:  CDC Coronavirus Guidance.

I.  Legal Issues

From a legal perspective, employers have two primary statutes that relate to their employees and coronavirus:  (1) the Occupational Safety and Health Act (“OSHA”); and, (2) the Americans with Disabilities Act.

OSHA has a “General Duty Clause” that requires employers to furnish “a place of employment which [is] free from recognized hazards that are causing or likely to cause the death or serious physical harm to … employees.” In short, employers have a general duty to protect employees from hazards. That’s great, in concept, but how does it apply to coronavirus?

At this stage, employers should take common-sense steps to prevent the spread of contagious illnesses in the workplace. Most employers already have these steps in place. Provide hand sanitizer at multiple locations. Regularly clean and disinfect public areas. Make sick employees stay home. If the cornavirus threat spreads in the United States, there may be increased duties under OSHA for employers to provide personal protective equipment and/or take other measures. But, those are not necessary at this stage.

Generally, the ADA prohibits employers from taking an adverse job action against an employee  who is disabled or “regarded as” disabled.  So, would the ADA prevent an employer from suspending or terminating an employee who is infected with coronavirus or suspected of infection?  I have strong doubts that the ADA would apply.  But, I will give my lawyerly disclaimer:  Only a judge and/or jury can make a final determination on legal liability.  In particular, the transitory nature of any virus is unlikely to amount to a disability under the ADA.  Moreover, the Eleventh Circuit has expressly found that an employer’s fear an employee might develop Ebola in the future does not amount to “regarding” the employee as disabled.  Here’s a link to a blog post that I wrote about that case:Fear of Future Infection and the ADA.  That analysis would seem to apply equally to fear of contraction of coronavirus.

Employers may also want to require their employees to undergo a medical examination.  Even though coronavirus might not be a disability, the ADA generally imposes restrictions on medical examinations regardless of an employee’s status as disabled.  The EEOC previously issued guidance on steps that an employer can properly take under the ADA relating to a pandemic.  Here’s a link to that guidance:  EEOC/ADA Pandemic Guidance.  In general, employers can ask employees about potential exposure to coronavirus; ask employees how they are feeling; and, require symptomatic employees to stay home.

II.  Practical Advice

If one of my Alabama clients has a genuine fear about coronavirus, I have advised them that they should allow asymptomatic employees returning from “hot spots” to work from home, if possible.  If work-from-home is not an option, then consider requiring the employee to stay home — and pay the employee at the employer’s expense.  If overhead makes gratis leave infeasible, consider requiring the employee to use accumulated paid leave.  Employers should consult with counsel before requiring an asymptomatic employee to take unpaid leave.

OFCCP is Updating Its Rules on Compliance Evaluations

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OFCCP is proposing to clarify its standards for compliance evaluations.

The United States Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) is updating its rules for evaluating compliance by federal government contractors with equal employment opportunity laws.  On December 27, 2019, OFCCP issued a Notice of Proposed Rule Making (“NPRM”), which can be found here:  OFCCP NPRM.  According to a Press Release, the purpose of the NPRM is to “provide federal contractors with greater certainty and transparency about the procedures that OFCCP follows during compliance evaluations to resolve employment discrimination and other material violations.”

This is good news for federal contractors because the new rules will make some aspects of an OFCCP compliance evaluation mandatory.  Typically, evaluation procedures are guided by OFCCP’s Federal Contract Compliance Manual (“FCCM”).  Yet, the agency makes clear that the FCCM “does not establish substantive agency policy.”  In other words, OFCCP can depart from the FCCM without violating the law.  The FCCM can be found here.

The proposed rule making clarifies the circumstances in which OFCCP will issue  a Predetermination Notice (PDN) of discrimination to contractors.  If OFCCP finds an employment or compensation disparity during a compliance evaluation, it will determine:  (1) if that disparity is “both practically and statistically significant”; and, (2) where relevant, whether nonstatistical evidence demonstrates an intent to discriminate.  If OFCCP cannot corroborate statistical evidence with nonstatistical evidence, it will issue a PDN only where the statistical evidence is significant at a confidence level of 99% or higher, which equates to three or more standard deviations. Currently, OFCCP pursues compensation audits based solely on statistically-significant disparities below this threshold.

So, the NPRM is good for employers because it limits the circumstances in which OFCCP will rely solely upon statistical evidence to make a predetermination finding of potential discrimination.  But, the NPRM also clarifies the types of nonstatistical evidence OFCCP will rely upon to bolster statistics that, on their own, would not warrant a PDN.

Nonstatistical evidence may include testimony about biased statements, remarks, attitudes, or acts based upon membership in a protected class; differential treatment through review of comparators, cohorts, or summary data reflecting differential selections, compensation and/or qualifications; testimony about individuals denied or given misleading or contradictory information about employment or compensation practices; testimony about the extent of discretion or subjectivity involved in making employment decisions; or other anecdotal or supporting evidence.

This portion of the NPRM is not as favorable for contractors. It provides no standards on how OFCCP will weigh any particular type of nonstatistical evidence.  Moreover, by including “discretion or subjectivity” in its definition of nonstatistical evidence, OFCCP is implicating the vast majority of employment decisions.  Almost every hiring or promotion decision relies, in some part, on discretion or subjectivity by the decision maker.

If OFCCP issues a PDN to a contractor, the contractor must respond within 15 calendar days unless OFCCP grants an extension “for good cause.”  That is a short window to respond.  If the contractor does not respond or provide a “sufficient response,” OFCCP may issue a Notice of Violation (NOV).  If OFCCP issues a NOV, it may offer the contractor the opportunity to enter into a conciliation agreement. That agreement “shall provide for such remedial action as may be necessary to correct the violations and/or deficiencies noted, including, where appropriate (but not necessarily limited to), remedies such as back pay and retroactive seniority.”

Finally, OFCCP’s proposed rule includes an “expedited conciliation option.” Under that option, a contractor can enter into a conciliation agreement before OFCCP issues a PDN or NOV.  Compliance evaluations and responses to PDNs can be extremely costly in terms of time and money.   The expedited conciliation option will provide contractors a procedure to remedy compliance issues without as much time or expense.

OFCCP is accepting public comments on the NPRM through January 29, 2020.  Instructions for submitting a comment can be found at this link:  OFCCP Comments

 

Government Contracts: Trump Ends Requirement to Hire Incumbents

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President Trump’s new executive order gives contractors control over hiring of incumbent employees.

A Burden Lifted – Hiring of Incumbent Workforce By Follow On Contractor – It Is Again Your Decision Who You Hire

“The Federal Government’s procurement interests in economy and efficiency are served when the successor contractor hires the predecessor’s employees.”  Or so began the Obama Era Executive Order, “Nondisplacement of Qualified Workers Under Service Contracts,” Executive Order 13495, 74 FR 6103 (Jan. 30, 2009).  The order required successor contractors to offer jobs to essentially all the incumbent workforce.  But, on Halloween, President Trump signed Executive Order 13897, “Improving Federal Contractor Operations by Revoking Executive Order 13495” Exec. Order No. 13897, 84 FR 59709, 2019 WL 5694266 (October 31, 2019), which revoked the prior order.  The old Executive Order required follow-on contractors to offer jobs to many “qualified” service employees when succeeding an incumbent government contractor providing the same or similar services at the same place.  The new EO directs the DOL to immediately terminate investigations and compliance actions based on the old order and withdraw rules and accompanying guidance implementing the old order.

Since President Obama signed EO 13495 in January 2009, its requirements, essentially giving a right of first refusal to non-managerial employees of the prior incumbent contractor, received criticism from government contractors.  The requirement was seen as unnecessary, since most contractors do hire the incumbent’s employees when a contract changes hands.  But in cases where the new contractor feels another employee would be better, the old EO effectively precluded that business decision being from carried out, creating inefficiencies and possibly increasing costs.  The DOL investigated and pursued alleged violations with vigor.  Ultimately, this administration decided to take steps to address the situation.

The decision is again in the hands of the government contractor.  They can decide who best to fill the positions when they take over a contract.  We expect contractors to continue to keep most of the incumbent workforce – as was the case before EO 13495.  But it is not a requirement now; and our clients in the federal government contracting industry can use their business judgment when deciding issues related to the new workforce when the contract transitions over.

So, what do you need to do?  Review solicitations out now and review your new awards to ensure the contracts and proposed contracts do not include language from EO 13495 or the implementing clauses.  Take exceptions in appropriate cases and use EO 13897 as the basis for doing so.

 

Catch-22: Government Customer “Suggests” Terminating an Employee

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What should government contractors do when their customer “suggests” terminating an employee?

In many government contracts, a contractor provides personnel who work for the government.  In most government contracts, the federal government Contracting Officer or Contracting Officer’s Representative (“COR”) does not have the power to require removal of employees of a government contractor.   In short, the COR can’t order that an employee be terminated.  But, a COR, or another government employee, can express displeasure with an employee.  As a result, my government contractor clients frequently ask me what to do when a COR, or other government employee, “suggests,” but does not require, that an employee be terminated.

Those clients are placed in a Catch-22 situation with no easy answer.  They want to keep the government customer happy to help ensure that they win renewals of the contract.  But, without explicit instructions, those contractors do not have a completely solid basis for termination.

That’s the situation that one government contractor faced in Security Walls, Inc. v. National Labor Relations Board, No. 17-13154, 2019 WL 1771291 (11th Cir. Apr. 23, 2019).  Security Walls, Inc. provided security guards to the Internal Revenue Service for its facility in Austin, Texas.  Three security guards negligently allowed visitors to enter the facility undetected.  In response, the Contracting Officer Representative wrote to Security Walls and said:  “If individual guards do not have the character and self-discipline to work at a federal installation and comply with the responsibilities associated, they will need to be removed.”

That seems like a pretty clear mandate.  Yet, the COR never explicitly said that the three guards, in particular, needed to be fired.  In fact, he suggested that the guards’ conduct did not constitute “careless behavior.”  Nevertheless, Security Walls conducted an investigation and determined that the guards violated two standards from its Performance Work Statement with the IRS.  Based on those violations, Security Walls terminated the guards.

But, the guards were members of a union, and Security Walls had a progressive discipline policy, which only permitted, at most, a two-day suspension for the guards’ conduct.  As a result, the Union filed an unfair labor practices charge with the National Labor Relations Board.  An Administrative Law Judge and the NLRB both ruled against Security Walls.  Thus, Security Walls appealed to the Eleventh Circuit Court of Appeals.

At the Eleventh Circuit, Security Walls argued that its Performance Work Statement with the IRS superseded its collectively-bargained progressive discipline policy.  The Eleventh Circuit was not persuaded.  Judge Tjoflat was skeptical that Security Walls held “a get-out-of-jail-free care when it cannot simultaneously comport with both the PWS and the NLRA.”  In fact, he found that Security Walls “might have voluntarily put itself between a rock and hard place from which there is no painless resolution.”  Nevertheless, he found that nothing in the Performance Work Statement required the guards’ termination.  Arguably, they violated the Performance Work Statement, but there was nothing in that statement mandating termination for violations.  As a result, Security Walls could comply with both the PWS and the NLRA, and the Eleventh Circuit affirmed the decision of the NLRB.

The Security Walls decision is a classic example of the difficulties faced by government contractors when a government agency suggests, but does not require, termination of an employee.  Those difficulties were compounded by collective bargaining issues.  It’s easy to “Monday Morning Quarterback” Security Walls’ termination decision and conclude that they should have followed their progressive discipline policy rather than jumping straight to termination.  But, in the heat of the moment with the IRS expressing clear displeasure over the guards’ performance, I can’t say that Security Walls’ decision was “wrong” from a business perspective.

From a business (rather than legal) perspective, Security Walls demonstrated to the IRS that they took their security obligations seriously and implemented prompt, serious consequences for breakdowns in security.  In the long-run, that business decision may outweigh the legal risks and costs associated with terminating the guards.  That risk/reward analysis must be conducted on a case-by-case basis by other contractors faced with similar dilemmas in the future.  Naturally, I recommend that contractors include their attorneys in any such analysis.

Government Shutdown: Salary/Overtime Issues for Contractors

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The government shutdown causes issues with payment of employees for government contractors.

The federal government is in another shutdown.  Obviously, there are many thorny political issues behind the shutdown.  But, there are also practical and legal issues that arise for employers.  In particular, government contractors have employees that want to work and be paid.  One particularly difficult area involves payment of employees who are exempt from overtime.  Contractors need to make sure that they do not accidentally lose the exemption for employees who only work part of a week because of the government shutdown.

In order to be exempt from overtime, executive, administrative and professional employees must paid on a “salary basis.”   To be paid on a “salary basis,” an employee must receive in each pay period a predetermined amount that constitutes all or part of their compensation, and that compensation cannot be reduced because of variations in quality or quantity of work. In other words, you must pay an exempt employee their full salary for any week in which they perform any work regardless of the number of days or hours they actually work.

So, what if you have an exempt employee who is required to report to their government facility today, only to be told that they are non-essential and must return home.  Do you have to pay that employee a full week’s salary, even though they reported to work for an extremely short period of time?  In short:  “Yes.”

But, what about next week?  If the shutdown continues, and the exempt employee performs no work at all next week, are your required to pay them their full salary?  In short:  “No.”  The Fair Labor Standards Act’s implementing regulations provide: “Exempt employees need not be paid for any workweek in which they perform no work.”  Here, it is crucial that employees perform no work at all.  In this electronic age, there is an argument that checking work e-mail can constitute “work.”  Therefore, if government contractors want to ensure that they are not responsible for salary during the government shutdown, they should explicitly instruct exempt employees not to check e-mail or conduct any work-related activities during the shutdown.

Some of my clients believe there are exceptions for partial-week “furloughs” of employees.  In the vast majority of cases you cannot “furlough” an exempt employee without risking loss of the exemption.  If you want to require exempt employees to work for a partial-week, and only pay the for the partial week, you should consult with your employment attorney.

Service Contract Act: Holiday Pay Issues

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Make sure that you comply with the Service Contract Act’s holiday pay provisions.

Happy Holidays!! For my friends in the government contracting world, this post is a quick reminder that nothing is ever easy when dealing with the federal government and employees.  In particular, you need to make sure to comply with the holiday pay requirements of the Service Contract Act.  Here are some key reminders from the Service Contract Act regulations on holiday pay, found at 29 C.F.R. 4.174.

  1. Employees receive holiday pay if they perform any work during the workweek that a holiday occurs.
  2. Unless a different standard is used in a wage determination, a full-time employee who works on the holiday must be paid, in addition to the amount he ordinarily would be entitled, the cash equivalent of a full-day’s pay up to 8 hours or be furnished another day off with pay.
  3. An employee who performs no work during the workweek in which a named holiday occurs is generally not entitled to the holiday benefit.  But, if the employee does not work because he is on paid vacation or sick leave, he may be entitled to the benefit.
  4.  Holiday pay benefits cannot be denied because the employee did not work the day before or the day after the holiday, unless such qualifications are specifically included in the determination.
  5. There is an interesting quirk for newly hired employees. A contractor generally is not required to compensate a newly hired employee for the holiday occurring prior to the hiring of the employee. However, where a named holiday falls in the first week of a contract, all employees who work during the first week are entitled to holiday pay for that day. For example, if a contract to provide services for the period January 1 through December 31 contains a fringe benefit determination listing New Year’s Day as a named holiday, and if New Year’s Day is officially celebrated on January 2 in the year in question because January 1 fell on a Sunday, employees hired to begin work on January 3 would be entitled to holiday pay for New Year’s Day.
  6.  A full-time employee who is eligible to receive payment for a named holiday must receive a full day’s pay up to 8 hours unless a different standard is used in the fringe benefit determination.  Thus, for example, a contractor must furnish 7 hours of holiday pay to a full-time employee whose scheduled workday consists of 7 hours. An employee whose scheduled workday is 10 hours would be entitled to a holiday payment of 8 hours unless a different standard is used in the determination.

 

OFCCP Affirmative Action Audits on the Horizon

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The OFCCP is about to commence audits of federal contractors to ensure compliance with their affirmative action obligations.

The Office of Federal Contractor Compliance Programs (“OFCCP”) is focusing on the requirement that federal contractors adopt and annually update affirmative action plans. On August 2, 2018, the OFCCP’s Acting Director, Craig Leen, participated in a public discussion during which he reviewed the current compliance process for contractors.   Currently, contractors simply “check the box” to certify compliance with affirmative action obligations in the General Services Administration’s (“GSA’s”) System for Award Management (“SAM”) registration system.  Mr. Leen expressed concern that many contractors checking the box do not actually possess a valid affirmative action plan.

Mr. Leen’s comments were followed-up by a new OFCCP directive on August 24, 2018:  Directive 2018-07.  The subject of that directive is the commencement of an “Affirmative Action Program Verification Initiative.”  OFCCP “is concerned that many federal contractors are not fulfilling their legal duty to develop and maintain AAPs [Affirmative Action Plans] and update them on an annual basis.”  Therefore,  Directive 2018-07 requires OFCCP to develop a comprehensive program to verify that federal contractors are complying with affirmative action obligations on a yearly basis.  That program will include:

• Development of a process whereby contractors would certify on a yearly basis
compliance with AAP requirements.
• Inclusion of a criterion in the neutral scheduling methodology increasing the
likelihood of compliance reviews for contractors that have not certified compliance
with the AAP requirements.
• Compliance checks to verify contractor compliance with AAP requirements.
• Requesting proffer of the AAP by contractors when requesting extensions of time
to provide support data in response to a scheduling letter.
• Development of information technology to collect and facilitate review of AAPs
provided by federal contractors

Directive 2018-07 does not provide a timeline for implementation.  Nevertheless, it is abundantly clear that compliance audits are coming.  Therefore, federal contractors should carefully review their affirmative action plans for compliance, and make sure that those plan are updated annually.

Federal Contractors: OFCCP Issues Directive on Religious Freedom

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The OFCCP issued a directive requiring recognition of religious freedom.

The Office of Federal Contract Compliance Programs (“OFCCP”) has issued a new directive reminding its staff members of their obligation to recognize the religious freedom of federal contractors.  Here’s a link to the new directive:  Directive 2018-3.  Here’s a link the OFCCP press release about the directive:  Press Release.

The directive was issued in response to several recent decisions from the United States Supreme Court on religious freedom, and President Trump’s executive order which “reminded the federal government of its duty to protect religious exercise — and not to impede it.”  Thus, the OFFCP reminded its staff that:

• They “cannot act in a manner that passes judgment upon or presupposes the
illegitimacy ofreligious beliefs and practices” and must “proceed in a manner
neutral toward and tolerant of … religious beliefs.”
• They cannot “condition the availability of [opportunities] upon a recipient’s
willingness to surrender his [ or her] religiously impelled status. ”
• “[A] federal regulation’s restriction on the activities of a for-profit closely held
corporation must comply with [the Religious Freedom Restoration Act].”
• They must permit “faith-based and community organizations, to the fullest
opportunity permitted by law, to compete on a level playing field for …
[Federal] contracts.”
• They must respect the right of “religious people and institutions … to practice
their faith without fear of discrimination or retaliation by the Federal
Government. “

As a practical matter, the new OFCCP directive does not provide much clarity on a key religious issue:  whether government contractors can discriminate against LGBT persons based upon religious beliefs.  Indeed, I previously wrote that President Trump will not rescind President Obama’s Executive Order prohibiting LGBT discrimination:  Trump and LGBT.  For now, government contractors should proceed cautiously if they want take employment actions based upon religious beliefs.

Service Contract Act: Non-Compliance Can Be Costly

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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.