Labor Department Compliance Audits

The Department of Labor's Wage and Hour Division (WHD) investigators have been pretty busy lately, investigating contractor violations of certain labor related regulations. For contractors subject to the minimum wage and reporting requirements of Davis-Bacon (DB) and the Service Contracting Act (SCA), the probability of being audited for compliance is actually quite high and the consequences for failing to comply can be significant. The Labor Department recently sent out press releases concerning the outcome of two such investigations.

In the first case, a roofing contractor out of Tuscaloosa Alabama agreed to pay $57 thousand in back wages, overtime and fringe benefits to 41 employees after the Labor Department investigation found the company (employer) violated requirements of the Davis-Bacon Act (DBA), the Contract Work Hours and Safety Standards Act (CWHSSA) and the Fair Labor Standards Act (FLSA). The company failed to pay one employee for overtime hours on a DBA project and several employees for overtime when they worked more than 40 hours on a commercial project. Additionally, the roofing company failed to submit accurate certified payroll records and maintain accurate daily records of the number of hours employees worked.

In the second case, a Texas-based contractor paid $24 thousand in back wages to ten employees after investigators found the company had inaccurately classified several employees as exempt from the overtime requirements of the FLSA when none met the requirements for exemption. The company paid the affected employees flat weekly salaries regardless of the number of hours they worked, resulting in overtime violations when they worked more than 40 hours per week without overtime payment.

These two cases almost sound like "honest mistakes" where very small contractors did not have the internal resources to know all the rules and regulations that applied. We see honest mistakes happen frequently in our consulting business. However, when it comes to labor law, employees are often more informed about such matters than their employers and with the abundance of hotlines and other avenues for whistleblowing, the , it only takes a phone call to have investigators show up on your doorstep.