Thursday, August 30, 2018

Contractor Agrees to Pony Up for Shortchanging its Workers

A Government contractor, performing work funded by the Department of Transportation, has agreed to pay back wages, overtime, and fringe benefits to 77 employees. This agreement was the culmination of an investigation by the Labor Department's Wage and Hour Division (WHD). The WHD found that the contractor violated requirements of the Davis-Bacon Act, the Contract Work Hours and Safety Standards Act (CWHSSA), and the Fair Labor Standards Act (FLSA). We do not know why the WHD initiated its investigation. It could have been a result of a whistleblower or other complaint (as is often the case in these investigations) or the contractor could have been randomly selected as part of WHD's ongoing oversight responsibilities.

The Labor Department investigators determined that the contractor, Hoytt Reinforcing Inc., "inaccurately classified" employees as "laborers" when they were really doing the work of "reinforcing ironworkers". That sounds pretty bad, right? Because a common laborer is about the lowest skill level - an entry level position. As a result of the misclassifications,  Hoytt was able to pay the workers less than the prevailing rate for ironworkers, violating the various aforementioned laws. The investigators also found that Hoytt violated the FLSA by failing to maintain accurate time records, a violation of record-keeping requirements. Accurate timekeeping is as important here as it is under regular cost-type contracts.

Hoytt agreed to pay back wages and benefits to 77 employees. There was no mention as to whether civil or criminal penalties would be assessed. The problem here is twofold. Employees are not being paid the wages they are legally owed under Federal construction projects and second, it results in unfair competition for contractors who do play by the rules - i.e. estimate their costs based on prevailing wages.

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