Loan service provider fails to pay holiday wages, other benefits

Deval LLC to pay more than $288K in fringe benefits, prevailing wages to 58 Dallas workers following US Department of Labor investigation

Deval LLC, a federal contractor for loan servicing support, did not pay its employees the prevailing wages or fringe benefits they rightfully earned under the McNamara-O'Hara Service Contract Act, a U.S. Department of Labor Wage and Hour Division investigation has found. The company has a contract with the U.S. Department of Housing and Urban Development.

Investigators in the division's Dallas District Office determined the company violated federal law when it did not pay permanent employees and temporary employees hired through staffing agencies for health and welfare benefits or holidays. Deval has agreed to pay 58 employees $253,072 in fringe benefits and $35,593 in prevailing wages for SCA violations.

"Employers who enter into federal contracts are responsible for knowing and following the regulations governing these contracts. When they ignore their responsibilities, they not only cheat their own employees, they gain an unfair advantage over those employers who obey the law," said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest.
 
Deval offers loan servicing options primarily to HUD, including loan modification, loss mitigation, debt collections and assistance in foreclosure procedures. The company has also agreed to abide by the law in the future.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Lockheed Martin settles wage dispute with US Coast Guard

18 wrongly classified workers receive $201K for wages owed

The U.S. Department of Labor has announced an agreement with Lockheed Martin Corp. to settle allegations that the company violated prevailing wage laws while under contract with the U.S. Coast Guard in Petaluma. Eighteen workers have been paid $201,000 in back wages by Lockheed as a result.

A Wage and Hour Division investigation determined that Lockheed violated the prevailing wage requirements of the Service Contract Act by improperly classifying technical instructors/course developers in job categories that did not reflect the duties they performed. As a result of the improper classification, the company paid incorrect prevailing wages.

“Government contracts specify in detailed language how pay and benefits are to be determined. Employers must follow these rules, so that workers are paid correctly,” said Susana Blanco, district director for the Wage and Hour Division in San Francisco. “Government contractors, large and small, should be aware of their obligations under the law.”

The SCA applies to every contract entered into by the U.S. that has as its principal purpose services furnished by contractors. The law requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality. Additional information on labor provisions and enforcement of government contracts is available at http://www.dol.gov/whd/govcontracts/.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Corrections Corp. of America violated federal service contract laws

US Department of Labor recovers more than $8M in unpaid wages and benefits for hundreds of California prison employees

Federal prison subcontractor Corrections Corp. of America has paid more than $8 million in back wages and fringe benefits to 362 current and former prison guards, maintenance workers and administrative personnel employed at California City Correctional Center, a federal correctional facility in California City, following an investigation by the U.S. Department of Labor’s Wage and Hour Division.

The investigation conducted by the division’s Los Angeles District Office established that Corrections Corp. of America violated the Service Contract Act and the Contract Work Hours and Safety Standards Act by failing to pay proper prevailing wages, health and welfare benefits, overtime and holiday pay. The investigation uncovered record-keeping violations under the Fair Labor Standards Act.

“Many of the workers, some of whom commuted up to two to three hours to keep our communities safe, will receive more than $30,000 in back pay,” said Ruben Rosalez, regional administrator for the division’s West region. “This recovery sends a message to the prison industry and others that we are watching for workplace violations.”

The SCA applies to every contract entered into by the United States that has as its principal purpose services furnished by contractors. The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality.

The CWHSSA requires federal service contracts and federal and federally assisted construction contracts over $100,000 to cover contracts to pay laborers and mechanics one and one-half times their basic rate of pay for all hours worked over 40 in a workweek. This act also prohibits unsanitary, hazardous or dangerous working conditions on federal and federally financed and assisted construction projects.

Source: EEOC

This information is intended to be educational and should not be considered legal advice on any specific matter.

Garcia Forest Service debarred from federal contracts for 3 years following DOL investigation

A U.S. Labor Department investigation has resulted in the debarment of Garcia Forest Service LLC, and its president, Samuel Garcia, from eligibility for further service contracts with any U.S. government agency for three years. The investigation found that the Rockingham, N.C.-based company violated the McNamara-O'Hara Service Contract Act and the Contract Work Hours and Safety Standards Act by failing to pay fringe benefits, minimum wage, overtime and holiday pay to workers hired for a reforestation project in the Superior National Forest in Minnesota. Administrative Law Judge Kenneth A. Krantz issued the debarment order in Newport News, Va. The consent findings were filed by the department's Regional Office of the Solicitor in Chicago.

"Contractors that do business with the federal government have an obligation to abide by the law, pay their employees the required contractual rates and benefits, and keep accurate and complete required records," said Laura A. Fortman, principal deputy administrator of the Wage and Hour Division. "The Service Contract Act requires debarment when violations are found unless the high standard of 'unusual circumstances' is met. Debarring this employer illustrates the department's commitment to vigorous enforcement of government contracting laws and helps level the playing field for law-abiding employers."

Garcia Forest Service entered into a contract in 2007 with the U.S. Forest Service, an agency of the U.S. Department of Agriculture, for reforestation services, such as planting seedlings and clearing brush in the Superior National Forest. The company primarily uses the H-2B Visa Program to recruit and employ foreign guest workers to perform seasonal work under its contracts.

An investigation by the department's Wage and Hour Division's district office in Minneapolis found that the company violated the SCA and the CWHSSA by failing to ensure hours worked were accurately reported resulting in minimum wage violations, not paying required fringe benefits, overtime and holiday pay. The company and its president, Garcia, cooperated fully with the Wage and Hour Division during its investigation and subsequently paid 12 workers $27,489 in back wages.

Garcia Forest Service had previously been investigated by the Wage and Hour Division regarding three contracts during the period of 2005-2006. That investigation found the company had failed to pay holiday pay under these contracts. The company provided back wages to the effected employees as a result of the investigation.

The SCA applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services in the United States through the use of service employees. The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Company debarred from federal contracts for three years

An investigation by the U.S. Department of Labor's Wage and Hour Division resulted in the restoration of $1,979,779 in 401(k) pension benefits to 515 drivers working on U.S. Postal Service contracts for Lange Trucking Inc. because of violations of the McNamara-O'Hara Service Contract Act. The company, along with its President, William A. Langenhuizen; Vice President, William H. Langenhuizen; Secretary Treasurer, Antoinette Langenhuizen; Vice President, Robert Langehuizen; and Vice President of Finance, Lisa Kulak, have been debarred from eligibility for further service contracts with any U.S. government agency for three years for their failure to pay drivers required fringe benefits.

"Contractors that do business with the federal government have an obligation to abide by the law and pay their employees the required contractual rates and benefits," said U.S. Secretary of Labor Thomas E. Perez. "Restoring the pension benefits of these workers and debarring this employer illustrate the department's commitment to vigorous enforcement of government contracting laws and helps level the playing field for law-abiding employers." 
 
Wage and Hour investigators found that Lange Trucking failed to fully fund the drivers' 401(k) plan, resulting in a violation of the SCA. Wage and Hour has investigated the company several times in the past. Lange Trucking paid $500,000 of the unpaid benefits while Hoovestol Inc., which is based in Eagan, Minn., acquired the company subsequent to the violations and voluntarily agreed to fund the remaining $1.48 million in benefits. Hoovestol, which cooperated fully with the Wage and Hour Division during its investigation, has also: corrected record-keeping procedures, overhauled the plan to ensure timely payments into the plan going forward, posted wage determinations at the work site and made information about the contracts accessible to employees.

The SCA applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services in the United States through the use of service employees. The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

US Department of Labor investigates Contract Transport Inc., finds more than $160,000 in back wages due for 201 truck drivers

Contract Transport Inc. has agreed to pay 201 truck drivers a total of $160,073 in back wages and fringe benefits after an investigation by the U.S. Department of Labor’s Wage and Hour Division found that the trucking company violated provisions of the McNamara-O’Hara Service Contract Act. The company, which has a contract to haul mail for the U.S. Postal Service, violated the SCA by failing to document and pay mail haul drivers for delay time during trips.

“Government contracts specify in detailed language how pay and benefits are to be determined, and employers are required to follow these rules so workers are paid correctly,” said Michael Staebell, district director of the Wage and Hour Division’s office in Des Moines. “Contractors are well aware of these obligations when they bid, and when the contracts are awarded. This investigation demonstrates the department’s commitment to ensuring that employees are paid the wages they have rightfully earned and to leveling the playing field among all employers who do business with the government.”

The investigation determined that the employer paid drivers for a predetermined number of hours per trip, without regard to how long the trips took. Delays brought on by weather, construction or other factors resulted in hours worked by employees going unpaid, in violation of the SCA. As a result, 115 employees at Contract Transport’s headquarters facility in Des Moines are due $64,217 in back wages, and 86 employees who operate out of the company’s Kansas City, Mo., facility are due $95,856.

In addition to paying all of the back wages found due, Contract Transport has agreed to train both office staff and drivers on the importance of proper time documentation, to ensure future documentation of all hours worked, including delay time, and to provide a phone number to workers to report pay discrepancies.

The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality, or rates contained in a predecessor contractor’s collective bargaining agreement.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Federal Agency Issues Much Anticipated Proposal Governing SCA Exemption for Certain Extended Care Service Providers

On February 13, 2013, a proposed rule was issued providing long-awaited guidance regarding an exemption to the Service Contract Act (“SCA”) for certain providers of extended care programs entering into agreements with the U.S. Department of Veterans Affairs (the “VA”). The SCA imposes prevailing wage rate and fringe benefit standards, as well as various reporting requirements, on certain contractors and subcontractors.

The proposed rule pertains to the Veterans Health Care, Capital Asset and Business Improvement Act (“the Act”), which was passed in 2003 to expand access to care for veterans with mental illness. Although the Act has long been understood to provide an SCA exemption, the VA recommended that providers wait to apply the exemption until the regulations were issued. After a ten year wait, the proposed rules have been issued. Final rules are expected shortly, and the VA is advising eligible providers to prepare accordingly.
We spoke with the Director of the Purchased Long-Term Care Group at the VA about this critically important proposed rule. The core of this rule, largely drawn directly from the statute, is that the reporting and wage payment provisions of the SCA do not apply to certain “providers” of “extended care services” serving veterans, if the providers enter into “agreements” rather than “contracts” with the VA. Highlights from our interview appear below.

• What providers are covered by the exemption? To be exempt from the reporting and wage payment provisions, a “provider” must have an agreement with Medicare or Medicaid or participate in a state plan for home and community based services to veterans. The VA must approve and authorize the services being provided under a provider agreement. Many providers in rural areas do not participate in Medicare or Medicaid and thus must enter into agreements to participate in state plans for home and community-based services to veterans. This may prove difficult for small providers who may not have legal counsel.
• What are “provider agreements”? “Provider agreements” are instruments used by the federal government to purchase long-term care services without making the provider a federal contractor and therefore subject to many additional rules and regulations that do not apply to providers of care under Medicare and Medicaid. In its distilled form, it is a purchasing instrument the VA can use to acquire extended care services.
• What exactly are eligible providers exempt from under the proposed rule? Providers will be exempt from reporting and wage payment requirements under the SCA, effectively removing the ability of the Department of Labor to audit them for SCA compliance. While providers can determine their own wages, they must still comply with the Fair Labor Standards Act for their employees.
• What are “extended care services?” This includes nursing homes, home hostice, home health care, adult care, home respite, home or community based respite and geriatric evaluation services.
• What is the difference between “agreements” and “contracts?” The SCA applies to contracts, but not to agreements. The major difference between them is that the VA sets the amount of medical liability and insurance for contracts, whereas the state insurance commissioner determines this for provider agreements. Also, provider agreements, which are four pages or less, are easier to administer than contracts, which may be 70+ pages long.
• What will be reimbursed? The VA will pay the Medicare and Medicaid rates, whichever is higher.
• What does this mean for potentially exempt providers? The comment period is 30 days and it is expected to be another 90 days until the final rule is issued. In the interim, the VA advises providers to consult legal counsel regarding how to restructure their contracts, and to contact the appropriate individuals (head of geriatrics and extended care, head of social work, or head of community health nurse) at their local VA hospital to discuss moving forward with provider agreements.

Source: Healthcare Employment Counsel
By Elizabeth A. Lalik and Rebecca Signer Roche

This information is intended to be educational and should not be considered legal advice on any specific matter.