In a recent investigation, the U.S. Department of Labor (DOL) has successfully recovered $77,627 in wages and benefits for 10 workers employed by a Virginia-based information technology support company. The company, under contract with the U.S. Marine Corps and tasked with providing computer systems and tech support, incorrectly classified these workers as exempt from overtime pay, resulting in a costly penalty.
Technology Support Company Incorrectly Classified Contract Workers as Exempt From Overtime Pay
The affected workers were employed at various U.S. military installations highlighting the federal scope of this issue. The investigation conducted by the DOL’s Wage and Hour Division determined that the technology support company had misapplied the administrative exemption under the Fair Labor Standards Act (FLSA), failing to pay the workers their rightful health and welfare, as well as holiday benefits. This violation led to the recovery of $55,593 for the affected workers.
Additionally, investigators found that, despite the erroneous exemption from overtime, the technology support company had paid these 10 workers straight-time rates for all hours worked, thereby denying them the legally mandated overtime rate for hours exceeding 40 in a workweek. The workers were consequently owed $22,034 in unpaid overtime wages under the FLSA.
Richard Blaylock, District Director of the Wage and Hour Division in North Carolina, emphasized the DOL’s commitment to ensuring that employees are paid their rightfully earned wages, particularly when working on government contracts. Blaylock underscored the importance of federal contractors comprehending and adhering to the requirements associated with government contracts, including wage and benefits standards.
Classification Compliance
Under the law, contractors and subcontractors engaged in prime contracts valued at more than $2,500 are obligated to pay service employees no less than prevailing wage rates and fringe benefits in the locality, or the rates specified in a predecessor contractor’s collective bargaining agreement. This regulation is crucial in maintaining fair compensation practices within the federal contracting system.
Blaylock urged other federal contractors to take note of the outcomes of this investigation and to use it as an opportunity to review their pay practices. He emphasized the importance of compliance with labor laws to avoid costly consequences for violations, such as those uncovered in this case.
Conclusion
This case serves as a stark reminder to small and midsize business owners, especially federal contractors, of the consequences of non-compliance with employment laws. The DOL’s dedication to protecting workers’ rights and ensuring fair compensation practices is unwavering. Business owners are strongly encouraged to familiarize themselves with federal labor laws, review their pay practices, and take proactive measures to avoid legal and financial penalties. Ultimately, prioritizing compliance with employment laws is not only a legal obligation but also an ethical commitment to treating employees fairly and justly.