Federal contractors are subject to a variety of employment-related laws and regulations as part of the price of doing business with the government. One of those laws — the Service Contract Act (SCA or Act) — is being invoked by Good Jobs Nation, a nonprofit watchdog and advocacy group, in a Complaint filed with the United States Department of Labor (DOL) on April 8, 2015. The Complaint alleges that various federal contractors violated the SCA by failing to pay the prevailing wages required by the Act.
The SCA generally requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor’s collective bargaining agreement. As previously reported on February 12, 2014, President Barack Obama issued Executive Order 1358 increasing the minimum wage for workers on most federal contracts to $10.10 per hour effective January 1, 2015. This Order was further clarified by the DOL’s Final Rule issued on October 1, 2014.
According to the Complaint, “Good Jobs Nation (GJN) is a new organization that advocates for low-wage federal contract workers. GJN has been contacted by employees of three federal contractors in Washington DC who have provided convincing evidence that they and their coworkers are being unlawfully compensated at levels far lower than those set by the SCA.” The Complaint alleges violations with respect to employees at three different federal sites: Janitors at the Department of Education (DOE) Headquarters; Groundskeepers at the National Zoo; and Tour Bus Drivers for the National Parks Service.
The Complaint claims that the Janitors at DOE Headquarters, employed by Ace Janitorial Services, Inc. and Sabree, Inc., “are paid a base wage of between $9.10 and $9.65 per hour, with no fringe benefits, no sick leave or vacation, and four days or fewer paid holidays” but should have been paid $11.83 per hour plus benefits. The underpayment amounts to “$7,500 in back wages and benefits for each year of their employment at the [DOE] headquarters.” The Complaint alleges that in total, the DOE Janitors “are owed approximately $472,500 for the three-year time-period recoverable under the SCA.”
At the National Zoo, groundskeepers employed by Friends of the National Zoo (FONZ) are allegedly entitled to $13.07 per hour under the SCA, but have only been paid between $9.50 and $9.80 per hour. The Complaint states that “[t]he groundskeeping workers at National Zoo employed by FONZ are, therefore, owed approximately $7,425 in back wages plus an unknown amount in unpaid benefits, for each year of their full-time employment in these jobs. In total, the affected groundskeepers are owed at least $178,000 for the three-year time period recoverable under the SCA.”
The last group of employees identified in the Complaint are sightseeing bus drivers employed under a contract between the National Park Service of the United States Department of Interior and Open Top Sightseeing. The Complaint alleges that the proper occupation classification under the SCA for the employees has an applicable wage rate of $20.85 per hour, plus paid holidays and fringe benefits. The bus drivers were allegedly paid between $16.60 and $18.20 per hour. The underpayment allegedly results in $8,840 in back wages plus an unknown amount in unpaid benefits, for each year of their full-time employment in these jobs. In total, the affected drivers are owed at least $928,000 for the three-year time period recoverable under the SCA.
The GJN Complaint should serve as a further wakeup call to federal contractors nationwide. According to the General Services Administration, at least 50 percent of federal contractors are currently out of compliance with the SCA. Compliance is vital, as the underpayment of employees can open contractors up to not only back wages and benefits, but also civil and even criminal fines and penalties up to and including debarment. And not knowing your duties or innocent misclassifications are not defenses against compliance deficiencies. With penalties and sanctions becoming more frequent and often substantial, federal contractors must understand the complicated landscape of the SCA.