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Federal subcontractor fined for minimum wage and overtime violations

If you work as a contractor, you may believe you have little or no protection from U.S. employment law. While that is largely untrue — contractors have legal rights under the minimum wage, anti-discrimination and many other laws — the fact is, many of the protections and benefits of employment law are reserved for employees.

When it comes to wage and hour law, however, if your company contracts or subcontracts with the federal or state government, you do have rights. All companies with government contracts worth $100,000 or more are required to pay the “prevailing wage,” which is determined by the Department of Labor. You are also entitled to certain fringe benefits and to overtime compensation at one-and-a-half times your base pay if you work more than 40 hours in a week.

The U.S. Department of Labor’s Wage and Hour Division recently cracked down on a Milwaukee subcontractor that was working on refurbishing a major public housing development for the City of Milwaukee Housing Authority. According to the DOL, the subcontractor, Anointed Cleaners LLC, did not comply with those requirements.

Not only did Anointed pay some of its employees $2 to $3 an hour less than the prevailing wage, the DOL says, it also stiffed them for $3 per hour in statutory fringe benefits and refused to pay them overtime. Additionally, Anointed falsified its payroll forms to make it look like the employees were paid the required rate. The company also reported fewer hours than the employees had actually worked.

These violations are of two wage and hour laws that apply to government contractors: The Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act. As a result of those violations, the DOL determined that 13 Anointed employees were owed a total of $16,963 in back wages. The City of Milwaukee Housing Authority also assessed liquidated damages against Anointed for violating its contract.

Under the Davis-Bacon Act, the prime contractor is ultimately responsible for the compliance with the law of all subcontractors it hires. When the DOL contacted prime contractor Altius Construction about the issues, Altius immediately paid the back wages and fringe benefits owed to the workers and removed Anointed Cleaning from the project. Altius has the right to seek redress from Anointed.

“In this competitive contracting environment, no contractor should gain an economic advantage by paying workers below the required wages and fringe benefits on a prevailing wage project,” said the director of the Wage and Hour Division’s Minneapolis District office. “Not only does this practice undercut what is legally owed to the workers involved, it results in unfair competition.”

Source: U.S. Department of Labor, Wage and Hour Division, press release, “Anointed Cleaners LLC employees paid nearly $17,000 in back wages, benefits following US Labor Department investigation,” Feb. 5, 2013