Workers cheated as federal contractors prosper

A Center analysis found that government agencies paid $18 billion over an 18-month period to companies with wage violations

By Talia Buford, Maryam Jameel
April 6, 2017 4:54

“I knew it was a federal building, but since everyone else was paying low wages, too, I just figured that’s how it was supposed to be,” Quezada, 40, said in a recent interview at her home in Arlington, Virginia.

Actually, that’s not how it’s supposed to be. But each year, thousands of contractors enriched by tax dollars skirt federal labor laws and shortchange workers. In fact, U.S. Department of Labor data show that upwards of 70 percent of all cases lodged against federal contractors and investigated by the department since 2012 yielded substantive violations.

But many of these violators go on to receive more federal contracts. An Obama administration effort to change that practice was derailed in late March by President Donald Trump.

The Center for Public Integrity examined a subset of 1,154 egregious violators – those with the biggest fines, highest number of violations or most employees impacted – included in the Labor Department’s Wage and Hour Division enforcement database and cross-referenced them with more than 300,000 contract records from the Treasury Department. The Center found that between January 2015 and July 2016:

  • Federal agencies modified or granted contracts worth a total of $18 billion to 68 contractors with proven wage violations. Among them: health-care provider Sterling Medical Associates, Cornell University and Corrections Corporation of America
  • Of all agencies, the U.S. Department of Defense employed the most wage violators – 49, which collectively owed $4.7 million in back pay to almost 6,200 workers. The department paid those 49 contractors a combined $15 billion.
  • Violations by the 68 contractors affected some 11,000 workers around the country – about the same number of people who moved to D.C. in 2016.

 

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Successful investigation into worker misclassificatrion is victory for Utahns

By David Weil

For the Deseret News

Published: Friday, May 1 2015 12:04 a.m. MDT

Imagine if one day you went to your job, and the very next day you went back to the same job – working for the very same boss in the same location and performing the same tasks – but your employer declared you to be an independent contractor or part of a limited liability company.

That’s exactly what one Utah construction company was doing, as part of a worker misclassification scheme that denied workers basic protections. But an investigation by the U.S. Department of Labor’s Wage and Hour Division shut down this business model and made the workers whole again, to the tune of hundreds of thousands of dollars.

The defendants in this legal matter (operating collectively as CSG Workforce Partners, Universal Contracting, LLC and later as Arizona Tract/Arizona CLA) required their workers to become “member/owners” of limited liability companies, stripping them of legal rights that come with employee status. That means no minimum wage guarantee, no time-and-a-half overtime pay, no workers’ compensation, no unemployment insurance and other benefits.

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