Specific wage and hour regulations apply to federally funded projects

by Stibbs & Co., P.C. on December 12, 2012

Contracting with the federal government can provide much-needed revenues for a business. Especially given the sluggish state of the U.S. economy over the past few years, many firms may have been reluctant to turn down any offer of work.

However, companies must exercise caution when entering into federal contracts or participating in projects that receive government funding, as these opportunities often come with strings attached. Specifically, accepting federal funding can cause an employer to become subject to strict wage and hour regulations.

Under the Davis-Bacon and Related Acts, companies are required to pay "prevailing wage rates and fringe benefits" to workers who participate in federally funded construction work. The Service Contract Act sets similar standards for service providers, while the Contract Work Hours and Safety Standards Act sets overtime requirements for almost all construction, service and supply contracts worth over $100,000. Other employment regulations also apply in many situations.

Failure to abide by the rules laid down in these laws can have serious repercussions for a company. In November, the Department of Labor (DOL) announced enforcement actions related to two cases. In one incident, an Arizona-based firm that provided janitorial services at U.S. military bases was forced to pay a total of $840,225 in overdue fringe benefits.

In another instance, a group of five companies that worked on a federally funded construction project in Tennessee were targeted by investigators from DOL's Wage and Hour Division. The contractors were ultimately forced to pay out more than $787,000 in back wages. These cases underscore the government's commitment to enforcing wage and hour laws on projects that receive federal funding.

Houston business attorneys can help local companies maintain compliance with pertinent employment laws and capitalize on market opportunities, while minimizing the risk of a regulatory intervention. Enterprises that are currently facing legal challenges should consult a Houston law firm with experience providing employer representation.

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