Government Contracts Monitor

Translation Firm to Pay $1.47M to Resolve Overtime and SCA Wages and Benefits Underpayments

February 9, 2016

The U.S. Department of Labor (DOL), Wage and Hour Division (WHD) recently announced that a Monterey, California-based translation and interpretation company that does work for the federal government and other clients has agreed to pay $1.47 million in wages and benefits to its nationwide corps of interpreters to resolve federal labor laws violations identified as the result of two separate WHD investigations.

The first investigation found that the company failed to properly calculate overtime payments due to employees working more than 40 hours in a workweek, in violation of the Fair Labor Standards Act (FLSA). As a result, DOL ordered the firm to pay more than $500k in back wages and damages to 635 employees.

A second investigation determined that the company failed to pay its translators the prevailing minimum wages and benefits required under the company’s federal contracts per the McNamara-O’Hara Service Contract Act (SCA). As a result, 2,428 translators nationwide will receive nearly $970k in back wage and benefits.

This announcement provides a strong reminder as to the importance of ensuring proper compliance, up-front, with all applicable labor laws, including particularly, but by no means limited to, the FLSA, SCA and Davis-Bacon Act as to federal construction work. All contract workers, no matter how denominated or classified, must be paid at least the specified minimum wages and benefits, and the employer must keep accurate and complete payroll records.

Moreover, the large backpay amounts show how quickly even small hourly underpayments can mount up when made to a large number of employees. Importantly, the agreed resolutions here, while substantial, do not reflect the likely significant additional costs and time burdens incurred in the two separate WHD investigations, much less the debarment risk inherent in the determined SCA violations. In addition, once the pending new regulations implementing President Obama’s Fair Pay and Safe Workplaces Executive Order 13673 kick-in later this year, the offending firm will have to report these violations in connection with each future federal bid, offer or quote for the next three years, and the various agencies will be required to consider the company’s labor laws compliance record in determining the company’s responsibility for future awards.