The Labor Department announced Friday that it would move to prohibit the contractor in charge of Senate cafeteria workers from accepting federal contracts because its subcontractor underpaid 674 of those workers an estimated $1 million in wages.
“Doing business with the federal government is a privilege and not a right,” said Oscar L. Hampton III, regional solicitor in Philadelphia in a statement released by the department. “Federal contractors should conduct their business in accordance with the highest standards and comply with the law by paying their workers the wages to which they are legally entitled. The complaint underscores those principles, and was filed to ensure a fair and level competitive playing field for all federal contractors and a fair day’s pay for a fair day’s work for all those who perform work pursuant to federal contracts.”
The department’s Wage and Hour Division said in July that Restaurant Associates LLC, a New York company, and subcontractor Personnel Plus improperly classified the workers, denying them the minimum hourly rate required by the government as well as overtime pay. The workers were food service employees in Capitol Hill’s various cafeterias. The companies were charged under the McNamara-O’Hara Service Contract Act, a 1965 law that sets wage rates for federal contractors and subcontractors.
Restaurant Associates said it was “surprised and disappointed” about the debarment proceedings and said the decision was “unprecedented in these circumstances.”
“Restaurant Associates, which had no history of previous Service Contract Act violations, fully cooperated in the investigation. The company immediately paid all back wages owed and made all changes to pay practices going forward as requested by [the Department of Labor]. The company was in active negotiations with DOL to take extraordinary measures, above and beyond those required by the Service Contract Act, to ensure compliance in the future through an Enhanced Compliance Agreement with the department.”
The Labor Department’s announcement follows moves by the Obama administration to crack down on companies, such as contractors, for violations by other companies they work closely with. One of the administration’s key tools has been expanding the legal definition of “joint employer.” That is the legal term for when one company can be held liable for a different company’s violations of worker protection laws on the grounds that the two businesses are so intertwined that both have effective control over the same workforce. The department has said that the “growing variety” of business models in the economy had created “evolving employment scenarios” that required it to update its rule on joint employment.
