For 2020 CWHSSA and PCA Overtime Penalties Remain $27 a Worker a Day But Now Bite Much Harder Than In The Past
“Everything worthwhile, everything of any value, has its price. Everything anyone has ever wanted has come neatly wrapped up in its penalties.”
The U.S. Department of Labor (“DOL”) has been fiddling around with the civil money penalties (“CMPs”) due under the Contract Work Hours and Safety Standards Act of 1962, (“CWHSSA”) and the Walsh Healey Public Contract Act (“PCA”). These are penallties which get paid to the Government and deposited in the U.S. Treasury as miscellaneous receipts. They are different than the back wages due employees.
Under CWHSSA, employers working on US Government contracts or Government financed contracts have to pay time-and-a-half for all hours worked in excess of forty per week to all “laborers and mechanics, including watchmen and guards” working on such contracts, or on subcontracts thereunder. 40 U.S.C. §3702. The 1986 DOD Authorization Act long ago deleted the former requirement that overtime be paid for hours worked in excess of 8 hours per day. CWHSSA covers both blue-collar service and construction contract workers. The PCA covers overtime for workers on U.S. Government supply and material contracts.
DOL issued All Agency Memorandum (“AAM”) no. 229 on February 19, 2019 to implement the liquidated damages “catch-up” increase in CMPs assessed under CWHSSA and the PCA. https://iae-wdol-sam-gov.s3.amazonaws.com/WDOL_MEMORANDUM/AAM229.pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Date=20200109T171337Z&X-Amz-SignedHeaders=host&X-Amz-Expires=9&X-Amz-Credential=AKIAY3LPYEEX2ODW4KXE%2F20200109%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Signature=00ac1e9fbe8f8df512c2591540ab0aa067609e1c24dc3cbe738fb05669039880. The Inflation Adjustment Improvement Act of 2015 required this action. As a result, a catch-up adjustment was implemented for the amount of liquidated damages assessed under the CWHSSA and PCA increased from $10 to $25 effective August 1, 2016. See 29 CFR § 5.8(a) and 41 CFR § 50-201.3(a). There were no increases were made to these liquidated damage amounts in January 2017. See 82 Fed. Reg. 5373 (Jan. 18, 2017). However, on January 3, 2018, the liquidated damage amounts were increased from $25 to $26, and the penalty subsequently increased from $26 to $27 on January 24, 2019. Exactly what penalty is due depends not just on when the violation occurred, but also when the Government assesses the penalty.
The AAM includes a summary table to help compute the CMPs, since they are a changing target now every year:
Violation Occurred On or Before November 2, 2015 and Penalty Assessed At Any time: Pre-adjustment penalties of $10 per day.
Violation Occurred: On or before November 2, 2015 But Penalty Assessed On or Before August 1, 2016: Pre-adjustment penalties of $10 per day.
Violation Occurred After November 2, 2015 But Penalty Assessed Between August 1, 2016 and January 2, 2018 : Initial post-adjustment penalties of $25 a day.
Violation Occurrred After November 2, 2015 But Penalty Assessed After January 2, 2018 (penalty updated updated annually): Subsequent post-adjustment penalties of $26 a day for 2018 and $27 a day for 2019.
The Inflation Adjustment Act requires agencies to adjust the levels of civil monetary penalties for inflation no later than January 15th of each year. DOL reports that the penalty remains at $27 for the year 2020. See https://www.dol.gov/agencies/whd/government-contracts/cwhssa.
Accordingly, as you can see, even though the overtime violation may have occurred years ago, the employer can be assessed the higher daily CMP sum since the penalties are being assessed in 2020.
Notably, sometimes these CMPs can exceed the back wages due. The standard in CWHSSA for assessing CMPs is whether the contractor “disregarded its obligations.” Contractors who wish to dispute the assessment of CWHSSA or PCA civil money penalties should contact their legal counsel. There are some strict timeliness rules for any such challeges.