“Working 9 to 5, not a way to earn a living.”

—Bachman Turner Overdrive.

            From 1892 to 1940, a series of statutes were passed, known as the Eight Hour Laws.  They required the payment of time and a half for hours worked in excess of eight per day, but did not provide for overtime pay for hours in excess of 40 per week.  Thus, a contractor could work his employees 56 hours per week (eight hours a day, seven days a week) without paying any overtime under the Eight Hour Laws.  The various Eight Hour Laws overlapped each other in their coverage of workers.  While wage underpayments could be withheld from amounts due the contractor, such withheld sums could not be paid to the employees.  33 Comp. Gen. 496 (1954).  These shortcomings of the Eight Hour Laws eventually resulted in new legislation.

            The replacement for the Eight Hour Laws was the Contract Work Hours and Safety Standards Act, Title I of the Work Hours Act of 1962, (“CWHSSA”) Pub. L. No. 87-581, 76 Stat. 357 (codified at 40 U.S.C. § 327-332), which became effective August 13, 1962.  CWHSSA covers overtime pay for certain employees under Government contracts or Government-financed contracts.

            The applicable regulations have been codified at Part 5 of Title 29 of the Code of Federal Regulations.  Revised regulations were published in the Federal Register on April 29, 1983.  48 Fed. Reg. 19541.

1.              General Requirements

            Under CWHSSA, employers on Government contracts or Government financed contracts have to pay time-and-a-half for all hours 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. § 328.  The 1986 DOD Authorization Act has deleted the former requirement that overtime be paid for hours worked in excess of 8 hours per day.  Exempted are contracts for transportation, for transmission of intelligence, for purchase of supplies, materials or articles ordinarily available in the open market, and work required to be done in accordance with the Walsh-Healey Public Contracts Act, 41 U.S.C. § 35-45.  40 U.S.C. § 329(b).  CWHSSA covers both service and construction contracts.  The Federal Acquisition Streamlining Act (“FASA”) increased the threshold for CWHSSA to contracts of $100,000 or more.  Contracts for commercial items or services are exempt entirely from CWHSSA.  FAR § 22.305(g).

2.              Remedies for Violations

            For decades, violators of CWHSSA were subject to “liquidated damages” of $10 for each man day in which the required overtime compensation was not paid, 40 U.S.C. § 332.  The penalty for this infraction has increased from $10 to $25 per day per event (per worker) effective August 1, 2016. Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (P.L. 114-74, Section 701).  The penalties  accrue to the U.S. Treasury, and not to the workers. They are accessed by the Contracting Officer, and not DOL.

Sums equivalent to underpayments of required back wage compensation may be withheld from amounts due the contractor from the United States and are to be paid directly to the underpaid employees by the Comptroller General.  40 U.S.C. § 3330(a).  For construction contracts, if the amount withheld is insufficient to pay the amounts due the employees, the employees can sue the contractor (and his payment bond surety) for the balance under the Miller Act.  40 U.S.C. § 330(b).  (Payment bonds are required on all Government construction contracts of $25,000 or more by the Miller Act, 40 U.S.C. § 270a-270e.)  No similar private right of action exists for employees on service contracts.

3.              Employees Covered

          Coverage under the CWHSSA extends to:

every laborer and mechanic employed by any contractor or subcontractor in his performance of work in any [federal or federally-assisted] contract . . . .

40 U.S.C. §§ 328(a), 329(a).  It thus provides overtime coverage primarily to employees who work at jobs that would be covered by either the Davis-Bacon Act or the SCA.  (Clearly, “blue collar” jobs are contemplated).

4.              Computation of Overtime

            Overtime under CWHSSA is computed on the employee’s “basic rate of pay.”  40 U.S.C. § 328.  The overtime premium is equal to one-half the straight time compensation paid.  The basic rate of pay is the equivalent of the “regular rate” under the FLSA.  29 C.F.R. § 5.15(c).  Accordingly, weekly salaries and even “Belo”-type plans are permissible.

            Under the Davis-Bacon Act, the employer can discharge his obligation to pay the prevailing wage and fringe benefits by any combination of cash and fringe benefits, even if the cash payment is less than the amount of the prevailing minimum wage.  See 29 C.F.R. § 5.31.  However, the “basic rate of pay” on which the overtime pay is based cannot be less than the prevailing minimum wage rate applicable to the contract.  29 C.F.R. § 4.55.

6. Conclusion

CWHSSA investigations are conducted by the DOL. They tend to run in tandem with Service Contract Act or Davis-Bacon Act investigations. CWHSSA covers blue collar service employees and all covered construction workers. So CWHSSA is a focus of DOL investigatory efforts, especially since it collects monies for the government. Additionally, the CWHSSA appeal process is very one-sided, but more on that for another day.