An Annual Update to Civil Money Penalties Under the Contract Work Hours and Safety Standards Act and the Walsh-Healey Public Contracts Act.
“Sign, sign, Everywhere a sign;
Blockin' out the scenery Breakin' my mind;
Do this, don't do that Can't you read the sign?
- The Five Man Electrical Band
Under the Contract Work Hours and Safety Standards Act (“CWHSSA”) and the Walsh-Healey Public Contracts Act (“PCA”), the Department of Labor (“DOL”) has the right to assess Civil Money Penalties (“CMP”) on employers who violate the acts. Under CWHSSA, the government requires employers to pay their covered employees time and a half for all hours worked in excess of 40 per work week. The PCA requires employers to pay prevailing minimum wages, overtime, and regulates who they can and can’t employ (such as children). The interesting part about the CMPs which are categorized as “liquidated damages” is that these penalties are owed to the government rather than the employees that was underpaid.
These liquidated damages little as $10 dollars per day in 2015. This meant that the employer would pay $10 in fines per day per employee to the government for every violation. But, as a result of the Inflation Adjustment Improvement Act of 2015, the fines have shown a dramatic increase. A sort of catch-up adjustment was implemented for liquidated damages assessed under CWHSSA and PCA. $10 per day per employee became $25 effective August 1, 2016. See 29 CFR § 5.8(a) and 41 CFR § 50-201.3(a). There were no increases 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. Now, after 2020 and 2021 showed no adjustment, DOL published new regulations that have increased the penalty from $27 to $29 for violations starting on or after January 15, 2022.
The Inflation Adjustment Act requires agencies to adjust the levels of civil monetary penalties for inflation no later than January 15th of each year. See https://www.dol.gov/agencies/whd/government-contracts/cwhssa. The inflation in the United States we are currently seeing is reflected in a 7.4 percent increase in the liquidated damages.
Notably, 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 challenges.
For more information on Civil Money Penalties and the maximum fines per violation, visit the DOL website here: https://www.dol.gov/agencies/whd/resources/penalties. This website is updated annually.