Inflation is taxation without legislation.

--Milton Friedman 

Pursuant to the Inflation Adjustment Improvement Act of 2015, in mid-January every year, the Government publishes a notice in the Federal Register adjusting civil money penalties (“CMPs”) to account for the inflationary forces playing out over the prior year. This year the inflation adjustment was just a whopping 7.745% rounded to the nearest dollar, so the impact is substantial. The U.S. Department of Labor (“DOL”) thus announced on January 13, 2023,  the new CMPs due under the Fair Labor Standards Act (“FLSA”), the  Contract Work Hours and Safety Standards Act of 1962, (“CWHSSA”) and the Walsh Healey Public Contract Act (“PCA”). These are penalties are paid to the Government and deposited in the U.S. Treasury as miscellaneous receipts. They are different than the back wages due employees.

This change in the CMPs left minor child labor violations under the FLSA with a CMP of $15,138  while more serious violations including death could lead to CMPs of $68,801 to $137,602. General FLSA CMPs were also raised to $2,374. These penalties can be assessed against repeated or willful violators of the minimum wage or overtime requirements.

Similarly, penalties under CWHSSA and the PCA also went up. The new CWHSSA and PCA penalty are both $31 per worker per day. The CWHSSA penalty applies to not paying the proper overtime wages. Sometimes the penalty is more than the overtime wages due. The PCA penalty applies for employing minors under age 16 or prisoner labor on US Government supply contracts. These increases are pursuant to All Agency Memorandum (“AAM”) no. 229 issued by DOL on February 19, 2019 to implement the liquidated damages “catch-up” increase in CMPs assessed under CWHSSA and the PCA. Under CWHSSA, employers working on US Government 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.

If you want to know more about the new changes in the CMPs, see https://www.dol.gov/agencies/whd/resources/penalties and https://www.federalregister.gov/documents/2023/01/13/2023-00271/federal-civil-penalties-inflation-adjustment-act-annual-adjustments-for-2023.