“Trees don’t grow to the sky.”

– German proverb

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 factor was 6.2222%, albeit down from a whopping 7.745% in 2023. But the impact remains substantial. Perhaps the Government actually wants and benefits from inflation, in creeping inflation adjustments to taxes and penalties. The U.S. Department of Labor (“DOL”) thus announced  for 2024 its new labor-related 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”). In so announcing, DOL said: “Outdated penalties are a problem because civil penalties are less effective when they do not keep pace with the cost of living.”

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. Back wages get paid to the workers. But the Government can and does collect and keep these CMPs from errant employers. And they can be significant, sometimes even more than the back wages when the violations are comparatively small. One reason to hire counsel and to defend against DOL back wage findings is to try and avoid the assessment of these CMPs.

This change in the CMPs left ordinary child labor violations under the FLSA with a CMP of $15,629, while more serious violations including death or serious injury could lead to maximum CMPs of $71,031, or even $142,062 if repeated or willful.  Penalties can be also assessed against repeated or willful violators of the child labor minimum wage or overtime requirements and these were raised to $2,451.

Similarly, daily penalties assessable under CWHSSA are up one buck a day per worker. The new CWHSSA penalty is $32 per worker per day, The CWHSSA penalty applies to not paying the proper overtime wages to construction workers and certain blue -collar service employees (i.e., laborers, mechanics or guards). 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. It is sometimes the case that the penalty is more than the overtime wages due. CWHSSA penalties often arrive in tandem with DOL back overtime wage findings under the Davis-Bacon Act and the Service Contract Act. Thus, it should be not be surprising that I have done some CWHSSA penalty appeals over the years.

The PCA penalty also went up a buck to $32. The PCA penalty applies for employing minors under age 16 or prisoner labor on US Government supply contracts. I have never been consulted about a PCA penalty case.

These increases are pursuant to All Agency Memorandum (“AAM”) no. 229 issued by DOL back  on February 19, 2019, to implement the liquidated damages “catch-up” increase in CMPs assessed under CWHSSA and the PCA.

If you want to know more about the new changes in the CMPs, see https://www.dol.gov/agencies/whd/resources/penalties.