The U.S. Department of Labor’s Wage and Hour Division has ruled that government contracting laws must be adhered to. The Division handed down a ruling that Lange Trucking Inc. must restore $1,979,779 in 401(k) pension benefits to 515 drivers working on U.S. Postal Service contracts. An investigationby the Department of Labor revealed that Lange Trucking was in violation of the McNamara-O’Hara Service Contract Act (SCA).
The SCA requires that every contract by the U.S. government of more than $2,500 for services furnished in the U.S., the contractors and subcontractors must pay the wages and fringe benefits to their employees performing the services. For failure to pay the required fringe benefits to its drivers, Lange Trucking, its president, vice-president, secretary-treasurer, and vice-president of finance, will not be eligible to enter into service contracts with any government agency for three years.
Lange Trucking specifically did not fully fund the 401(k) plans of the drivers. The company had been investigated several times previously. Lange was acquired by Minnesota-based Hoovestol Inc., but Lange did pay $500,000 of the unpaid benefits. Hoovestol voluntarily agreed to pay the remaining $1.48 million in benefits and cooperated fully with the Wage and Hour Division during the investigation. The new owners have also corrected record-keeping procedures, implemented a plan to set up timely payments, and posted wage determinations at its work site to make information available to employees about government contract benefits.
U.S. Secretary of Labor Thomas E. Perez stated, “Contractors that do business with the federal government have an obligation to abide by the law and pay their employees the required contractual rates and benefits. Restoring the pension benefits of these workers and debarring this employer illustrate the department’s commitment to vigorous enforcement of government contracting laws and helps level the playing field for law-abiding employers.”