The Labor Department said Tuesday that 674 Capitol Hill cafeteria workers would receive more than $1 million in back wages, or about $1,500 per person, after an investigation found that their employers failed to meet wage guidelines for federal contractors.
The department’s Wage and Hour Division Administrator David Weil said that Restaurant Associates, a New York-based company, and its subcontractor, Personnel Plus, improperly classified the workers, denying them the minimum hourly rate required by the government as well as overtime pay. The workers were food service employees in Capitol Hill’s various cafeterias. The department is considering whether to bar the contractors from future contracts with the government.
“Employers given the opportunity to earn a profit by providing a service to the government at a cost to the taxpayer have a legal obligation to follow the letter of the law, especially when it comes to paying their workers. Workers in the restaurant industry are among the lowest-paid workers in our economy. Most struggle to afford life’s basic expenses and pay their bills; they shouldn’t have to deal with paychecks that don’t accurately reflect their hard work and the wages to which they are legally entitled,” Weil said.
The companies were charged under the McNamara-O’Hara Service Contract Act, a 1965 law that sets wage rates for federal contractors and subcontractors.
A representative of Restaurant Associates could not be reached for comment.
The announcement follows recent moves by the Obama administration to crack down on companies, such as contractors, for violations by companies they work closely with. One of the administration’s key tools has been expanding the legal definition of “joint employer.” That is when one company can be held liable for a different company’s violations of worker protection laws on the grounds that the two businesses are so intertwined that both have effective control over the same workforce.
Last year, the National Labor Relations Board ruled, the main federal labor law enforcement agency, ruled in a case called Browning-Ferris that a contractor can be held liable for violations by a subcontractor. The same standard was adopted by the Labor Department in January. The department’s wage and hour division said that the “growing variety” of business models in the economy had created “evolving employment scenarios” that required it to update its rule on joint employment.
“As the workplace continues to fissure, and as employment relationships continue to become more tenuous and murky, we will continue to identify where joint employment applies and to hold all employers responsible,” Weil said in January.
Business groups have called on Congress to rein in the administration on the joint employer issue. Some Republican lawmakers agree, but those efforts have gained little traction.
