Government paid $18 billion to companies that cheat employees

Karla Quezada worked at the Ronald Reagan building’s food court in Washington, D.C., and says she was cheated out of overtime pay. After speaking out, she says, her hours were cut so severely she had to quit.   (Photo credit: Maryam Jameel/Center for Public Integrity)

For 11 years, Karla Quezada assembled sandwiches at the Subway in the food court of the Ronald Reagan Building and International Trade Center, a sprawling complex in downtown Washington, D.C., owned by the U.S. General Services Administration.

She routinely worked more than 40 hours a week, with no overtime pay. She worked holidays, also without extra compensation. Her paychecks took a hit whenever she stayed home sick.

“I knew it was a federal building, but since everyone else was paying low wages, too, I just figured that’s how it was supposed to be,” Quezada, 40, said in a recent interview at her home in Arlington, Virginia.

Actually, that’s not how it’s supposed to be.

Despite laws that prohibit employers from cheating their workers, each year, thousands of contractors enriched by tax dollars skirt federal labor laws.

U.S. Department of Labor data show that upwards of 70 percent of all cases lodged against federal contractors and investigated by the department since 2012 yielded substantive violations.

But many of these violators go on to receive more federal contracts. An Obama administration effort to change that practice was derailed in late March by President Donald Trump.

The Center for Public Integrity examined a subset of 1,154 egregious violators — those with the biggest fines, highest number of violations or most employees impacted — included in the Labor Department’s Wage and Hour Division enforcement database and cross-referenced them with more than 300,000 contract records from the Treasury Department.

The study found that between January 2015 and July 2016:

  • Federal agencies modified or granted contracts worth a total of $18 billion to 68 contractors with proven wage violations. Among them: health-care provider Sterling Medical Associates, Cornell University and Corrections Corporation of America
  • Of all agencies, the U.S. Department of Defense employed the most wage violators — 49, which collectively owed $4.7 million in back pay to almost 6,200 workers. The department paid those 49 contractors a combined $15 billion.
  • Violations by the 68 contractors affected some 11,000 workers around the country — about the same number of people who moved to D.C. in 2016.

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