CH Inc. has agreed to pay 35 employees $268,899 in fringe benefits and overtime back wages following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found that the contractor violated provisions of the McNamara O’Hara Service Contract Act and the Contract Work Hours and Safety Standards Act in its performance of work on a contract with the Federal Bureau of Prisons.

The investigation found that CH Inc. failed to pay required fringe benefits of up to $3.59 per hour to any employee they considered a part-time employee on the contract, in violation of the SCA. SCA makes no distinction, with respect to its compensation provisions, between temporary, part-time and full-time employees. Such fringe benefits are required for all employees on covered contracts, for all hours paid up to 40 hours per week. The division also found violations of CWHSSA when the company failed to properly calculate and pay overtime rates for hours worked beyond 40 in a workweek.

Council Bluffs-based CH Inc. holds the contract with the Federal Bureau of Prisons to provide employees, such as security guards, food service workers and case managers to a federal residential re-entry facility in Council Bluffs. The company has agreed to pay the back wages found due in full and to comply with the SCA and CWHSSA in the future.

The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates, including prospective increases, contained in a predecessor contractor’s collective bargaining agreement. Requiring prevailing wages on these contracts protects local contractors from being underbid by those from other areas who may otherwise be able to recruit and bring in less expensive labor. It benefits local employees and local economies and supports good, local middle-class jobs.

The CWHSSA applies to federal service contracts and federal and federally assisted construction contracts over $100,000. These require contractors and subcontractors on covered contracts to pay laborers and mechanics employed in the performance of the contracts one and one-half times their basic rate of pay for all hours worked over 40 in a workweek. The overtime premium charged to employers for hours worked by an employee beyond 40 per week encourages them to hire more employees on these contracts, thus creating jobs, rather than working fewer employees longer hours.