Wage and Hour Division (WHD)
U.S. Department of Labor
TAMPA, Fla. -- U.S. Department of Labor Administrative Law Judge C. Richard Avery has ordered that Ares Group Inc. be debarred from bidding on or receiving any federal contracts due to violations of the McNamara-O'Hara Service Contract Act uncovered through an investigation by the department's Wage and Hour Division.
In 2007, Alexandria, Va.-based Ares Group was awarded a contract from the U.S. Department of Homeland Security to supply armed security guards for federal buildings in northern and central Florida, which required the hiring of more than 200 employees. Investigators from the Wage and Hour Division's Tampa District Office found that Ares owed these employees back wages totaling $195,196, primarily for failing to pay for training time prior to the commencement of the contract, regardless of whether the employees were terminated before the contract started, and also for failing to pay correct wage rates and required health and welfare fringe benefits.
At the final conference with the Wage and Hour Division in May 2008, the company agreed to make back wage payments as calculated; however it failed to actually pay all outstanding back wages until March 2009, over ten months after the final conference. Even after full back wage payments were made, two new investigations opened in 2009 and 2010 by the Wage and Hour Division regarding the same contract found additional incorrect payments to Ares employees. Ares agreed to pay the back wages owed in both cases.
In his order, Judge Avery found that Ares exhibited culpable conduct by deciding unilaterally that it was not required to compensate individuals for pre-commencement training without seeking guidance from the Department of Labor and by its repeated failure to pay the correct rate of pay and health and welfare fringe benefit rate. Accordingly, Judge Avery found that the company should be debarred from holding federal contracts for a standard period of three years, as requested by the Labor Department.
Ares has requested a review of the decision before the Labor Department's Administrative Review Board. The debarment order will not go into effect pending the review. Among its current contracts, Ares Group Inc. provides security services to the U.S. District Court for the Northern District of Florida and the U.S. District Court for the Central District of Illinois.
"Ares has a history of complaints by employees alleging noncompliance with federal contracting rules dating back to 2004, and the Wage and Hour Division has found evidence of the company intentionally underpaying employees in violation of the Service Contract Act," said Oliver Peebles III, the Wage and Hour Division's regional administrator in Atlanta. "Taxpayers have a right to expect that federal contractors, who are paid with taxpayer dollars, will comply with the law, and the Labor Department will not allow companies to abuse that trust. This ruling underscores the message that the department will use all enforcement tools available, including debarment, to ensure a level playing field. Honest companies must not be placed at a competitive disadvantage for playing by the rules and paying their workers full and fair prevailing wages."
The Labor Department was represented in this case by its Regional Office of the Solicitor in Atlanta.
The Service Contract Act requires contractors and subcontractors performing services on prime contracts with the federal government and the District of Columbia 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. Information about the McNamara-O'Hara Service Contract Act is available at http://www.dol.gov/whd/govcontracts/sca.htm.
Accessible and searchable information on enforcement activities by the U.S. Department of Labor is available at http://ogesdw.dol.gov/search. For additional information on the Service Contract Act and other federal laws administered by the Wage and Hour Division, call the division's toll-free helpline at 866-4US-WAGE (487-9243) or visit its website at http://www.dol.gov/whd.
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