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News Release

U.S. Department of Labor Investigation Results in Ammunition Manufacturer Paying $678,296 in Back Wages and Benefits to 63 Employees

MILAN, TN – American Ordnance LLC – based in Middletown, Iowa – has paid $678,296 in back wages, overtime, and fringe benefits to 63 employees after a U.S. Department of Labor's Wage and Hour Division (WHD) investigation found the employer violated provisions of the McNamara-O'Hara Service Contract Act (SCA), and the Contract Work Hours and Safety Standards Act (CWHSSA). American Ordnance LLC is an ammunition manufacturer for the U.S. military performing work at the Milan Munitions Plant in Milan, Tennessee.

WHD investigators found the manufacturer failed to segregate work subject to SCA requirements performed by its subcontractor, Jabezco Group Inc., and failed to include SCA requirements in their contract. Failure to include those requirements resulted in that subcontractor failing to pay its employees hourly rates that met or exceeded the required rates for each classification of work performed. The subcontractor also subsequently failed to pay proper vacation, holiday, and health and welfare benefits as required by the applicable collective bargaining agreements.

Investigators also found American Ordnance LLC failed to pay accurate overtime rates based on applicable prevailing wage rates when employees worked more than 40 hours in a workweek.

"Contractors that bid on government contracts should be aware of and must adhere to all applicable laws when paying employees," said Wage and Hour Division District Director Nettie Lewis, in Nashville. "We provide a number of tools to help employers understand and comply with the labor requirements on government contracts. Our education and enforcement work in this area levels the playing field for all contractors who perform work for the government."

The SCA 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.

For more information about the FLSA, SCA, CWHSSA, and other laws enforced by the Division, contact the Division's toll-free helpline at 866-4US-WAGE (487-9243) or visit the Division's web site. The Division also offers a search tool which allows users to determine if you are owed back wages collected by the Division.

Wage and Hour Division
October 1, 2018
Release Number
Contact: Eric R. Lucero
Phone Number
Contact: Michael D'Aquino