Labor Department to bar company that stiffed its employees from working with the government

Federal contract workers at a rally in 2014. CREDIT: AP Photo/Molly Riley

In July, Restaurant Associates, which contracts with the federal government to serve food to members of Congress in the capitol building, agreed to pay its employees more than $1 million in back wages after the Department of Labor (DOL) found that it had illegally underpaid them. Now the DOL wants to make sure the company never works for the government again.

As a federal contractor employing service sector workers, Restaurant Associates had to adhere to the McNamara-O’Hara Service Contract Act (SCA), which requires companies to pay employees at least as much as the prevailing wage in the area where they perform the work. And because Restaurant Associates’s $5.25 million contract was more than $100,000, it also had to pay time-and-a-half when workers put in more than 40 hours a week.

The DOL’s finding that it failed to pay adequate wages and overtime means that the company violated the SCA, which is grounds to be barred from all future federal contracts. So the agency has initiated debarment proceedings against the company, and if successful, it and its principal officer Dick Cattani will be put on a list of ineligible contract bidders for three years.

“Doing business with the federal government is a privilege and not a right,” Oscar L. Hampton III, the DOL’s regional solicitor in Philadelphia, said in a statement. “Federal contractors should conduct their business in accordance with the highest standards and comply with the law by paying their workers the wages to which they are legally entitled.”

The issue of inadequate pay for the workers who serve members of Congress rose to prominence when they began staging a series of strikes and protests over the past four years. According to a 2013 report, the federal government, through its contractors, is one of the largest low-wage employers in the country, more than Walmart and McDonald’s combined. These workers have been highlighting how little they make and calling on President Obama to take executive action. While they have demanded to be paid at least $15 an hour, Obama issued an order raising pay to $10.10 an hour and also made it harder for companies with bad labor track records to get contracts.

Both of these action could be undone by the Trump administration, however. His pick for DOL secretary, Andrew Puzder, is an opponent of higher wages. Meanwhile, Republican lawmakers have tried to pass measures that would make it easier for contractors to get away with violating labor laws.