Logistics organisation California Cartage Company has been ordered to pay $3,573,074 (£2,728,363.58) in wages and benefits to 1,416 employees after the US Department of Labor Wage and Hour Division (WHD) ruled that it had violated federal contract law.
WHD investigators found the employer had failed to pay prevailing wages and required health and welfare benefits to employees under the McNamara-O'Hara Service Contract Act (SCA). This law requires the US government to ensure fair wages for workers when it buys services from private contractors.
The SCA requires contractors and subcontractors to pay service employees 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.
The California Cartage Company's breach relates to port drayage services of cargo selected for inspection by US Customs and Border Protection at the Port of Los Angeles/Long Beach, for which the employer had received federal funds.
The WHD also found California Cartage Company failed to apply SCA clauses and wage determination to contracts for five subcontractors, which resulted in those subcontractors failing to pay required prevailing wages and fringe benefits to their employees as well.
WHD district director Kimchi Bui said: "No contractor receiving federal funds to provide services to the government should gain an economic advantage by paying workers below the wages and fringe benefits required by applicable law.
"Workers must be paid what they are legally owed for their work. Violations can be avoided, and we encourage employers to reach out to us for guidance."
California Cartage Company was unavailable for comment at the time of publication.
