The U.S. Bankruptcy Court for the District of Maryland has approved an international settlement allowing the U.S. Department of Labor to recover $7,968,744 in back wages, fringe benefits and 401(k) plan assets on behalf of more than 2,000 security guards who were once employed by USProtect Corp.
This settlement puts an end to the Labor Department's actions against the company related to violations of the McNamara O'Hara Service Contract Act and the Employee Retirement Income Security Act.
The DOL’s Wage and Hour Division and its Employee Benefits Security Administration conducted the investigation when the company failed to meet its payroll. Investigators discovered that the company did not pay hundreds of employees for their last two and a half weeks of work, and many employees were not paid the prevailing wage based on their geographic areas or fringe benefits. The company also did not remit employee salary deferral contributions to their 401(k) plan accounts.
The settlement allows for a complete recovery of $7,968,744, of which $6,951,977 is to be applied to the employees' wages and cash fringe benefits. The remaining $1,016,767 is for the employees' 401(k) accounts.
"I am very pleased that former USProtect employees will receive the back wages, fringe benefits and retirement assets they earned and are owed," says Secretary of Labor Hilda L. Solis. "This settlement represents a remarkable recovery for a bankruptcy proceeding and is due to the coordinated effort of the Department of Labor's agencies, Department of Justice attorneys, the bankruptcy trustee and various federal contracting agencies."
USProtect Corp. was under contract to provide security services for the Social Security Administration, U.S. Department of Justice, U.S. Army, U.S. Air Force, U.S. Department of Homeland Security, Court Services and Offender Supervision Agency for the District of Columbia, Naval Facilities Engineering Command and the District of Columbia Superior Court. The areas under the contract are located in California, Delaware, the District of Columbia, Louisiana, Maryland, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Texas and the Virgin Islands.
Based on the McNamara-O'Hara Service Contract Act, contractors and subcontractors providing services on federal contracts in excess of $2,500 must pay service employees no less than the wage rates as well as fringe benefits found prevailing in the locality for the classification of work that they perform.
The Baltimore District Office of the Wage and Hour Division and the Washington District Office of the Employee Benefits Security Administration led the investigations, and the bankruptcy issue was managed by the Justice Department along with attorneys from the Labor Department's Regional Office of the Solicitor in Arlington, Va.