Memorandum

To: Ike Casey, American Subcontractor’s Association

From: BrigliaMcLaughlin, PLLC

Date: 11/30/2015

Re: Wage and Hour regulations in DC, VA, and MD

Question Presented

Whether overtime regulations in the District of Columbia, Virginia or Maryland require payment of anything more than time and a half for laborers working on private contracts?

Brief Answer

              No, nothing within DC, VA, or MD’s overtime regulations requires payment of anything more than time and a half for laborers working on private contracts.

Overtime Regulations Governing Federal Contracts

Generally, employers in the District of Columbia, Maryland, or Virginia who contract with the Federal Government must comply with federal laws that set specific wage-hour standards for work performed on government contracts. There are four prevailing statutes governing overtime compensation for work performed on government contracts:

  • The Walsh-Healey Public Contracts Act. The Walsh-Healey Public Contracts Act requires payment of the prevailing minimum wage for straight-time hours, overtime pay of time and one-half an employee's basic rate for hours worked in excess of 40 in a workweek, and maintenance of sanitary and nonhazardous working conditions. This Act applies to firms that furnish the federal government with materials, supplies, articles, or equipment under contracts exceeding $10,000.
  • The Service Contract Act. The Service Contract Act applies to government contractors that furnish services to a federal agency under contracts exceeding $2,500. The Act requires employers to provide at least the minimum wages and fringe benefits prevailing in the locality for similar employment.
  • The Davis-Bacon Act. The Davis-Bacon Act requires contractors to pay mechanics and laborers prevailing wages and fringe benefits on federally funded construction contracts in excess of $2,000.

For the purpose of making wage determinations, the “prevailing wage” is defined as the wage paid to the majority (more than 50%) of laborers or mechanics in the classification on similar projects in the area. If there is no majority wage, a weighted average is used. Under the Davis-Bacon Act, prevailing minimum wages must be determined separately for each project. This procedure is different from that under the Walsh-Healey Act, in which a wage determination is made by an industry to apply to all contracts awarded in that industry.

In making wage determinations, the Secretary will include the prevailing hourly value of fringe benefits. Two basic types of benefits are counted in making prevailing hourly wage payments:

1. Trust or insurance funds. The cost of payments irrevocably made to a trustee or third person pursuant to a fund, plan, or program.

2. Payments from general assets. The anticipated costs of providing fringe benefits from the contractor's or subcontractor's general assets.

There are some conditions for including these costs in the prevailing hourly rate: the benefit plan or program must be financially responsible; it must be based upon an enforceable commitment; and it must be communicated in writing to the affected employees.

An employer generally must pay time and a half for overtime based on the basic hourly cash rate—the “regular rate”—but there is an exception. If the total cash and fringe rate is greater than the total determined by the Secretary, the employer may arrive at the basic rate like this: deduct from the total (cash plus fringe rate) the cost of the fringes actually being paid, or the amount determined by the Secretary to be the prevailing fringe rate, whichever is greater.

  • The Contract Work Hours and Safety Standards Act. The Contract Work Hours and Safety Standards Act requires federal government contractors to pay laborers and mechanics overtime compensation at a rate of one and one-half times their basic rates for each hour (or fraction thereof) worked in excess of 40 in a workweek. The Act's overtime requirements apply only to hours engaged in covered contract work.
  • The Copeland Anti-Kickback Act. The Copeland Anti-Kickback Act prohibits all contractors on federally funded construction projects from forcing any employee to "kick back" or rebate any portion of his or her entitled compensation.

Overtime Regulations in DC, MD, and VA for Private Contracts

Nothing within the DC, VA, or MD regulations alters the rate of overtime pay for workers working on private contracts, even if they also partially work on contracts governed by the above-summarized statutes.

Overtime Regulations in the District of Columbia

The District of Columbia's overtime minimum wage is $14.25 per hour, one and a half times the regular DC minimum wage of $9.50. If an employee earns more than the Virginia minimum wage rate, the employee is entitled to at least 1.5 times her regular hourly wage for all overtime worked. No exemptions to this regulation are provided for workers who also work on government contracts.

Overtime Regulations in Virginia

Virginia's overtime minimum wage is $10.88 per hour, one and a half times the regular Virginia minimum wage of $7.25. If an employee earns more than the Virginia minimum wage rate, the employee is entitled to at least 1.5 times her regular hourly wage for all overtime worked. No exemptions to this regulation are provided for workers who also work on government contracts.

Overtime Regulations in Maryland

Maryland's overtime minimum wage is $12.00 per hour, one and a half times the regular Maryland’s minimum wage of $8.00. If an employee earns more than the Maryland minimum wage rate, the employee is entitled to at least 1.5 times her regular hourly wage for all overtime worked. No exemptions to this regulation are provided for workers who also work on government contracts.

DC’s Earned Sick and Safe Leave Amendment Act

The revisions to DC’s Earned Sick and Safe Leave Amendment Act, taking effect on February 22, 2014, accelerate workers' ability to take paid sick leave from one year to 90 days after starting work, allow former temporary workers to claim credit for time worked with their employer on a trial basis, and require employers to reinstate accrued leave banks for individuals who transfer to work locations outside the District and return within one year.  The new law also extends paid sick and safe leave benefits to both temporary workers and tipped employees not covered in the original 2008 legislation.

The law will also dramatically increase the penalties for noncompliance, create a private right of action to enforce the law (in addition to the existing administrative remedy), and create a rebuttable presumption that any employee who experiences an adverse employment action within 90 days of taking leave or protesting an employer's administration of the leave policy has been the victim of retaliation.

Significantly, especially for employers with substantial turnover, the Act eliminates the existing 12 month and 1,000 hours of service threshold for leave eligibility.

The Act also expands the definition of "employer" to include any entity that directly or indirectly employs or exercises control over the wages, hours, or working conditions of employment, including through use of temporary workers or a staffing agency.

Wage and Hour Regulations in the DMV

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