This Act requires Federal contractors to pay their “blue collar” workers one and one-half times their basic pay rates for all hours worked over 40 hours during a work week.
The Act applies to all contractors working on Federal service and construction projects exceeding $100,000, as well as any Federally-assisted construction contracts where the government is not the direct contracting agency. Exemptions from the Act include contracts for intelligence agencies, transportation, or open market materials purchases. It also does not apply to projects where the government is only guaranteeing a loan or providing insurance.
The compensation aspects of this Act are enforced by the Wage and Hour Division of the Employment Standards Administration. An intentional violation of this Act can be punished by a fine of up to $1,000 or six months imprisonment. In addition, a violation of the overtime provisions of the Act can result in a $10 penalty per employee for each day that overtime is not paid. The government can assure that these penalties will be paid by withholding them from the contract payments being made to a contractor. Employees can also sue their employers for any unpaid overtime amounts. In addition, intentional violation of this Act can result in the termination of all Federal contracts and a contractor’s exclusion from receiving future federal contracts for up to three years.