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‘Where is the Money?’ US Workers Left Unpaid After Federal Contractor Wage Theft

Augusta Wood worked in IT support under a federal contractor for the Department of Veterans Affairs in Florida for about four years. It seemed like a safe job. Instead, Wood experienced thousands of dollars in wage theft and is one of more than 40 workers for a federal contractor who have been trying since 2015 to recoup their pay. They have yet to receive any of it.

Workers say the contractor – Consultis – and government agencies have deflected responsibility to one another for over $500,000 in back pay owed to workers for this contract alone.

“I ended up with over $42,000 in wage loss,” said Wood. “Despite the Department of Labor ruling in our favor, we didn’t get the money.”

Wood said the hardship that followed the wage theft pushed her and her partner to leave Florida, where her family had lived for generations. “I sold my car. We left our families. We ended up moving to Colorado,” Wood said.

Wage theft of workers employed by federal contractors under the Service Contract Act is not uncommon. In 2021, the US Department of Labor’s wage and hour division recovered more than $48m in back wages owed to more than 21,000 workers on federal contracts. Federal contractors found to have conducted wage theft are supposed to be excluded from receiving new contracts for three years but enforcement is lax, according to a government survey.

An October 2020 report by the Government Accountability Office noted that in the previous five years, the Department of Labor conducted more than 5,000 compliance investigations resulting in over $220m in back wages for workers, but only 60 contractors were excluded from receiving federal contracts for three years. A 2017 report by the Center for Public Integrity found many federal contractors who commit wage theft continue receiving lucrative federal contracts.

In some cases, there also appears to be a reluctance within government agencies to right wrongs for fear of causing issues elsewhere, according to emails obtained by the Guardian.

A US Department of Labor wage and hour division investigator in Orlando, Florida, wrote to the Department of Veterans Affairs (VA) in October 2015, noting 44 current and former employees were not paid correct wages and fringe benefits while working for Consultis from September 2013 to October 2015.

The investigator noted in the letter that the General Services Administration (GSA), a federal agency that supports and assists in managing the functions of other federal agencies, claimed it could not add the wage determinations retroactively to the contract “because it could possibly impact other contracts with undeterminable repercussions across the US”.

Another document from the labor department noted the GSA claimed “it would result in great confusion and potentially cause many claims against the government” if the agency added required wage determinations to the contract retroactively.

Joey Mendoza, a former IT contractor with Consultis at the Department of Veterans Affairs, first discovered he and his co-workers were being underpaid in 2014 while looking through the contract after workers were notified of a possible furlough. Mendoza initially filed the complaint with the Department of Labor. He is owed more than $29,000 plus interest in back pay.

I want that money because it’s owed to me, because I worked hard for it. I worked overtime. I did everything I was supposed to do

Joey Mendoza, former IT contractor with Consultis

“I want that money because it’s owed to me, because I worked hard for it. I worked overtime. I did everything I was supposed to do,” said Mendoza, who said he struggled financially while working for about $14 an hour. “Financially, that set me back so far. I’m still dealing with the waves of it, the repercussions. Eight years dealing with this. What kills me is I can’t get a single person to explain to me why it’s OK: why the VA put in writing we are owed this money, Consultis put in writing we are owed this money, the civilian board of contract appeals put in writing we are owed this money, the Department of Labor put in writing we are owed this money. So where is the money?”

In a May 2016 letter, Consultis’s chief financial officer, Bob Hageman, wrote a letter to the Department of Veterans Affairs outlining the back wages owed to 30 workers totaling over $560,000 plus interest.

Desiree Yates, one of the affected workers who is still owed more than $37,000 plus interest in unpaid wages, provided emails and documents from the Department of Labor that noted the Department of Veterans Affairs deferred responsibility to the GSA to modify the contract. Despite the outstanding unpaid wages, the VA renewed the contract with a different contractor that used Consultis as a subcontractor.

“The problem is there’s really nothing in place to ensure that we get paid that back pay, the lost wages, because essentially what happened was Consultis was getting paid an amount to pay us, and they were pocketing a lot of it,” said Yates. “We’ve filed report after report to the GSA saying we still haven’t been paid. Because of the type of contract, it’s actually their responsibility. They should have ensured that Consultis paid us properly and they should be paying us and then work it out with Consultis. They keep telling us to go to Consultis.”

Yates said after the Department of Labor investigation, their wages were fixed under a new contract, but the workers have not received any back pay for the wages they are still owed.

“Because we’ve been fighting this for so long, it’s become like a second job to me to be constantly spending time on this email after email,” added Yates. “We would like the GSA held accountable, to hold the contract company up to par; we want insurance to ensure they’re going to do better in the future, we want to get paid back what we’re owed and we want interest on that because of the insane hoops they’ve put us through.”

Consultis, the General Services Administration and the Department of Veterans Affairs did not respond to multiple requests for comment.

“Consultis, the prime contractor and responsible party, was informed of the retroactive incorporation of the applicable wage determinations but did not agree to pay the affected workers the wages owed,” a spokesperson for the Department of Labor said in an email. “The Wage and Hour division attempted to find other federal funds to withhold but found no active contracts with Consultis. Therefore, no federal funds were available for withholding or cross-withholding. Due to these factors, funds could not be recovered for the affected employees.”

Another worker who is still owed thousands of dollars in wages said due to the statute of limitations when the initial complaint was filed, they are probably owed much more in back pay for years of underpaid work for a federal contractor. They requested to remain anonymous because they still work for a government agency.

“Unfortunately, I’ll never see any of that money,” they said. “What strikes me the most in this situation is that a federal agency found for the class; they said the class was wronged, that we were underpaid. But yet, at the same time, everybody escapes accountability. They’ve all pointed fingers at each other and said, ‘Well, it’s not my responsibility.’”

Source : The Guardian