Huge federal contractor ‘failed’ to pay workers $100 million in wages, union says

By Danielle Paquette

One of the country’s largest federal contractors has been accused of underpaying about 10,000 workers who run help hotlines for public health insurance programs, including the Affordable Care Act marketplaces, by up to $100 million over the past five years, according to four complaints filed Monday to the Labor Department.

The complaint brought by the Communications Workers of America alleges General Dynamics Information Technology misclassified employees at call centers in Kentucky, Florida, Arizona and Texas to suppress their wages.

The union, which does not represent the workers, said the contractor hired or promoted workers into roles that require special training but paid them below government-set rates for the jobs they performed. The complaint covers the period since 2013, when GDIT started a $4 billion, 10-year contract with the Centers for Medicare and Medicaid Services.

GDIT said in a statement: “The company takes seriously our obligations under the Fair Labor Standards Act and Service Contract Act. Our call center employees are not represented by the Communications Workers of America. Similar to other federal contractors, the company is subject to routine compliance reviews and as with any notice received it will engage with the relevant parties including our employees and the Department of Labor.”

The CWA has previously filed four similar complaints about the contractor’s call centers, and those cases remain under investigation. (The New York Times first reported claims from a Mississippi center in January.)

The union said it filed the new complaints Monday after hundreds more workers stepped forward alleging they had been improperly classified and shortchanged.

“These folks are paid such low wages that this means an awful lot to them,” CWA president Chris Shelton said. “If they were paid what they were supposed to be paid, and they got these back wages, it would change their lives completely.”

The union said the call center employees’ duties and skills fit the description of more advanced staffers — “General Clerk II” or “General Clerk III,” as the government classifies the roles under the Service Contract Act.

The federal hourly rates for such jobs in Kentucky are set at $12.08 and $13.56. But GDIT paid most of the call center workers $10.52 an hour, the CWA alleged.

In 2017, GDIT had $15.3 billion in federal contracts, or 3 percent of all the public dollars paid to firms to handle work for the government. (The only larger recipients were Lockheed Martin and Boeing.)

The firm offers a broad range of services to government agencies, including health-care IT, cybersecurity and other computing tasks. On its website, GDIT says it built the first private cloud for the U.S. Marines.

Federal outsourcing has fluctuated over the past decade and dipped in 2013 under President Barack Obama, largely due to budget cuts and decreases in military operations, according to the National Contract Management Association, which tracks the spending. Outsourcing began to rebound in 2014, and analysts expect spending on contractors to increase under President Trump, who has pledged to pour more money into the nation’s armed forces.

The CWA’s complaint comes a month after Trump revoked regulations put in place by Obama that required federal contractors to report labor law violations from the past three years before starting a new project for a government agency.

The Trump administration considered the rule unnecessarily burdensome, while supporters of the 2014 action said it prevented firms with a history of abusing workers from winning taxpayer-funded contracts.

During Trump’s first year in office, the Labor Department’s Wage and Hour Division, which investigates wage-theft claims, recovered $270 million in back wages for more than 241,000 employees — the “second-highest amount ever recovered,” the agency tweeted last week.

Tanya Goldman, former senior policy adviser to the administer of Wage and Hour Division under Obama, said allegations of improperly labeling workers are increasingly common.

“More employers are misclassifying workers to reduce their labor costs,” said Goldman, now a senior policy analyst at the Center for Law and Social Policy, a national group that advocates for low-wage workers.

In 2016, hundreds of Senate cafeteria workers were awarded more than $1 million in back wages after the Labor Department determined two federal contractors, Restaurant Associates and Personnel Plus, had illegally underpaid them for six years. 

Alexander Passantino, who ran the Wage and Hour Division under President George W. Bush, said the Service Contract Act, which sets the minimum pay requirements for federal contractors, can confuse companies.

“There’s a lot of opportunity for contractors to make minor mistakes that have big impact,” he said.

Passantino advised firms to carefully study the federal wage requirements, since a relatively low-level worker who performed even one upper-rank duty would have to be classified in the more advanced job bracket.

“Even if you are 98 percent right,” he said, “that 2 percent can kill you.”

Kelly Grove, who has worked at GDIT’s call center in London, Ky., since 2016, was promoted after one year — going from reading basic scripts to counseling callers through complicated medical device questions — but stayed at her hourly wage of $10.52.

“It feels as if we don’t matter,” she said. “They want to put more work on us. But they don’t want to offer any more of an incentive for it.”

Her paychecks barely cover the bills, she said, and her two teenagers are on Medicaid.

“I work 40 hours a week,” she said. “Full time. I shouldn’t have to have my children on state insurance.”

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