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Contract Work Hours and Safety Standards Act Update

Civil Money Penalty Inflation Adjustments

On November 2, 2015, President Obama signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 to advance the effectiveness of civil money penalties and to strengthen their deterrent effect. Outdated penalties are a problem because civil penalties are less effective when they do not keep pace with the cost of living. Penalties deter violations of the important laws that we enforce, which not only result in safer, more productive workplaces, but also in a more level playing field for responsible employers who have to compete with the minority who try to save money by evading the law. That is why this law modernizing many penalties that have long lost ground to inflation is critical.

The law directs agencies across the federal government to adjust their penalties for inflation each year in January. Additionally, it directs all agencies to issue a “catch up” penalty adjustment, effective August 1, 2016. Congress capped the “catch up” increase at 150 percent of the current penalty to ensure that these increases are reasonable and manageable.

Below is a table that reflects the adjustments for Contract Work Hours and Safety Standards Act (CWHSSA) that have occurred since the 2015 law was passed. For more information, see adjustment law and rules.

Type of Violation Statutory Citation CFR Citation Maximum Civil Monetary Penalty before 8/1/2016 Maximum Civil Monetary Penalty after 8/1/2016
(1) Failure to pay laborers and mechanics at a rate not less than one and one-half times their basic rate of pay 40 USC 3702(c) 29 CFR 5.8(a) and 29 CFR 5.5(b)(2) $10 $25

Contract Work Hours and Safety Standards (CWHSSA)

This Act imposes liquidated damage (LD) assessments and is typically made by HUD or by the local contracting agency (i.e. Public Housing authorities, Tribally Designated Housing entities (TDHE), Community Development agencies, etc.) to a contractor for failure to pay overtime compensation for workers who work over 40 hours in a 7-day workweek. Overtime compensation is typically at 1 ½ times the regular pay (in some areas it may be higher). When a contractor fails to pay overtime, then the agency should assess the contractor liquidated damages, now at $25 per workday, per person, where the worker was permitted to work overtime without being properly compensated. CWHSSA is imposed on contracts greater than $100,000 in value. Labor violations on contracts less than $100,000 may be captured under the Fair Labor Standards Act, which is enforced by the Department of Labor. NOTE: This description of liquidated damages is for violation of labor laws and is not the same as LD for failure of the contractor to complete the project on time.

HUD form(s) where the CWHSSA statement appears:

  1. HUD form 5370 (see page 15); General Conditions for Construction Contracts (for Public Housing/TDHE programs)
  2. HUD form 4010 (see page 4); Federal Labor Standards Provision (for Community Development programs)
  3. HUD form 92554M (see page 8); Supplemental Conditions of the Contract for Construction (for Multifamily Housing programs)