Eric Leonard Discusses Court Decision Upholding Debarment of FEMA Contractor for Wage Violations

February 26, 2016

Eric W. Leonard, a partner in Wiley Rein’s Government Contracts Practice, was quoted by Bloomberg BNA’s Federal Contracts Report in a February 24 article about debarment proceedings for a Federal Emergency Management Agency (FEMA) contractor. According to the article, the U.S. District Court for the District of Columbia recently concluded, in Tri-County Contractors Inc. v. Perez, that the U.S. Department of Labor (DOL) properly debarred a FEMA contractor for three years for underpaying employees and failing to maintain employee records.

Mr. Leonard said debarments based on such facts typically are difficult to challenge. Personnel at DOL’s Wage and Hour (W&H) Division “have always stressed how critical it is for service contractors to maintain accurate records of actual hours service employees have worked under the Service Contract Act,” he noted. “They also have stressed the importance of contractors cooperating with investigators and taking prompt corrective actions when DOL W&H finds violations.”

This decision also stands for the proposition “that a contractor generally can challenge a debarment decision in D.C. federal courts even if the period of debarment has ended, and that future reputational damage appeared to suffice to avoid a finding of mootness,” Mr. Leonard said. “This is important for contractors challenging debarments since the appeal process can be lengthy.”

Mr. Leonard added that “the impending issuance of the Fair Pay and Safe Workplaces rule and associated disclosure requirements to presumably cover actions like debarments may result in more and more contractors seeking to challenge debarment decisions, given the potential long-term impact the debarment could have — impact that could stretch far beyond the three-year debarment term.”