DoL Recovers 401(k) Assets for Former Security Guards

November 23, 2011 ( - The U.S. Bankruptcy Court for the District of Maryland has approved a global settlement that allows the U.S. Department of Labor to recover $7,968,744 in back wages, fringe benefits and 401(k) plan assets for more than 2,000 security guards formerly employed by USProtect Corp., a defunct company that provided security services for federal buildings across the country.

The decision resolves the Labor Department’s actions against the company related to violations of the McNamara O’Hara Service Contract Act and the Employee Retirement Income Security Act.  

Investigations were conducted by the department’s Wage and Hour Division and its Employee Benefits Security Administration when the company could not meet its payroll. Investigators found that the company failed to pay hundreds of employees for their last 2 1/2 weeks of work, and many employees were not paid the prevailing wage for their geographic areas or fringe benefits. The company also failed to remit employee salary deferral contributions to their 401(k) plan accounts.   

The settlement between the federal government and a bankruptcy trustee allows for a total recovery of $7,968,744, of which $6,951,977 was recovered for the employees’ wages and cash fringe benefits. The remaining $1,016,767 was recovered for the employees’ 401(k) accounts.   

USProtect Corp. was contracted to provide security services for the Social Security Administration, the U.S. Department of Justice, the U.S. Army, the U.S. Air Force, the U.S. Department of Homeland Security, the Court Services and Offender Supervision Agency for the District of Columbia, the Naval Facilities Engineering Command and the District of Columbia Superior Court. Contracts covered services provided in California, Delaware, the District of Columbia, Louisiana, Maryland, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Texas and the Virgin Islands.  

The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing on federal service contracts in excess of $2,500 to pay service employees no less than the wage rates and fringe benefits found prevailing in the locality for the classification of work that they perform.