Withholding from or suspension of contract payments
Contracting officers must withhold or suspend payments to ensure compliance with labor standards and protect employee wages when violations are suspected or confirmed.
Overview
FAR 22.406-9 outlines the procedures for withholding or suspending contract payments when violations of labor standards, such as wage underpayments or noncompliance with the Contract Work Hours and Safety Standards statute, are suspected or confirmed. The regulation empowers contracting officers to withhold funds from current contracts, including those across agencies, and details the process for adjusting, releasing, or disposing of withheld funds. It also covers the suspension of payments if a contractor or subcontractor fails to comply with labor standards, and specifies how withheld funds should be managed, including restitution to employees and the handling of liquidated damages. The section ensures that employees are compensated for wage violations and that contractors are held accountable for compliance with labor standards statutes.
Key Rules
- Withholding from Contract Payments
- Contracting officers must withhold estimated wage underpayments and liquidated damages if violations are suspected or at the Department of Labor's request.
- Suspension of Contract Payments
- Agencies must suspend payments if contractors or subcontractors fail to comply with labor standards until violations are resolved or sufficient funds are withheld.
- Disposition of Withheld/Suspended Payments
- Withheld funds are used to pay employees and cover liquidated damages; excess funds are returned to the contractor, but only with Department of Labor approval if requested or disputed.
Responsibilities
- Contracting Officers: Must withhold or suspend payments, adjust withholdings after investigations, follow DOL guidance for restitution, and ensure proper disposition of funds.
- Contractors: Must comply with labor standards and resolve any violations promptly to avoid payment withholdings or suspensions.
- Agencies: Must enforce withholding/suspension, coordinate with DOL, and follow agency procedures for liquidated damages.
Practical Implications
- This section protects workers' rights to proper wages and enforces contractor accountability.
- Contractors risk delayed payments and reputational harm if labor standards are violated.
- Common pitfalls include failing to resolve violations quickly or misunderstanding the process for releasing withheld funds.