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August 19, 2003
Labor Dept. Sues Contractor for Unpaid Fringe Benefits

The U.S. Department of Labor has filed suit before an administrative law judge against S3 LTD and owner William Casanova for alleged violations of the McNamara-O'Hara Service Contract Act. The administrative complaint seeks to recover $1,976,571 in fringe benefits for 1,451 workers and to prevent the company and William Casanova from obtaining federal contracts for a period of three years.

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The legal action follows an investigation conducted by the U.S. Labor Department's Wage and Hour Division, which concluded that the company failed to pay service employees the fringe benefits required by the contract and federal law, including severance pay, vacation pay, paid sick leave and health and life insurance.

S3, with offices in Virginia Beach, Va. and California, had a contract with the U.S. Fleet and Industrial Supply Center to provide logistical, material and support services to United States military installations and other federal agencies on the East and West Coasts in October 1997.

The McNamara-O'Hara Service Contract Act covers contracts entered into by federal agencies where the principal purpose of the contract is to furnish services in the United States through the use of "service employees." It requires that every federal service contract in excess of $2,500 contain a wage determination reflecting wages and fringe benefits prevailing in the locality or contained in the collective bargaining agreement of the predecessor contractor.

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