For many employers, wage and hour compliance seems straightforward—pay employees accurately and on time. However, the U.S. Department of Labor's (DOL) Wage and Hour Division routinely investigates employers for violations of the Fair Labor Standards Act (FLSA), and many findings result from common administrative mistakes rather than intentional misconduct. 

Enforcement Spotlight 

The U.S. Department of Labor continues to aggressively enforce the Fair Labor Standards Act. In Fiscal Year 2025 alone, the Wage and Hour Division recovered more than $259 million in back wages for nearly 177,000 employees nationwide—the highest annual recovery since 2019. Common violations included unpaid overtime, employee misclassification, and failure to compensate employees for all hours worked.  

While many investigations involve large employers, small and mid-sized businesses are frequently investigated after an employee complaint. The DOL does not limit investigations to Fortune 500 companies—any employer covered by the Fair Labor Standards Act may be subject to an audit. 

Government contractors may face additional wage compliance risks. In addition to the Fair Labor Standards Act, many federal contractors must comply with prevailing wage requirements under laws such as the Davis-Bacon Act or the McNamara-O'Hara Service Contract Act (SCLS). Timekeeping errors, employee misclassification, or improper overtime calculations can create contractual issues in addition to DOL wage and hour liability.  

For government contractors, where contract compliance and accurate labor reporting are already under increased scrutiny, maintaining sound wage and hour practices is essential. 

1. Misclassifying Employees as Exempt from Overtime 

One of the most common compliance issues involves incorrectly classifying employees as exempt from overtime. Paying an employee a salary alone does not make them exempt from the FLSA's overtime requirements. Most exemptions require employees to satisfy both a salary basis test and a duties test. Positions that have evolved over time—or employees whose responsibilities have changed—should be reviewed periodically to ensure they continue to qualify for an exemption. 

Tip: Conduct periodic exemption reviews, especially following promotions, reorganizations, or significant job duty changes. 

2. Failing to Pay for All Hours Worked 

The FLSA generally requires employers to pay nonexempt employees for all hours they are "suffered or permitted" to work. This may include work performed before or after scheduled shifts, responding to emails after hours, completing mandatory training, or performing work during meal periods. Remote and hybrid work environments have increased the likelihood of employees performing work outside their scheduled hours. 

Tip: Establish clear policies for recording all hours worked and train supervisors not to allow off-the-clock work. 

3. Incorrectly Calculating Overtime 

Overtime calculations can become more complicated when employees receive nondiscretionary bonuses, shift differentials, commissions, or multiple hourly rates. These forms of compensation often must be included when determining an employee's regular rate of pay for overtime purposes. Errors frequently occur when payroll systems or manual calculations fail to account for these additional earnings. 

Tip: Periodically review payroll calculations and ensure overtime is computed using the employee's correct regular rate of pay. 

4. Poor Timekeeping Practices 

Accurate time records remain one of an employer's strongest defenses during a wage and hour investigation. Missing, incomplete, or altered time records can make it difficult to demonstrate compliance. Employers should ensure employees accurately record all hours worked and that supervisors understand they may not modify time records without a legitimate business reason and appropriate documentation. 

Tip: Conduct periodic audits of timekeeping records and promptly investigate missing punches, recurring edits, or unusual patterns. 

5. Assuming Federal Law Is the Only Requirement 

Many states have wage and hour laws that provide greater protections than federal law. Depending on where employees work, employers may need to comply with state-specific requirements related to overtime, meal and rest breaks, final pay, minimum wage, or employee recordkeeping. For employers with remote employees or operations in multiple states, compliance should be evaluated under both federal and applicable state law. 

Tip: Review wage and hour policies whenever expanding into a new state or hiring remote employees. 

Helpful DOL Resources 

The U.S. Department of Labor provides several excellent compliance resources for employers: 

• Fair Labor Standards Act (FLSA) Handy Reference Guide 

  
  

• Overtime Pay Requirements Fact Sheet #23 

  
  

• Wage and Hour Division Overtime Resources 

  
  

• Overtime Fact Sheets Library 

How C2 Essentials Can Help 

Maintaining wage and hour compliance requires more than accurate payroll processing. Proper employee classification, timekeeping practices, supervisor training, and periodic HR audits all play an important role in reducing compliance risk.

C2 Essentials works with employers to review exempt classifications, evaluate wage and hour practices, assist with policy development, and help clients navigate federal and state employment law requirements. If your organization has questions regarding overtime eligibility, employee classification, or wage and hour compliance, contact your HR Team before a small issue becomes a costly investigation. 

The U.S. Army recently announced a significant initiative to strengthen America's defense industrial base by partnering with private industry to develop domestic critical mineral processing facilities on Army installations. While the announcement focuses on large industrial projects, it may also create meaningful business opportunities for small and mid-sized government contractors throughout the defense supply chain. The effort originated with March 2025 executive order aimed at increasing the ability to mine and produce rare Earth elements for manufacturing in the United States. 

The announcement was published by U.S. Army Public Affairs on June 25, 2026 and explains that the Army has conditionally selected four companies to negotiate long-term Enhanced Use Leases to design, finance, build, and operate critical mineral processing facilities on Army installations. The projects are intended to strengthen the domestic defense industrial base, reduce reliance on foreign processing, and enhance supply chain security. 

Why Critical Minerals Matter 

Critical minerals—including rare earth elements, lithium, graphite, and boron—are essential components in many defense systems and advanced technologies. They are used in products ranging from military vehicles and communications equipment to drones, batteries, precision weapons, radar systems, and aerospace components. 

Historically, much of the world's processing capacity for these materials has been concentrated outside the United States. Federal policymakers have increasingly emphasized building domestic production and processing capabilities to improve supply chain resilience and support national security. 

To help accomplish this goal, the Army has announced conditional agreements with several companies to design, finance, construct, and operate mineral processing facilities on underutilized Army property. The facilities are expected to support the production of materials that are vital to future military readiness. 

Opportunities Beyond the Prime Contractors 

Although the companies awarded these projects will serve as prime contractors or facility operators, history shows that projects of this size generate substantial subcontracting opportunities for businesses across many industries. 

Examples may include: 

• Construction management and general contracting 

  
  

• Civil, electrical, and mechanical engineering 

  
  

• Environmental consulting and permitting support 

  
  

• Industrial maintenance services 

  
  

• Safety and OSHA compliance consulting 

  
  

• Security services 

  
  

• Information technology and cybersecurity 

  
  

• Industrial automation and controls 

  
  

• Logistics and transportation 

  
  

• Equipment installation and maintenance 

  
  

• Human resources and workforce staffing 

  
  

• Training and technical documentation 

  
  

• Administrative and professional support services 

Many small businesses already supporting the federal government may find opportunities that align with their existing capabilities, even if they have no experience in mining or mineral processing. 

Preparing for Future Opportunities 

Government contractors interested in supporting these projects should ensure their business development efforts and compliance programs are current. 

Recommended steps include: 

• Maintain an active registration in the System for Award Management (SAM.gov). 

  
  

• Review and update capability statements highlighting relevant technical experience. 

  
  

• Ensure socioeconomic certifications (such as HUBZone, Woman-Owned Small Business, Veteran-Owned Small Business, or 8(a), if applicable) remain current. 

  
  

• Monitor procurement notices from federal agencies and prime contractors. 

  
  

• Build relationships with larger contractors that may be seeking qualified subcontractors. 

  
  

As these projects move from planning into construction and operations, additional procurement activity is expected over the coming months and years. 

Where to Look for Contracting Opportunities 

Government contractors should regularly monitor official procurement resources, including: 

• SAM.gov for federal contract opportunities 

  
  

• SBA SubNet for subcontracting opportunities with large prime contractors 

  
  

• The Department of Defense Office of Small Business Programs 

  
  

• Individual defense contractors' supplier registration portals 

  
  

Many large defense contractors also maintain supplier diversity and small business outreach programs where qualified subcontractors can register for future opportunities. 

HR Considerations as Growth Occurs 

C2 Essentials, as your HR and compliance partner, is here to support workforce planning for contractors as they pursue new defense opportunities handling:  

• Hiring and onboarding processes 

  
  

• Wage and compensation competitiveness 

  
  

• Multi-state employment compliance 

  
  

• Background screening procedures 

  
  

• Employee handbook updates 

  
  

• Safety training requirements 

  
  

• Benefit offerings that support recruitment and retention 

  
  

Expanding federal work often brings additional workforce compliance obligations that should be addressed early to avoid delays during contract performance. 

Final Thoughts 

The Army's investment in domestic critical mineral processing represents more than an infrastructure initiative—it reflects a broader effort to strengthen the U.S. defense industrial base and domestic manufacturing capacity. While only a handful of companies will develop the processing facilities themselves, the supporting ecosystem will likely involve hundreds of subcontractors providing construction, engineering, professional services, logistics, technology, and workforce support. 

For small and mid-sized government contractors, now is an excellent time to evaluate where your organization fits within this evolving supply chain. Preparing today can position your business to compete for future subcontracting opportunities as these projects move forward. 

On June 10, 2026, President Trump signed the Secure America Act (S. 2) into law following its passage by both the U.S. Senate and House of Representatives. The legislation provides approximately $70 billion in funding for immigration enforcement activities through September 30, 2029. 

While the law does not change existing immigration eligibility requirements, visa categories, or employment authorization rules, it significantly increases funding for federal immigration enforcement agencies, including U.S. Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP). 

For employers—particularly federal government contractors—the legislation serves as a reminder that immigration compliance remains an important business risk area. 

What Does the New Law Do? 

The Secure America Act allocates funding for: 

• Additional ICE and CBP personnel 

• Immigration enforcement technology and equipment 

• Detention and removal operations 

• Expanded partnerships between federal, state, and local law enforcement agencies 

• Enhanced compliance and enforcement activities 

Because the funding remains available through fiscal year 2029, employers should anticipate a sustained increase in immigration enforcement efforts rather than a short-term initiative. 

Potential Impact on Government Contractors 

Many small and mid-sized government contractors already operate in a highly regulated environment. While the Secure America Act does not create new employment eligibility requirements, increased enforcement resources could result in: 

• More I-9 audits 

• Increased worksite inspections 

• Additional requests for employment records 

• Greater scrutiny of federal contractor compliance practices 

• Increased enforcement actions against employers with deficient hiring records 

Organizations that employ foreign nationals under employer-sponsored visa programs should also ensure that visa-related documentation, job descriptions, payroll records, and work authorization records are accurate and up to date. 

Why Proper I-9 and E-Verify Compliance Matters 

Federal contractors subject to the Federal Acquisition Regulation (FAR) E-Verify clause are already required to verify employment eligibility through the E-Verify system for covered employees.

As part of C2 Essentials' onboarding process, newly hired employees complete their Form I-9 through the employee portal, and C2 administers E-Verify services for clients that are subject to federal E-Verify requirements. These processes help establish consistent employment eligibility verification procedures and support compliance with federal regulations. 

Looking Ahead 

The Secure America Act does not automatically change immigration laws or work authorization requirements. However, the substantial increase in enforcement funding signals that immigration compliance will remain a federal priority for the foreseeable future.

Government contractors that maintain strong hiring, onboarding, and recordkeeping practices will be better positioned to respond to audits, inspections, and compliance reviews should enforcement activity increase.