LOS ANGELES (AP) — The nation's largest private prison company, Corrections Corp. of America, has paid more than $8 million in back wages and benefits to current and former employees guarding federal inmates at a prison in California City, officials with the U.S. Department of Labor said Tuesday.
The payments came after an investigation found that the federal prison subcontractor underpaid 362 employees at the California City Correctional Center under the terms of its contract, where pay rates are established by law, according to federal officials.
The company disputed the findings and said it had not violated any laws but was paying its employees under the terms of a pre-existing contract.
"This is about the U.S. Department of Labor wanting to retroactively apply a wage standard that wasn't part of the original contractual agreement," company spokesman Jonathan Burns said in a statement.
Officials with the Labor Department, however, said that over a period of years employees were paid 30 to 40 percent less than they were supposed to be paid, said Eduardo Huerta, assistant director of the department's wage and hour division.
Many employees recouped more than $30,000 in back pay, benefits, overtime and holiday pay, officials said, and had worked at the lesser pay rate for up to five years.
The facility houses federal inmates being detained by the U.S. Marshal and federal immigration authorities, as well as state inmates. The back wages applied only to CCA employees working with federal inmates.
Corrections Corp. of America will seek a retroactive cost increase for the contract to absorb the additional wages and benefits, Burns said.
"We greatly value our employees and the important work that they do to keep our communities safe and secure," he said.
The company also wasn't making the required contributions to health and life insurance and retirement accounts, Huerta said. The investigation found record-keeping violations under the Fair Labor Standards Act, include inaccurate recording of breaks, lunches and overall hours worked.
"If somebody was supposed to be making $30 an hour, they were making $20 an hour instead," said Huerta.
"The people that get these federal monies from a federal agency to get one of these contracts have to abide by the wage rates."
Corrections Corp. of America — the fifth-largest prison system in the nation — has come under scrutiny before.
In Kentucky, it paid $260,000 last week to settle claims that it denied overtime to shift supervisors and forced them to work extra hours.
In Kansas, CCA and a group of collections officers, case managers and clerks settled in 2009 in federal court over allegations of unpaid overtime. CCA agreed to pay a maximum of $7 million but did not acknowledge fault in the case.
Idaho, which had contracted with the company for its Boise prison, began the process of returning operations of the facility to state control.
The facility was sued and plagued by accusations of violence, gang activity and understaffing after the private prison contractor took it over.
Corrections Corp. of America operates detention centers for federal, state and local governments in 20 states in the U.S. and houses nearly 80,000 inmates at 60 facilities.
California City is about 110 miles northeast of Los Angeles.