(Please see an attorney before you even THINK about becoming a whistleblower. A whistleblower is an inside person who tells the authorities about wrongdoing.)
The main rules which were ignored were:
A person working on your premises, using your equipment, is almost always considered an employee. The penalty for the company could be that the company has to pay payroll taxes, unemployment insurance, etc. for all persons deemed to be employees, rather than consultants. This can include interest and penalties.
If an employee is not actually managing anything, the employee may NOT be exempt from overtime payments. In California, the company could owe three times the unpaid overtime.
If your employee is an exempt employee and works over 40 hours a week, you have to divide his salary by the hours he actually works, before you charge the federal government for his time.
READ YOUR CONTRACT. If you are doing business with the federal government, your contract should have a page or two of small print, most of which refers to laws, regulations and/or presidential proclamations. At the very least, your attorney needs to read all of the laws, regulations and/or presidential proclamations and tell you what you need to do to comply.
Sometimes the penalty for disobeying these laws, rules and regulations is that a company can lose the right to contract with the federal government. Sometimes all they do is refuse to pay you for your work.
DO NOT SAY THAT I DID NOT WARN YOU!
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