DOL Issues Final Overtime Rule

News Release

WASHINGTON, DC – Today the U.S. Department of Labor announced a final rule to make 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act (FLSA)

"For the first time in over 15 years, America's workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans," Acting U.S. Secretary of Labor Patrick Pizzella said. "This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers."

"Today's rule is a thoughtful product informed by public comment, listening sessions, and long-standing calculations," Wage and Hour Division Administrator Cheryl Stanton remarked. "The Wage and Hour Division now turns to help employers comply and ensure that workers will be receiving their overtime pay."

The final rule updates the earnings thresholds necessary to exempt executive, administrative, or professional employees from the FLSA's minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses (and commissions) towards meeting the salary level. The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the Department is:

• raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
• raising the total annual compensation level for "highly compensated employees (HCE)" from the currently-enforced level of $100,000 to $107,432 per year;
• allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
• revising the special salary levels for workers in U.S. territories and in the motion picture industry.

The final rule will be effective on January 1, 2020.
The increases to the salary thresholds are long overdue in light of wage and salary growth since 2004. Nearly every person who commented on the Department's 2017 Request for Information, participated at listening sessions in 2018 regarding the regulations, or commented on the Notice of Proposed Rulemaking agreed that the thresholds needed to be updated for this reason.

The Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level. The Department also estimates that an additional 101,800 workers will be entitled to overtime pay as a result of the increase to the HCE compensation level.

A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rulemaking regarding a revised salary threshold. As the 2016 final rule was invalidated, the Department has consistently enforced the 2004 level throughout the last 15 years.

More information about the final rule is available at https://www.dol.gov/whd/overtime2019/.

The Wage and Hour Division's (WHD) mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the Nation's workforce. WHD enforces Federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the FLSA. WHD also enforces the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and a number of employment standards and worker protections as provided in several immigration related statutes. Additionally, WHD administers and enforces the prevailing wage requirements of the Davis Bacon Act and the Service Contract Act and other statutes applicable to Federal contracts for construction and for the provision of goods and services.

The mission of the Department of Labor is to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.


Agency: Wage and Hour Division
Date: September 24, 2019
Release Number: 19-1715-NAT
Contact: Emily Weeks
Phone Number: 202-693-4681
Email: weeks.emily.c@dol.gov

Federal Labor Law Posting Update

Federal Labor Law Posting Update Effective August 1st 

Effective August 1, 2016, employers must post new Fair Labor Standards Act (FLSA) and Employee Polygraph Protection Act (EPPA) postings. Penalty amounts listed on previous versions of posters are incorrect as of that date.

The Department of Labor has removed penalty amounts from the posters and has added a section about the rights of nursing mothers to the FLSA poster. Employers are required to post the revised versions of these federal posters.

Comply with the Mandatory Posting Change. Update your posters today!

Over the past two years, there have been almost 100 mandatory state posting changes. And there have been 32 mandatory state changes so far this year.

Fair Labor Standards Act Final Rule Released on Overtime

In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act, and to simplify and modernize the rules so they’re easier for workers and businesses to understand and apply. The department has issued a final rule that will put more money in the pockets of middle class workers – or give them more free time.

The final rule will:

• Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
• Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
• Strengthen overtime protections for salaried workers already entitled to overtime.
• Provide greater clarity for workers and employers.

The final rule will become effective on December 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.

For more information, see the Fact Sheet on this new rule.

Cox subcontractor End 2 End Communications failed to pay overtime to field employees

For 246 current and former employees of an Arizona cable installation company, a fair day's pay for a fair day's work is finally ringing true as their employer has pay them a total of $350,150 in back wages after failing to pay them overtime rates, as required by federal law.

An investigation of End 2 End Communications by the U.S. Department of Labor's Wage and Hour Division found the Gilbert-based company paid field technicians on a per-task basis for all installations without regard to the number of hours they worked. For example, a technician performing enough tasks to earn $500 was paid that amount — whether it took 30 or 50 hours. As a result, the employer failed to pay legally required overtime at time and one-half for each hour worked beyond 40 in a workweek, in violation of the Fair Labor Standards Act.

"Commonly, cable installation industry employers do not pay overtime to employees who work long hours in the field," said Eric Murray, director of the division's Phoenix District Office. "Employees paid on a piece-work basis are still entitled to overtime for hours worked beyond 40 per week. Those employers who don't pay workers correctly should take note of this case." 
 
End 2 End Communications, which does business as End 2 End Technologies, signed a consent judgment and agreed to ensure future compliance with federal labor law and pay the back wages. The company is a subcontractor for Cox Communications, the nation's third largest cable and broadband company. 
 
As part of its agreement, End 2 End has notified current and former employees of the case's resolution and redesigned the company's payroll system to ensure that all overtime-eligible employees receive pay stubs that properly record the wages paid for overtime hours worked. The employer also provided companywide training on the updated payroll system and on workers' rights under the FLSA and included a reference to the Wage and Hour Division in employee handbooks.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

DOL finds federal contractor misclassified workers as independent contractors

Employees due more than $135K in back wages

 

Employer name: Pegasso Construction & Floor Covering LLC

Investigation site: Office at 1746 Hazel Wood Drive, Marietta, Ga., 30067 and various jobsites including Ft. Gordon army base in Augusta, Ga.

Investigation findings: Investigators from the department's Wage and Hour Division found that Pegasso misclassified all of its workers as independent contractors. This unlawful practice resulted in violations of the Fair Labor Standards Act, the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act. The employer paid many of these workers on a weekly salary basis without regard for the number of hours worked. In some cases this salary, when divided by the number of hours worked, was not sufficient to meet the current federal minimum wage of $7.25 per hour. The contractor also failed to pay legally required overtime when these employees worked beyond forty hours in a workweek. As a result of these violations of the minimum wage and overtime provisions of the FLSA, Pegasso owes 151 employees back wages of $135,819. The firm also violated the DBRA and CWHSSA, which apply to the federally financed work done at Fort Gordon, by not accurately completing the required certified payrolls and by failing to pay overtime to one worker.

Resolution: Pegasso has agreed to future compliance with DBRA, CWHSSA and the FLSA and to pay the back wages. The employer has also put all workers on his payroll and will properly classify them as employees.

Quote: "Misclassification of employees as independent contractors cheats workers of wages and benefits to which they would otherwise be entitled to under the law, subsequently hurting our economy. It also leads to unfair competition because businesses that play by the rules operate at a disadvantage to those that don't. We will continue to work to ensure that workers receive the wages they have rightfully earned."
— Eric Williams, Wage and Hour Division Atlanta District Office Director

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Employer, staffing agency avoided paying overtime to temporary workers

More than 160 workers at a Philadelphia direct mail and printing company will receive $1.45 million in back wages and damages after a federal investigation found their employer and a staffing agency failed to pay overtime wages.

The U.S. Department of Labor's Wage and Hour Division conducted an investigation that resulted in a consent judgment, filed in U.S. District Court for the Eastern District of Pennsylvania, in which ICS Corp., New Century Integrity Corp. and its owner Hokkito Teddy agreed to pay 166 workers $725,583 in overtime wages, and an equal amount in liquidated damages. The investigation found ICS, New Century and Teddy employed the workers jointly.
 
"Temporary staffing agencies are valuable contributors to our economy," said Wage and Hour Division Administrator Dr. David Weil. "These agencies should not be used by employers to attempt to avoid their obligations under the law. Those who do will be held accountable, as today's action shows."

An investigation of direct mail processor ICS and two staffing companies it retained, found significant violations of the Fair Labor Standards Act. Violations included paying some workers in cash at straight time rates for all hours instead of paying overtime when employees worked beyond 40 hours in a workweek. Other employees, provided by New Century received checks for their first 40 hours from ICS. New Century then paid these employees in cash for their overtime hours at rates less than their regular pay. For example, a worker who received $13 per hour for his first 40 hours received $11 per hour in cash for overtime hours.
 
Investigators also found that Richy Services Inc., a second staffing agency used by ICS, failed to produce time and payroll records.

In addition to back wages and damages, the consent judgment requires ICS to appoint a compliance officer to ensure that the company maintains proper records, and pays temporary workers in compliance with the FLSA.
 
"Companies that use temporary agencies have a responsibility and duty to pay legally required wages," said Oscar Hampton, the department's Regional Solicitor in Philadelphia. "ICS violated the law when it failed to pay its workers the wages they earned. The company cheated its employees and sought an unfair business advantage over competitors that abide by the law."

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Affected employees receive liquidated damages, as well.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

San Antonio oil workers due back wages benefit from DOL enforcement effort

The latest investigation in the U.S. Department of Labor's Wage and Hour Division ongoing enforcement initiative, focused on the oil and gas industry in New Mexico and Texas, has helped 188 workers who will receive $157,000 in back wages after investigators found their employer violated the Fair Labor Standards Act.
 
Wage and Hour Division investigators in the San Antonio District Office found that Elite Production Services LLC failed to include the workers' bonus payments when calculating their rates of pay for overtime hours.

Since the initiative began in 2014, the agency has recovered more than $1.3 million owed to more than 1,300 workers.

"There is a misconception in the oil and gas industry that, because workers typically earn more than the minimum wage, they are being paid legally. That is not always the case," said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. "Employees must be paid properly for every hour worked, and employers need to calculate the total amount of pay to pay overtime correctly."

Employers must base overtime pay on an employee's total earnings, including their normal hourly rate and most bonus payments. For example, a $10-per- hour employee who works 50 hours and receives a $50 bonus in that workweek must be paid overtime based on a rate of $11 per hour. The FLSA excludes certain payments, such as reimbursement of work-related expenses, from the regular rate calculation.

Based in San Antonio, Elite Production Services provides on-site services throughout the drilling, completion and production cycles of oil fields. The company has agreed to correct the violations, comply in the future and pay the full amount of back wages.

The division's ongoing enforcement initiative has found overtime violations associated with various illegal pay practices, including the following:

• Improperly applying exemptions from overtime.
• Failing to include bonus payments made to employees when calculating overtime pay rates.
• Not paying for time spent working off-the-clock and before and after scheduled work shifts.
• Paying flat, daily shift rates without regard to how many hours the employee worked and without additional time and one-half pay for overtime.

Focused on this fast-growing industry, the initiative seeks to inform workers of their rights and ensure FLSA compliance among oil and gas companies and other related businesses including, but not limited to, trucking, lodging, haulers of water and stone, staffing service providers and other types of oil and gas supporting trades.

The division also is reaching out to employers and employer associations to provide them with compliance assistance information and to secure their cooperation in promoting industrywide compliance. Similarly, the division continues to conduct outreach to workers and community groups to inform them of the initiative and departmental services and to encourage employees to come forward with potential violations.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Federal enforcement effort finds Gulf Coast workers owed nearly $3.5 million in back wages

US Labor Department determines agencies illegally paid wages as per diem reimbursement

Six Gulf Coast staffing agencies have agreed to pay thousands of workers nearly $3.5 million in back wages after U.S. Department of Labor Wage and Hour Division investigators found part of their wages were mislabeled as "per diem" payments as reimbursement for expenses they never incurred.

Federal investigators found the agencies owed back wages to more than 3,000 workers – welders, electricians, pipe fitters, and other craftspeople – on maritime vessels and other oil and gas industry projects.

The investigations are part of an ongoing, multi-year initiative aimed at ending an illegal and alarming trend of employers labeling part of employee wages as per diem payments, often to avoid overtime, payroll taxes and other costs. Investigators are actively monitoring staffing agencies and other employers in the 1,600-mile Gulf Coast region for signs of this practice.

"Workers don't often complain about receiving per diem pay in place of regular wages because they believe they make more money being paid this way," said Wage and Hour Division Administrator David Weil. "The truth is these workers are losing out. They are not getting all of the short- and long-term benefits their employer owes them."

Companies break the law when they label part of a worker's regular wages as per diem expense reimbursement instead of wages to lower labor costs, avoid paying overtime, and avoid making payments toward federal and state taxes, workers' compensation, unemployment insurance and Social Security payments. By attempting to reduce these obligations illegally with this scheme, these employers also gain an unfair advantage over their competitors.

Per diem pay is intended as a way for employers to reimburse workers for lodging, meals and other travel expenses incurred on behalf of their employer.

Regular wages mislabeled as per diem cheat workers out of correct overtime wages. The payments may prevent workers from receiving full benefits in the event of a lay-off or workplace injury, and do not make full contributions toward a worker's Social Security benefits.

"Illegal per diem pay also hurts law-abiding employers, defrauds local, state and federal governments and cheats all of us who pay increased taxes as a result," Weil added. "Our division has dedicated the people and resources we need to stop this illegal pay practice on the Gulf Coast and throughout the nation."

The six companies found to be engaged in this practice in the latest investigations, the back wages found and the numbers of affected employees are as follows:

Employer Name	Back Wages	Employees
Masse Contracting	$909,667	1,257
Permanent Workers	$1,110,103	604
TREO Staffing	$511,877	428
Flexicrew Staffing	$94,496	195
Winston International	$390,361	490
Government Support Services, Inc. (GSI)	$474,938	289
TOTAL	$3,491,442	3,263

 
The initiative has also found troubling trends in the region's staffing industry in Alabama, Florida, Louisiana, Mississippi and Texas. Employers that use temporary staffing agencies may be liable if investigations find workers employed jointly by the staffing agency, and the business that contracted them, received illegal per diem payments. 
 
The FLSA requires that workers receive at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers must maintain accurate time and payroll records. Under the FLSA, employers who violate the law are liable for employees' back wages and an equal amount in liquidated damages. Affected employees receive liquidated damages directly.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Federal contractor pays nearly half of a million dollars in back wages

Guards denied prevailing wages, fringe benefits and overtime compensation

 

Employer name: PTS of America LLC doing business as Prisoner Transportation Services of America, Nashville, Tennessee

Investigation sites: PTS corporate headquarters, Nashville, Tennessee; Phoenix-Mesa Gateway Airport, Mesa, Arizona; Alexandria International Airport, Alexandria, Louisiana; and San Antonio International Airport, San Antonio, Texas.

Investigation findings: PTS of America LLC is a prisoner extradition company and an international transporter of detainees. The firm is a subcontractor of CSI Aviation Services Inc., a prime contractor for the U.S. Immigration and Customs Enforcement at several airports.

Wage and Hour Division investigators found that PTS violated the McNamara O'Hara Service Contract Act by failing to pay detention officers the required prevailing wages along with health and welfare fringe benefits. Additionally, the contractor violated the Contract Work Hours and Safety Standards Act by failing to properly calculate and pay overtime compensation to 77 employees. As a result of these violations, PTS owed 204 employees back wages of $430,788 under the SCA and an additional $14,927 in overtime back wages under CWHSSA. PTS also violated Executive Order 13495 by failing to offer jobs to three employees who were employed with the previous contractor. The order requires that workers on a federal service contract who would otherwise lose their jobs as a result of the completion or expiration of a contract be given the right of first refusal for employment with the successor contractor.

Resolution: CSI Aviation Services Inc. has paid a total of $445,715 in back wages, which is being distributed to 204 employees. Under the SCA, a contractor is held financially responsible for monetary wage violations committed by its subcontractors. PTS has agreed to future compliance with SCA, CWHSSA and the Fair Labor Standards Act. Additionally, the company agreed to rehire the three workers who were not offered jobs and paid back wages to them as part of separate administrative action by the National Labor Relations Board.

Quote: "Enforcement of the prevailing wage laws levels the playing field for all contractors and protects the wages of hard-working, middle-class American workers. The Wage and Hour Division will remain vigilant in its enforcement to ensure employees are paid in accordance with prevailing wage laws." said Nettie Lewis, director of the division's Nashville District Office. "We are pleased that we were able to successfully collaborate with the contracting agency and the prime and subcontractor to get these hardworking employees the wages they rightfully earned."

Source: DOL

BabyVision Inc. willfully violates federal wage and hour law, obstructs investigators and threatens employees

Poughkeepsie, New York, employer must pay more than $121K to 49 workers

A Poughkeepsie-based maker and distributor of baby apparel and accessories denied 49 workers overtime pay and then attempted to thwart federal investigators by hiding workers and threatening them if they spoke to U.S. Department of Labor Wage and Hour Division agents.

A yearlong federal probe found that BabyVision Inc. and the company's owners, Shreenivas Shah and Malti Shah, paid employees — including some not on the company payroll — straight time in cash and denied them the required overtime rate of one and one-half times their regular hourly wage when they worked more than 40 hours in a workweek. The owners also improperly classified some employees as exempt from overtime. Additionally, the Shahs failed to maintain proper payroll records.

The Shah's actions violated the federal Fair Labor Standards Act. As a result, the agency determined that the workers are due $121,349 in overtime back wages and liquidated damages.

Early in the investigation, the Shahs told employees they were to hide from investigators or provide false information. Workers were threatened with termination if they cooperated with investigators. The department responded by obtaining a temporary restraining order to protect the workers and their rights, allowing the review of the company's employment practices to continue.

A consent judgment was also secured by the department that ordered the Shahs to pay the back wages and damages, take extensive corrective action to prevent future violations and pay $13,744.50 in civil money penalties, given the willful nature of their violations.

"Deliberately denying employees their earned income is illegal, and it makes it harder for workers to care for themselves and their families," said Sonia C. Rybak, the Wage and Hour Division's assistant district director in the White Plains Area Office. "We will use every enforcement tool at our disposal to ensure a fair and level playing field for employers and fair pay for employee work."

"This case shows our commitment to take all necessary legal steps, including using restraining orders, to protect workers and their rights," said Jeffrey S. Rogoff, the department's regional solicitor of labor in New York. "The judgment here does more than secure back wages. It commits BabyVision and the Shahs to a comprehensive compliance plan that includes corrective action and worker education to keep these violations from happening again."

The compliance plan requires the defendants to use a time clock or another automated timekeeping device to record all hours worked by their employees accurately; prohibits employees from working off-the-clock; record employees' work hours and break time correctly; prominently post an employees' rights notice and poster in Spanish and English; and provide all current workers and new hires with a copy of the consent judgment in Spanish and English.

BabyVision designs and distributes baby apparel and accessories to retail stores and on the Internet under brands such as Luvable Friends, Hudson Baby, Yoga Sprout and Nurtria. It operates a warehouse and offices at 30 Firemens Way in Poughkeepsie. The underpaid employees prepared customer orders, loaded and stocked items in the warehouse and maintained the company's website.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Danica Group LLC underpaid workers, misclassified some as independent contractors

The U.S. Department of Labor has obtained a settlement by consent judgment that provides for the recovery of $1.42 million in back wages and liquidated damages for more than 300 current and former employees of four Long Island City plumbing and heating contractors. The related businesses are Danica Group LLC; Copper Plumbing & Heating LLC; Copper II Plumbing & Heating LLC; Copper III Plumbing & Heating LLC, and the owners are Thomas Andreadakis, Leonidas Andreadakis and Helen Andreadakis.

Investigations by the department's Wage and Hour Division found that the contractors violated the overtime and recordkeeping requirements of the Fair Labor Standards Act. Specifically, they paid employees straight time wages rather than time and one-half when employees worked beyond 40 hours in a workweek, and issued separate paychecks for the overtime hours from a petty cash account.

Additionally, they misclassified at least 25 employees as independent contractors, paying them a weekly salary that did not compensate the employees at time and one-half when employees worked beyond 40 hours in a workweek. The defendants also frequently paid many employees late, sometimes requiring workers to wait several weeks to be paid. Finally, they maintained incomplete and inaccurate payroll records.

"Hundreds of workers were denied their lawful pay when they were not paid promptly and correctly or were misclassified as independent contractors," said Dr. David Weil, administrator for the Wage and Hour Division. "The misclassification of employees as independent contractors deprives workers of wages and benefits they are entitled to under the law, thereby hurting our economy. It also leads to unfair competition because businesses that play by the rules operate at a disadvantage to those that don't."

Under the terms of a consent judgment entered with the U.S. District Court for the Eastern District of New York, the defendants will pay the workers $710,000 in back wages covering the time period between September 2010 and April 2014, and an equal amount in liquidated damages. The judgment also includes enhanced compliance provisions that will commit the defendants to taking effective steps to improve their payroll recordkeeping, ensure that employees are paid on time each week, reclassify as employees those who were previously misclassified as independent contractors and properly pay them.

"Underpaying and misclassifying employees as independent contractors are illegal and unacceptable actions. The Labor Department will pursue all available legal measures to ensure that workers are properly classified and compensated for their work," said Jeffrey Rogoff, regional Solicitor of Labor in New York. "If the defendants fail to adhere to the terms of the judgment, they could be subject to contempt sanctions by the Court."

The case was investigated by the Wage and Hour Division's New York City District Office and litigated by the Department's regional Office of the Solicitor in New York City.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Judgments end misclassification scheme, order workers paid and treated as employees

Investigation in Utah and Arizona secures wages and benefits for more than 1,000 construction workers who were wrongly classified

A nearly five-year federal investigation of illegal business practices by 16 defendants in Utah and Arizona has yielded $700,000 in back wages, damages, penalties and other guarantees for more than 1,000 construction industry workers in the Southwest, the U.S. Department of Labor announced.

Consent judgments put an end to an effort by the defendants — operating collectively as CSG Workforce Partners, Universal Contracting, LLC and Arizona Tract/Arizona CLA — to claim that their workers were not employees. The defendants required the construction workers to become "member/owners" of limited liability companies, stripping them of federal and state protections that come with employee status. These construction workers were building houses in Utah and Arizona as employees one day and then the next day were performing the same work on the same job sites for the same companies but without the protection of federal and state wage and safety laws. The companies, in turn, avoided paying hundreds of thousands of dollars in payroll taxes.

"Hiding behind deceptive legal partnerships to reduce wages owed to employees is wrong. We will not tolerate denying overtime and other employment rights to workers," said U.S. Secretary of Labor Thomas E. Perez. "We will combat schemes like these with every enforcement tool we have, including partnering with other federal and state agencies to ensure that workers are not misclassified as owners or members of LLCs or otherwise. Deceptions like these deny workers hard-earned wages, hurt families who depend most on those wages, and leave workers without important protections if they're injured on the job or laid off."

A misclassified employee — with independent contractor or other non-employee status — lacks minimum wage, overtime, workers compensation, unemployment insurance, and other workplace protections. Employers often misclassify workers to reduce labor costs and avoid employment taxes. By not complying with the law, these employers have an unfair advantage over competitors who pay fair wages, taxes due, and ensure wage and other protections for their employees. These illegal practices lower standards for all workers, especially in highly competitive markets and industries where employers try to reduce overhead, often at the expense of their workers.

"Employers who misclassify workers do not pay their fair share of payroll taxes, which cheats critical state and federal programs," Perez added. "The misclassification of workers shortchanges every single taxpayer by forcing them to pick up the slack for those who break the law."

The consent judgments are the result of a combined effort of the U.S. Department of Labor, U.S. Department of Justice and the state of Utah. The investigation began in southern Utah and then moved to Arizona after the passage of state legislation in Utah that required LLCs to provide workers' compensation and unemployment insurance to their "members." To avoid legal jeopardy in Utah, the defendants moved their operations south to Arizona.

Utah officials assisted the department by sharing information through the state's Worker Classification Coordinated Enforcement Council, an entity created by the state legislature to combat misclassification. Working together in the investigation and litigation, the U.S. Attorney's Office for the District of Utah and the U.S. Department of Labor presented findings to federal courts in Utah and Arizona. The courts, in turn, approved consent judgments on April 21 against the above-named companies and their respective owners.

The consent judgments require the defendants to:

• Pay $600,000 in back wages and liquidated damages to employees in Utah and Arizona and an additional $100,000 in civil penalties;
• Stop using limited liability companies to avoid Fair Labor Standards Act compliance;
• Treat themselves as "employers" and their current and future workers as "employees" under the FLSA;
• Comply with the FLSA's minimum wage, overtime, recordkeeping, and anti-retaliation provisions;
• Pay all applicable federal, state and local taxes; and
• Work with the department to identify those workers who were harmed by their misclassification scheme and determine proper individual payment of back wages.

"Legitimate independent contractors are valuable contributors to our economy, but those who deliberately misclassify actual employees as independent contractors — or partners — are a serious problem in many industries, especially in construction," said Wage and Hour Division Administrator David Weil. "We will continue to work together with other enforcement authorities to ensure a fair and level playing field for businesses, and fair and full pay for workers."

"We are pleased that this multi-agency effort has helped so many workers find justice, and produced a change in business practices in the regional construction industry," said M. Patricia Smith, U.S. Solicitor of Labor. "This kind of cooperation among state and federal law enforcement authorities will serve as a model for preventing misclassification and similar practices that deny workers' their wages and protections, and undermine law-abiding employers. The resolution of this case should send a strong message to any other employers, in any industry, contemplating such a scheme."
Workers who believe they might be owed back wages by the defendants can contact the Wage and Hour Division's Salt Lake City District Office at 801-524-5706, or Arizona District Office at 602-514-7100.

In a separate but related case, the department obtained a consent judgment against a major client of the Arizona defendants in this case. The judgement in the U.S. District Court for the District of Arizona against Paul Johnson Drywall, LLC, required the company to stop using the Arizona defendants' unlawful LLC business model and to pay $600,000 in back wages, liquidated damages and civil money penalties.

The Wage and Hour Division has aggressively expanded its efforts to combat employee misclassification in sectors where workers are especially vulnerable and violations are rampant. The department currently has 20 Memoranda of Understanding with states, including the Utah Labor Commission, through which it collaborates with states agencies to combat misclassification. More information is available on the department's misclassification Web page at http://www.dol.gov/misclassification.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

US DOL conducts compliance and enforcement initiative in Bay Area nursing homes, residential care facilities

$6.8 million in wages, damages recovered for more than 1,300 workers since 2011

A multiyear compliance assistance and enforcement initiative conducted by the U.S. Department of Labor’s Wage and Hour Division has found that Bay Area residential care facilities and nursing homes have underpaid more than 1,300 workers by millions of dollars.

The agency’s investigations concluded that between 2011-2014 minimum wage and overtime violations resulted in more than $6.8 million dollars in back wages and damages for the workers, money desperately needed to cover basic life expenses, such as rent, food, transportation and child care. Additionally, the initiative has served to level the playing field among the businesses by ensuring compliance with the federal Fair Labor Standards Act.

At the same time, the Wage and Hour Division has worked with business owners, worker advocacy groups and employees to educate the industry on basic federal labor law requirements. However, investigators continued to see widespread abuses where many employers took advantage of workers vulnerable to exploitation because they often don’t know their rights. As a result, they were subject to wage violations and retaliation.

“The hardworking men and women who take care of our relatives and friends need to be compensated fully for their time,” said Ruben Rosalez, regional administrator for the department’s Wage and Hour Division in San Francisco.
“We know that rewarding hard work with fair and full pay leads to happier and more productive workers. The trend of violations is therefore not only harming workers, but patients alike who might suffer with less quality care. We will continue to investigate and penalize employers who cheat their employees and gain an unfair competitive advantage over their law-abiding competitors at the expense of their workers.”

Working conditions in some residential care facilities can be difficult for many caregivers. Many of the facilities require employees to stay overnight on the premises to ensure round-the-clock care for patients. Despite the fact that they are on call assisting residents overnight, investigators found that some workers were not paid for such time, and some were denied adequate sleeping facilities and were forced to sleep on the floor. Such conditions can erode the quality of care patients receive.

Additionally, investigators found that employees who are paid hourly often worked 10 to 14 hours per day, six days per week, but were only paid for eight hours per day. Some workers were paid a flat weekly salary regardless of the hours they worked and were therefore denied time and one-half pay for hours worked beyond 40 per workweek. Employees were also threatened and harassed if they questioned their working conditions. Some employees were intimidated or retaliated against by their employers and were instructed not to cooperate with Wage and Hour investigators.

Investigations completed in the past year reflect the disturbing trend in violations. These include:

• The owners of Retirement Plus of San Carlos and four other Bay-Area facilities paid its caregivers as little as $5 per hour and misclassified one employee as an independent contractor. The employer paid more than $630,000 in minimum wage, overtime and damages to resolve the case.
• Lake Alhambra Assisted Living Center violated a protective order prohibiting retaliation against caregivers for cooperating with the investigation. Ultimately, the business paid $304,000 in back wages and damages to 32 caregivers, plus $25,000 in civil money penalties, as ordered in a consent judgment filed in the U.S. District Court for the Northern District of California. The order also included the appointment of an independent monitor to ensure the business pays its workers properly in the future.
• Anne’s Guest Home, which operates six facilities in Pleasanton and Livermore, was found in violation of the minimum wage, overtime, and record-keeping provisions of the FLSA. The company paid some workers below the federal minimum wage of $7.25 per hour and failed to pay overtime at time and one-half for hours worked beyond 40 in a workweek. The firm was ordered to pay more than $447,000 in back wages and damages in a consent judgment filed in the U.S. District Court for the Northern District of California.
• Farol’s Residential Care Home paid caregivers salaries below the minimum wage in many cases and did not pay overtime when employees worked over 40 hours per week. The business was ordered to pay a total of $405,284 in back wages, damages, interest and penalties in a consent judgment filed in the U.S. District Court for the Northern District of California. Twenty-seven workers will receive back wages in this settlement.
• Vicky Rebecca Quedado, doing business as We Care ICF/DD-H and Becker Home Inc. of Northern California, operates three intermediate residential-care facilities and will pay $261,356 in back wages and liquidated damages to 21 low-wage workers for violations of the FLSA. The division found that the business paid the workers flat salaries for all hours worked instead of paying them overtime when they worked more than 40 hours in a workweek, as the law requires.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

J&J Mongolian Grill and Spa Therapy workers were cheated and threatened

Jury awards more than $1.3M in back wages and damages to 101 former employees at defunct Bellingham businesses

Although a Bellingham restaurant and a spa have closed, 101 workers once employed by the businesses will receive more than $1.3 million in back wages and damages, thanks to a Washington State jury. The decision is the result of a U.S. Department of Labor investigation that revealed numerous violations of federal labor law.

A unanimous verdict found that the workers were systematically denied minimum wage and overtime pay under the Fair Labor Standards Act by business owners Huang “Jackie” Jie and Zhao “Jenny” Zeng Hong. The lawsuit was filed in 2013 against the two owners and their companies, Pacific Coast Foods, Inc., doing business as J&J Mongolian Grill, and J&J Comfort Zone, Inc., doing business as Spa Therapy. The jury also found that the defendants interfered with and retaliated against workers, most of whom spoke little to no English, who cooperated in the Labor Department’s investigation.

“No one who works hard and plays by the rules should be cheated out of the wages to which they are legally entitled,” said U.S. Secretary of Labor Thomas E. Perez. “In this case, the business owners took advantage of their workers and continued to do so even after being informed by investigators that they were operating in violation of federal labor law. That’s unconscionable. We will hold accountable those businesses that break the law, and just like in this case, ensure that justice prevails for workers.”

The department’s Wage and Hour Division found that employees of the J&J Mongolian Grill and Spa Therapy put in on average more than 70 hours during a six to seven day workweek. A number of the workers were paid less than the federal minimum wage of $7.25 per hour, and none of them received overtime pay for hours worked beyond 40 in a workweek. Both businesses were located in Bellingham’s Bellis Fair Mall.

“Dozens of brave men and women will now get the long overdue back wages they rightfully earned following years of abuse, trickery and retaliation,” said Janet Herold, the department’s regional solicitor in San Francisco. “This verdict is a warning to others: We will find you and the courts will back us when employers try to shortchange their workers to maximize profits.”

The department brought the case to court to stop the business owners, who have since divorced, from continuing to break the law and to recover wages owed to 101 cooks, kitchen helpers, cashiers and masseurs. The jury awarded the back wages and also awarded compensatory damages to four employees who had suffered retaliation, including threats, reduction of hours and, finally, termination of employment because they refused to be silenced about the defendants’ labor law violations.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Lighting Services Inc. excluded from federal contracts for 3 years

Honolulu electrical contractor owes workers more than $1.2M in back wages,
submits false records and attempts to obstruct investigators 

 

A federal electrical contractor, Lighting Services Inc. will pay 38 electricians/technicians more than $1.2 million in back wages after U.S. Department of Labor's Wage and Hour Division investigators determined the company did not pay required prevailing wages to workers at Marine Corps Base Hawaii in Kaneohe Bay. The division also found the employer submitted falsified payrolls and told workers to provide false information to investigators.

Lighting Services Inc. violated the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act and, as a result, the company and owner Scott Wilks are excluded from obtaining federal contracts for three years.

"Businesses that benefit from federal dollars have a responsibility to play by the rules, and that includes paying employees legally required wages," said U.S. Secretary of Labor Thomas E. Perez. "Having a federal contract is a privilege, not a right. And we will remain steadfast in our enforcement of laws that level the playing field for those employers who are doing the right thing."

Investigators found that Lighting Services and Wilks committed multiple egregious violations, including:

• Instructing employees to misrepresent to investigators the type of work that they did
• Requiring employees to falsify time records
• Failing to list numerous workers on certified payroll records
• Paying rates more than $20/hour below required wage rates

The department's regional solicitor in San Francisco brought charges against the contractor, seeking payment of back wages and debarment from federal contracts. The department resolved the charges and obtained appropriate remedies through consent findings approved by an administrative law judge last month.

"An employer cannot reduce its labor costs by underpaying workers the required wage standards in a federally funded construction contract," said Terence Trotter, the division's district director in Hawaii.

"Just as standards of quality must be met on completed electrical work, employers must also adhere to federal standards that safeguard the electricians' pay and working conditions."

The DBRA requires that all contractors and subcontractors performing work on federal and certain federally funded construction projects pay their laborers and mechanics at least the prevailing wage rates associated with their occupations, as determined by the secretary of labor. The CWHSSA, which applies to federal service contracts and federally funded and assisted construction contracts exceeding $100,000, requires workers to be paid one and one-half times their basic rate of pay for all hours worked over 40 in a workweek.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

 

Wage and Hour violations found at Shell, Exxon, BP and other national brand gas stations

More than 1,100 New Jersey gas station attendants receive $5.5 million in back wages and damages in U.S. Labor Department enforcement initiative

In the past five years, more than 1,100 attendants at Shell, Exxon, BP and other leading brand gas stations in New Jersey have been denied the minimum wage and, in some cases, overtime pay. These workers have received $5.5 million in back wages and damages recovered thanks to a multiyear enforcement initiative conducted by the U.S. Department of Labor’s Wage and Hour Division.

“The wages recovered for these low-wage workers will help them pay rent and put food on the table for their families. These wages will also fuel the local economy,” said Secretary of Labor Thomas E. Perez. “The U.S. Labor Department is determined to ensure that employers follow the law and to create a level playing field for those competitors who pay their workers all of the wages they have rightfully earned.”

“Our investigations of the New Jersey gas station industry found widespread violations of the federal Fair Labor Standards Act’s minimum wage, overtime and record-keeping provisions,” said Mark Watson, regional administrator of the Wage and Hour Division in the Northeast. “To combat these violations, we are engaged in strategic enforcement and outreach efforts with employer organizations and employee advocacy groups to educate all parties on their rights and responsibilities. Our efforts are having an impact on the industry.”

In fiscal year 2014, the division recovered nearly $300,000 in back wages and damages for nearly 100 employees, about $3,000 per worker. While that amount is significant, it has dropped to its lowest point since the initiative began in 2010. In addition, ample evidence shows the division’s enforcement efforts have impacted the industry. The division’s investigators report that some gas stations hired more employees to avoid overtime violations; purchased time clocks to track hours worked; and contacted the Wage and Hour Division for help in providing intensive training for managers on overtime and minimum wage laws. The division will continue to monitor this industry for continued compliance in fiscal year 2015.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Nonagricultural and other nonexempt employees are entitled to time and one-half their regular rates for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages.

When employees are denied their hard-earned income, the Wage and Hour Division is committed to ensuring that workers receive wages earned and needed for basic expenses such as rent, transportation and food. Since 2009, the division’s investigations have resulted in the recovery of more than $1.3 billion dollars in back wages for more than 1.5 million workers.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Supreme Court Upholds Rule Requiring Overtime for Loan Officers

The Supreme Court today upheld a Department of Labor rule that required
banks to pay mortgage loan officers overtime, finding in a unanimous decision that the Administrative Procedures Act does not require federal agencies to employ notice-and-comment rulemaking when it issues a rule interpreting an existing regulation.

In the case of Perez v. Mortgage Bankers Association, the court overturned a lower court ruling that the department could not change its determination of exemption under the Fair Labor Standards Act without going through a formal rulemaking process. The Supreme Court rejected the precedent relied on by the lower court, arguing that it would impose obligations on federal agencies not envisioned by the text of the APA.

The Labor Department had ruled in 2006 that mortgage loan officers were exempt employees under the FLSA, but it reversed itself in 2010. The Mortgage Bankers Association sued DOL, arguing that the government could not “significantly revise” its “definitive interpretation” without conducting an official rulemaking with notice and comment.

Source: ABA

This information is intended to be educational and should not be considered legal advice on any specific matter.

Drywall contractor owes ‘tapers’ more than $98K in back wages

PR Drywall of Hillsboro, Oregon, underpays 7 workers in wages and overtime

Seven “tapers” working for PR Drywall LLC of Hillsboro will receive more than $98,000 in back wages after a U.S. Department of Labor investigation found their employer failed to pay prevailing wages and overtime payments as they worked constructing the Tualatin Marquis Assisted Living Center. Built with federal financing assistance from the U.S. Department of Housing and Urban Development, the project and its contractors were subject to the Davis-Bacon and Related Acts and the Fair Labor Standards Act.

The department’s Wage and Hour Division investigated PR Drywall, a subcontractor on the Tualatin project. The agency determined that the tapers, also called drywall finishers, who prepare and press wet compound into joints, nail or screw holes in the drywall and then cover the wet material with tape, were paid below the prevailing wage rates required by the DBRA. The employees also worked beyond 40 hours in a workweek without being paid time and one-half, as required by law.

PR Drywall was found liable for $89,525 under the DBRA for prevailing wage violations, and $8,557 under the FLSA for overtime violations.

“Taxpayers have a right to expect federal contractors to understand their obligations and comply with the law,” said Thomas Silva, district director of the department’s Wage and Hour Division in Portland. “When PR Drywall or any other employer violates labor laws, they cheat their employees and gain an unfair advantage over competing employers who obey the law.”

The DBRA applies to contractors and subcontractors performing federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair, including painting and decorating, of public buildings or public works. DBRA contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area.

Source: EEOC

This information is intended to be educational and should not be considered legal advice on any specific matter.

Investigation reveals Chang & Sons Enterprises Inc.continues to cheat workers

Reinspection leads to court order for back wages, damages, penalties and monitoring

A follow-up investigation by the U.S. Department of Labor’s Wage and Hour Division has found that Whately agribusiness Chang & Sons Enterprises Inc., and its owner Sidney Chang, continue to deny workers the wages they have legally earned, despite prior investigations and a legal judgment requiring the employer to pay back wages and comply with federal wage and hour laws.

In 2013, the company paid $305,500 in back wages and liquidated damages to 14 workers for violations of the Fair Labor Standards Act. A recent follow-up investigation revealed additional minimum wage violations, resulting in another $73,535 in back wages and liquidated damages due to six employees. The new consent judgment requires that the employer hire a qualified, independent consultant who will monitor the firm’s compliance with the FLSA and provide the Wage and Hour Division with quarterly reports for the next three years. The employer has paid the most recent back wages, damages and penalties in full.

The Wage and Hour Division’s follow-up investigation found that some employees were paid in cash, usually $5 per hour, while working in the berry harvest. In light of the repeated violations, the defendants, whose business grows, harvests, packages and distributes bean sprouts and other agricultural products, will also pay $8,250 in civil money penalties.

“The Wage and Hour Division does reinvestigate employers to confirm that they are paying their employees the wages they have rightfully earned,” said Carlos Matos, the Wage and Hour Division’s district director in Boston. “Chang & Sons Enterprises’ repeated disregard for the law and workers’ rights is inexcusable. Aware of the obligation to pay the minimum wage as the result of our prior investigations and enforcement actions, it chose to continue to pay a number of these employees only $5 per hour, far less than what the law requires.”

“Employers’ actions have consequences. We will not hesitate to use enhanced compliance procedures to help ensure that employers comply with the law. We will seek liquidated damages and civil money penalties when employers flout the law,” said Michael Felsen, the regional solicitor of labor for New England, whose office litigated the case.

The Wage and Hour Division enforces labor laws to protect employees, employers and American taxpayers, to provide a level playing field for employers, and to ensure fair wages and safe working environments for employees. Such protections help to support ladders of opportunity, igniting economic engines to grow a strong middle class.

When employees are denied their hard-earned income, the Wage and Hour Division is committed to ensuring that the money ends up in the hands of those who worked for money that will be spent on rent, transportation and to put food on the table. Since the beginning of 2009, the agency has concluded investigations nationwide resulting in more than $1.3 billion dollars in back wages for more than 1.5 million workers.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.

Oregon developer makes retaliatory threats against employees

A federal court has ordered local developer David Emami and three of his affiliated companies to pay 33 Portland-area employees $512,290 in unpaid wages and liquidated damages. The U.S. District Court for the District of Oregon agreed with a U.S. Department of Labor investigation that found that Emami and companies Oak Grove Cinemas Inc., Barrington Management LLC and Barrington Venture LLC willfully violated the overtime and record-keeping provisions of the Fair Labor Standards Act. The court also held that Emami violated the anti-retaliation protections of the FLSA by threatening employees who cooperated with the department’s investigation.

“Those who flagrantly disregard basic wage obligations and then try to cover up those actions should think twice before threatening workers when they simply exercise their right to be paid fairly, as the law requires,” said Janet Herold, the department’s regional solicitor in San Francisco. “This judgment makes clear that we will not allow employers to violate the law and then try to bully their way out of trouble.”

The department concluded that those Emami employed as general maintenance, landscaping and construction workers at commercial properties he owned or maintained had two time cards for most pay periods. On one time card, an employee recorded their morning start time and a midafternoon end time. The employees immediately clocked in on a second time card to record the remainder of a day’s work hours. The workers’ duties and rates of pay remained the same each day at each work location.

Workers typically received two paychecks each time they were paid—one from Emami’s Oak Grove Cinemas and another from Barrington Management or Barrington Venture. The employer claimed that the employees were independent contractors during the hours they spent working for the Barrington companies. The combined paychecks covered all of the employees’ hours, including those over 40 per week, paid at straight time. The department found, and the court agreed, that Emami’s “scheme” was deliberately concocted to avoid paying his employees overtime.

“This employer found out the hard way how serious we are about stopping an employer’s attempts to profit by willfully violating the wage laws and employment rights that protect the most vulnerable members of the workforce and level the playing field for other law-abiding employers,” said Ruben Rosalez, the Wage and Hour Division’s regional administrator in the West.

The court also found that Emami violated the anti-retaliation provision of the FLSA by threatening to retaliate against employees for cooperating with the department’s investigation or becoming a witness for the government. Threats of retaliation included intimidation and threats of physical force against cooperating employees.

Source: DOL

This information is intended to be educational and should not be considered legal advice on any specific matter.