OIL FIELD SERVICES COMPANY PAYS BACK WAGES FOR MISCLASIFICATION OF EMPLOYEES AS INDEPENDENT CONTRATORS

FROM: U.S. DEPARTMENT OF LABOR

Rigid Oil Field Services in Hydro, Okla., pays more than $51,000 in overtime back wages following US Labor Department investigation

HYDRO, Okla. — Rigid Oil Field Services LLC has agreed to pay $51,839 in overtime back wages to 28 current and former employees following an investigation by the U.S. Department of Labor's Wage and Hour Division, which found violations of the overtime and record-keeping provisions of the Fair Labor Standards Act. The company misclassified its employees as independent contractors.

The investigation by the division's Oklahoma City District Office determined that laborers at Rigid Oil Field Services LLC were employees and not independent contractors as the company claimed. As a result of this misclassification, the company violated the FLSA by failing to pay its employees the legally required overtime pay for hours worked in excess of 40 in a workweek. Additionally, Rigid Oil Services LLC failed to maintain hours worked and payroll records for the employees that were misclassified as independent contractors.

"The misclassification of employees as independent contractors presents one of the most serious problems facing affected employees, employers and the entire economy," said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest Region. "The workers were not only denied their proper overtime compensation, but they were cheated out of other required worker protections, such as unemployment insurance and workers' compensation."

The company has agreed to comply with the FLSA in the future and has secured a third party to help it ensure that employees received time and one-half their regular rate of pay for hours worked over 40 in a week. The employer also agreed to pay the back wages found due in full.

Too often, business models and practices result in employees being misclassified as something other than an employee, such as independent contractors or LLCs. Under the law, however, whether someone is an employee is determined by the actual relationship between the worker and the business — not by label or registration. Similarly, simply providing employees with 1099s instead of W-2s does not transform them into legitimate independent contractors under the FLSA. Misclassifying employees can result in workers being denied minimum wage, overtime pay, unemployment insurance and workers' compensation benefits. This makes it harder for low-wage workers to put food on the table and provide for their families. It means a greater chance of working in unsafe conditions and not being compensated when hurt on the job.

The FLSA requires that covered, nonexempt 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, piece-rate earnings and incentive pay, for hours worked beyond 40 per week. In general, hours worked includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained.