COMPANY FOUND LIABLE FOR OVER $1.4 MILLION IN BACK WAGES, DAMAGES TO EMPLOYESS

FROM:  U.S. LABOR DEPARTMENT 

Judge finds Ohio-based Cascom Inc. liable for nearly $1.5 million in back wages, damages to employees misclassified as independent contractors

US Department of Labor filed lawsuit to recover wages for 250 employees
DAYTON, Ohio — The U.S. District Court for the Southern District of Ohio has found Cascom Inc. liable for back wages and liquidated damages totaling $1,474,266 owed to approximately 250 cable installers the Fairfield, Ohio, company misclassified as independent contractors in violation of the Fair Labor Standards Act.

The findings of fact were issued following a damages hearing in a lawsuit filed by the U.S. Department of Labor in 2009, after an investigation conducted by the Columbus District Office of the department's Wage and Hour Division. The court ruled in September 2011 that Cascom Inc. and its owner, Julia J. Gress, violated the FLSA by failing to compensate employees for hours worked in excess of 40 per work week because they were misclassified as independent contractors.
"The findings in this case bring justice to workers and their families by providing them with their rightfully earned wages," said Secretary of Labor Thomas E. Perez. "Cascom's business model also hurt law-abiding employers, who were undercut by this illegal practice. The Labor Department is committed to ensuring compliance to protect middle-class workers and to level the playing field for responsible employers."

The installers were found to be employees covered by the FLSA, rather than independent contractors. Cascom Inc. was found to be liable for $737,133 in back wages and an equal amount in liquidated damages, which can be collected both from the company and its owner. The company has ceased operations, so the department will seek to collect from the owner as well.

The misclassification of employees as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers and the economy. Misclassified employees are often denied access to critical benefits and protections — such as family and medical leave, overtime, minimum wage and unemployment insurance — to which they are entitled. Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers' compensation funds.

Under the FLSA, an employment relationship must be distinguished from a strictly contractual one. An employee — as distinguished from a person who is engaged in a business of his or her own — is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves.