DOL ANNOUNCES RECOVERY OF $4.5 MILLIN IN BACK WAGES FOR UNPAID OVERTIME IN NATURAL GAS EXTRACTION BUSINESS

FROM:  U.S. LABOR DEPARTMENT 

US Labor Department helps more than 5,300 Pennsylvania and West Virginia 

oil and gas workers recover $4.5M in back wages for unpaid overtime

Multi-year initiative finds widespread and significant violations

PHILADELPHIA — Thousands of workers employed by contractors engaged in natural gas extraction in the Marcellus Shale region of Pennsylvania and West Virginia are putting in a fair day's work but not receiving a fair day's pay. An ongoing multiyear enforcement initiative conducted by the U.S. Department of Labor's Wage and Hour Division offices in Wilkes-Barre and Pittsburgh from 2012 to 2014 found significant violations of the Fair Labor Standards Act which resulted in employers agreeing to pay $4,498,547 in back wages to 5,310 employees. Wage and Hour Division investigators attribute the labor violations in part to the industry's structure.

"The Department of Labor is committed to protecting working families who bear the greatest burden when labor standards are violated," said U.S. Secretary of Labor Thomas E. Perez. "Recovering wages for these workers will help them pay the rent, buy food for the table and clothing for their children. And it will help ensure that employers who play by the rules and pay their employees the wages they have earned are not undercut by those who gain advantage by cheating the system and their workers."

"The oil and gas industry is one of the most fissured industries. Job sites that used to be run by a single company can now have dozens of smaller contractors performing work, which can create downward economic pressure on lower level subcontractors," said Dr. David Weil, administrator of the Wage and Hour Division. "Given the fissured landscape, this is an industry ripe for noncompliance."

The majority of violations were due to improper payment of overtime. In some cases, employees' production bonuses were not included in the regular rate of pay to determine the correct overtime rate of pay. Under the FLSA, all pay received by employees during the workweek must be factored in when determining the overtime premium to be paid. Investigators also found that some salaried employees were misclassified as exempt from the FLSA overtime provision, and were not paid an overtime premium regardless of the number of hours they worked.

Large energy providers such as Chesapeake Energy, Citrus Energy and Anadarko Petroleum are engaged in site exploration and production in the Marcellus Shale region. These companies own the mineral rights and secure the technical and specialized workforce needed to identify natural gas well extraction sites, develop well sites, complete drilling and bring wells on-line for production. The providers then use subcontractors for the majority of the work performed on the extraction, or "well" site. The subcontractors include drilling and geological services, land leasing and acquisition service, and oilfield support services companies.

Secondary subcontractors are often hired for more specialized work and ancillary support services like welding, laboratory services, landscaping, pipeline maintenance, safety and traffic control, and water treatment. Frequently, this level of services does not take place directly at the well sites.

"The more fractured an industry is, the more likely there will be significant labor law violations," said Mark Watson, regional administrator for the Northeast. "Companies further down the contracting chain feel pressured to provide services at a competitive and often cut-rate price point. They are also more likely to cut corners and offer a low bid to secure a business opportunity."

The ongoing enforcement initiative began in 2012. In addition to investigations in Pennsylvania and West Virginia, the agency is examining potential wage and hour violations like these in other parts of the country.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour, as well as 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 that violate the law are, as a general rule, liable to employees for back wages and liquidated damages payable to the workers.

CONTRACTOR TO PAY OVER $220,000 TO WORKERS FOR PRESHIFT AND POSTSHIFT HOURS WORKED

FROM:  U.S. DEPARTMENT OF LABOR 

Carpentry business to pay more than $220K in back wages and damages to workers

Employer failed to record and pay for preshift and postshift hours worked
LOS ANGELES — A southern California carpentry contractor has agreed to pay $111,305 in overtime back wages and the same amount in liquidated damages to 29 workers.

An investigation by the U.S. Department of Labor's Wage and Hour Division in Orange found Next Level Door & Millwork Inc. in violation of the Fair Labor Standards Act's overtime and record-keeping provisions for failure to record and compensate workers for all hours worked.

"It is an employer's responsibility to record and pay for all work hours. Failure to do so adversely impacts not only employees and their families, but provides an unfair competitive edge over those employers who abide by the rules," said Rudy Cortez, the director of the division's San Diego District Office. "We are pleased that Next Level Door & Millwork has agreed to include Wage and Hour Division contact information and information about recording preshift and postshift work in all new hire packages it distributes."

Investigators found that employees were required to report to the shop to pick up materials and tools or to drive the company truck to the job site. Workers were also required to return the items to the shop after leaving the job site. The employer failed to pay for that time.

Next Level Door & Millwork is a licensed interior and exterior finish carpentry contractor with approximately 50 employees working at headquarters in Indio. At the time of the investigation, the company worked as a subcontractor for Pulte Home Corp. at the Hawthorne development project in Irvine. The company has satellite locations in Riverside and in Las Vegas.

The FLSA requires that covered employees be paid at least a minimum wage of $7.25 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 are required to provide employees with a notice about FLSA's tip credit provisions, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18. 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.

COMPANY TO PAY ALMOST $400,000 IN WORKER CLASSIFICATION CASE

FROM:  U.S. LABOR DEPARTMENT 
Norwood Commercial Contractors agrees to pay nearly $400,000 in back wages and damages to 96 workers following U.S. Labor Department investigation

MEDTRONIC WILL PAY BACK WAGES IN HISPANIC DISCRIMINATION LAWSUIT

FROM:  U.S. LABOR DEPARTMENT 

Medtronic to pay $290,000 in wage discrimination lawsuit settlement
78 Hispanic workers will receive back wages under agreement with US Labor Department

BOSTON — The U.S. Department of Labor's Office of Federal Contract Compliance Programs has resolved claims of pay discrimination affecting 78 Hispanic workers employed at the Medtronic Interventional Vascular Inc. manufacturing facility in Danvers, Mass.

In court filings, OFCCP alleged that Medtronic, a federal contractor, discriminated against 78 entry-level Hispanic senior production associates by paying them less than their white counterparts, in violation of Executive Order 11246. OFCCP also filed a consent decree memorializing the settlement with the Labor Department's Office of Administrative Law Judges after the company agreed to resolve the claims.

"Pay discrimination robs workers of the wages they deserve and takes from their families countless opportunities they might have had," said OFCCP Director Patricia A. Shiu. "Because pay discrimination is often hidden from workers, OFCCP's enforcement in this area is essential. I am pleased that we were able to work with Medtronic to finally resolve this case, provide compensation to the affected workers and fix the pay practices that led to this disparity in the first place."

Under the terms of the consent decree, Medtronic will pay the affected workers $290,000 in back wages and interest for pay disparities dating back to April 2008. Furthermore, the company will conduct training on its equal employment opportunity programs for all people involved in making decisions about compensation at the Danvers facility, and ensure that all of their pay practices fully comply with the law.

Medtronic Interventional Vascular Inc. is a wholly-owned subsidiary of Medtronic Inc., based in Minneapolis, Minn. In FY 2012, Medtronic Inc. was awarded more than $33 million in federal contracts to supply medical and surgical equipment as well as laboratory supplies to numerous government agencies, including hospitals associated with the U.S. Department of Veterans Affairs.

In addition to Executive Order 11246, OFCCP enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. These three laws require those who do business with the federal government, both contractors and subcontractors, to follow the fair and reasonable standard that they not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.

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.