Under the FLSA, employers are allowed to take certain types of payments to workers into account when calculating the legal payment rate. For example, reimbursements for work-related expenses, or standardized payments that reasonably approximate those reimbursements, can be subtracted when the employer calculates overtime payments. However, the reimbursements have to be for real expenses -- they can't be just handed out by employers to avoid paying overtime.
]]> "Employers cannot avoid their legal responsibility to pay overtime by using evasive practices that seek to undermine labor laws and deny workers their rightful wages," explained the acting Secretary of Labor in a press release.An investigation by the Labor Department found the wage irregularities, along with a number of recordkeeping violations that made it impossible to accurately determine the workers’ rightful pay rates, so the agency initiated a complaint against HUTCO.
Before the case could go to trial. HUTCO agreed to repay the workers for the nearly $2 million in unpaid overtime, and also to institute specific measures meant to ensure future compliance with the FLSA. They must set official standards to determine which workers are actually entitled to per diem payments and get them paid appropriately. They must also inform all employees of the legal rules regarding their employment conditions -- and get acknowledgement in writing from each employee that he or she understands.
Furthermore, the company must keep accurate records and demonstrate that any future per diem payments are legal, as based on IRS guidelines or a fair approximation of expenses an employee actually incurred on behalf of the company. Otherwise, the workers are entitled to the federal minimum wage of $7.25 an hour, plus time-and-a-half for all hours worked beyond 40 per week.
“Temporary workers face the risk of not being treated as employees in terms of the wages and legal protections guaranteed under federal law,” said another spokesperson for the DOL. “The Wage and Hour Division is committed to protecting them.”
Source: U.S. Department of Labor, Wage and Hour Division, press release, “Major staffing agency Hutco to pay nearly $2 million in overtime back wages to workers following US Labor Department investigation,” May 6, 2013
]]>Unfortunately, many drivers who took such offers say it was a bad deal all around. Instead of freeing them up to act as their own bosses and work toward becoming owner-operators, they say, the leasing companies just tie them into debt with the truck and then misclassify them as independent contractors in order to pay them less.
]]> Sadly, the vast majority of the drivers never end up as owner-operators as they hoped. Most are never able to complete the terms of the lease contracts. When they don’t, either because they can’t afford the payments or decide to quit the job, the companies hold them in default on the lease, leaving them potentially owing tens of thousands of dollars.The promise that drivers would control their own work and schedules didn’t pan out, either. Instead, many drivers say, they aren’t allowed to pick their own routes or loads, and they can’t take extra work from other companies because it would violate their leases.
“So the driver feels they can’t leave even though they are watching all of their savings get eaten up because they are tied to their trucks and are being bled dry,” said a lawyer. He is now representing hundreds of truckers in a class action lawsuit against one of the leasing companies, Central Leasing, along with leased-truck drivers for a sister company called Swift Transportation.
The collective action, filed in federal court in California, just went through a hearing on the questions of whether the truckers’ claims had to be resolved through arbitration and, more importantly, whether the truckers are legally employees or independent contractors.
“Our claims are that they have so much control that drivers are employees,” explained the attorney, “so therefore you owe them money and should pay them minimum wage.”
While ruling that the claims do have to go through arbitration, the judge ruled that there is no question the drivers were illegally misclassified as independent contractors. The case will now move into arbitration with the employee vs. contractor ruling already in place.
Source: Land Line magazine, "Fighting back: Truckers challenge Central Refrigerated over leases and control," Clarissa Kell-Holland, May, 2013
]]>The men had apparently been placed with an Iowa turkey processing company which, over the course of the last 45 years, held them in labor camps in seven states and essentially treated them like low-paid slaves. The men were sometimes paid as little as 41 cents an hour.
]]> When one man escaped during a snowstorm, he froze to death -- which only prompted the company to handcuff the men to their beds and tie them to their work stations, the EEOC claims. When the men violated company rules, many were forced go to a garage and walk round and round a pole while their so-called caretakers hit and kicked them, the evidence also showed.The details of the case are stark and disturbing. There is too much to cover in a blog post, but those interested should click on the source link at the end of this post to learn more.
The EEOC brought this lawsuit against the company, Henry's Turkey Service, on behalf of 32 men with developmental disabilities, although as many as 1,500 of the men were apparently used this way over the course of 45 years.
"The evidence is these men were treated like property," said the EEOC attorney to the jury. "These men are people. They are individuals."
Last year, after the work camps were closed down, the Department of Labor prosecuted the company for violations of federal labor law and won a $1.76 million judgment. Simultaneously, the Iowa Workforce Development department fined the company $1.2 million for violating state labor laws, and the EEOC won the men $1.3 million in unpaid minimum wages. Those three suits set the stage for this lawsuit, which was limited to men mistreated in one camp over the past two years.
Each man will receive $5.5 million in compensation for their treatment and unpaid wages, along with $2 million in punitive damages levied against Henry's.
"I totally lost it," one of the plaintiff’s sister said, describing her own reaction to the jury’s verdict. "I wanted the jury to make a statement so that my brother Keith and all of those men would know that someone had heard them. And if this isn't a statement, I don't know what is."
Source: The Des Moines Register, "Experts: $240M judgment for disabled men 'stunning'," Clark Kauffman, May 1, 2013
]]>The case did not mean, however, that workers were prohibited from bringing claims at all -- only that the size and scope of classes was limited. So, many more plaintiffs will be required to bring their lawsuits individually instead of as a group of similarly-situated employees.
The decision was prophesied to mean a flood of individual lawsuits, and that prophesy appears to be coming true. This week, some 420 allegedly misclassified loan officers for Prospect Mortgage, LLC, filed individual lawsuits or arbitration complaints under the Fair Labor Standards Act.
Just after the Dukes v. Wal-Mart ruling, a group of 600 loan officers had filed a collective employee misclassification action against Prospect in Northern California. A federal judge certified it conditionally, but Prospect made it "very clear" that it intended to fight that certification. Apparently the plaintiffs determined that their best option was to file each claim individually.
]]> Suits have now been filed in at least 37 federal district courts, and as many as 187 petitions for arbitration have been filed with the American Arbitration Association and the arbitration group JAMS, Inc. An attorney coordinating the lawsuits says that around 420 individual cases have been filed, and more may be on the way.The loan officers, who were paid on commission, claim they were misclassified as "exempt" employees under the FLSA, meaning ineligible for minimum wage protections and overtime pay.
A Seton Hall Law School employment law professor commented that the plaintiffs may have played their hands well. "They've used the certification process to identify the people interested in suing the company," he said, "And then they've brought the individual suits, which may be wildly inconvenient to the defendant."
The plaintiffs' attorney denies the collective filing was a strategic ruse, or that the individual actions are meant to inconvenience Prospect. "As inefficient as it sounds," he told Reuters, "the goal was to improve efficiency in terms of the amount of discovery and the time and briefing that would have occurred in the district court case."
Source: Thomson Reuters News & Insight, "After group action fizzles, loan officers sue employer one by one," Carlyn Kolker, April 26, 2013
]]>The ACA, often referred to as "Obamacare," amended Section 18A the Fair Labor Standards Act to require all FLSA-covered employers with 200 or more full-time employees to automatically enroll them in a company-sponsored health insurance plan. That amendment goes into effect at the beginning of next year.
When the company announced its decision to cut all the hours of all non-salaried workers' hours to 30 or less per week, some Regal managers asked how they should explain that to their workers. The corporate office went so far as to release a memo instructing managers to explicitly blame the ACA:
"[W]e suggest the following [explanation]," the memo reads. "To comply with the Affordable Care Act, Regal had to increase our health care budget to cover those newly deemed eligible based on the law's definition of a full-time employee."
]]> Apparently that potential increase in its health care budget was deemed to be addressed most appropriately, not by increasing prices or by cutting into the company's multibillion-dollar profits, but by cutting the pay of workers who reportedly earn, on average $7.80 to $7.90 an hour.Last year, Regal reported gross profits of $1.72 billion, and a total revenue of 2.8 billion, and its box office sales rose 6.5 percent.
The law is not yet in effect, of course. Regal, which has 5,000 employees, might be taking action now to ensure that none of its lower-level employees inadvertently work enough to be considered full-time. For the purpose of the new law, a full-time worker is defined as anyone who averages at least 30 hours a week.
Many of Regal's workers have felt compelled to seek living-wage jobs elsewhere. Luckily, while the company's ruthless decision will hurt many people, it is apparently among the minority of U.S. businesses on the subject. A recent survey by the Minneapolis Federal Reserve found that nearly 90 percent of companies had no plans to cut employees' hours deliberately to make them ineligible for company-sponsored health insurance.
Sources:
The new, unpaid overtime could only be offered for up to 160 hours per year, but employees would be required to use up the accrued time within 12 months. The current proposal would require comp time left unused after that period to be paid in money. It would give employers, and possibly employees, the option of changing their minds and go back to the money system, if they gave 30 days' notice.
If the goal is to give employers as much flexibility as possible to force their employees to work for free in the anticipation that they can take time off during slower periods, it certainly meets that goal. In a seasonal industry, for example, an unscrupulous employer who knew workers would be short hours because of low demand in winter, for example, could avoid paying any overtime at all.
]]> Business groups have been trying to take away employees' right to extra overtime pay for at least a decade. This isn't the first time comp time has been proposed as an amendment to the FLSA, which specifically prohibits the practice for private-sector employers. Federal, state and municipal employers, however, can offer comp time.The bill's sponsor says the goal is to give workers more options as they try to "balance the demands of work and family." It "does not change the 40-hour work week or how overtime is paid," she insisted.
"This bill has nothing to do with promoting workplace flexibility," insisted an opponent. "To be clear, nothing in this bill requires that the worker has access to time off when she really needs it."
Even if the system wasn't abused, it could still delay workers' receipt of their rightful overtime pay, however. "At the end of the day, that overtime pay could come back to you as much as 13 months later," pointed out a spokesperson for the Education and Workforce Committee Democrats, "so basically you're giving your employer an interest-free loan."
Source: Thomson Reuters News & Insight, "Proposed legislation would extend comp time to private sector," Amanda Becker, April 12, 2013
]]>Unpaid internships are advertised as a chance for people with little to no industry experience to be mentored by more experienced people, learn about the available jobs and, perhaps, get a foot in the door with future employers. They're perfectly legitimate if they offer substantial educational benefits -- but far too often interns are exploited by companies as unpaid general labor.
The federal Fair Labor Standards Act determines, among other things, who can legally be classified as a salaried ("exempt") or hourly ("non-exempt) employee, whether a worker is a legal employee or a contractor, and who can be considered an unpaid intern. Misclassification of workers has a major impact on how much they end up getting paid and what benefits receive, so it's a very serious issue.
]]> Under the FLSA, workers can be classified as unpaid interns only under limited circumstances. Generally, the Department of Labor considers six factors when determining whether an unpaid internship is a legitimate learning experience or an illegal misclassification of the intern, who in reality has been acting as a legal employee. To be legitimate, an unpaid internship essentially must:Because it's so common that internships don't meet all six of these criteria, unpaid interns across the nation have increasingly been filing lawsuits against companies that have exploited them.
"This has now become like wildfire," says one employment lawyer in New York. Speaking specifically of the flood of lawsuits by unpaid interns in the entertainment industry, she adds that interns haven't filed worker misclassification lawsuits in the past "probably for fear of being blacklisted, either by the firm they had the opportunity to intern for, or the industry."
In this economy, that's changing. Today, people can't afford to work for a year or more in an unpaid job, even if it results in a permanent position afterward, which often doesn't happen.
Have you ever worked as an unpaid intern? What was your experience? Do you think most interns should be paid for their work?
Source: ABA Journal, "More unpaid interns say they want to be compensated," Wendy N. Davis, April 1, 2013
]]>"In this competitive contracting environment, no contractor should gain an economic advantage by failing to pay workers fringe benefits on a prevailing wage contract," explained the Des Moines District Office director of the Wage and Hour Division. "Enforcement of the prevailing wage laws levels the playing field for all contractors and protects the wages of hard-working, middle-class American workers."
]]> According to the Labor Department, CH Inc. considered some of the security guards, case managers and food service workers it employed at the facility to be part-time workers. Therefore, it did not pay them the federally mandated fringe benefits of up to $3.59 these workers were entitled to under the McNamara O'Hara Service Contract Act, or SCA. The SCA does not make any distinction between full-time, part-time or temporary workers in requiring those benefits.The company also denied overtime pay to those corrections employees it considered part-time workers. The Labor Department, citing the Contract Work Hours and Safety Standards Act, found that the CH Inc. had improperly calculated hours worked beyond 40 per week and did not pay overtime rates.
CH Inc. has agreed to repay the corrections workers all of the underpaid overtime and benefits and has entered into an agreement to comply with the two federal contractor laws in the future.
According to a Wage and Hour Division press release, the purpose of the SCA's prevailing wage and benefits requirements is to protect local contractors from being underbid by companies able to bring in workers from other areas who are accustomed to lower wages. "It benefits local employees and local economies and supports good, local middle-class jobs," reads the press release.
Similarly, the CWHSSA's requirement for premium overtime pay encourages federal contractors "to hire more employees on these contracts, thus creating jobs, rather than working fewer employees longer hours."
Source: U.S. Department of Labor, Wage and Hour Division, press release, "CH Inc. to pay 35 employees nearly $269,000 in benefits, back wages following US Labor Department investigation," March 28, 2013
]]>In 2012, employees secured a total of $467 million in settlements of wage and hour complaints -- 18 percent more than in 2011. However, more than 20 percent of that total consisted of a $99 unpaid overtime settlement to 7,000 Novartis Pharmaceuticals workers. The average annual total of wage and hour settlements over the past five years, according to the firm, is $455 million.
Wage and hour disputes, which NERA defined as those involving claims for unpaid wages and overtime, denied meal and rest breaks, and work off the clock, are often quite substantial. The average settlement in 2012 was $4.8 million.
]]> Settlements for unpaid overtime, which are often the result of employee misclassification, accounted for 40 percent of all the settlements in 2012, which was slightly higher than in previous years. Another 19 percent involved denied meal and rest breaks, which represented an increase over their five-year average of 16 percent.Between 2007 and 2011, the firm says, settlements for healthcare workers represented only about 4 percent of total settlements for workers. The $99 million Novartis settlement in 2012 sent that percentage skyrocketing to 27 percent.
As for settlements involving class-action litigation, the number decreased sharply. This is because the U.S. Supreme Court greatly limited large class-action certifications in the case Wal-Mart v. Dukes in mid-2011. In 2007, NERA says, settlements affecting 10,000 or more plaintiffs made up 43 percent of all wage and hour settlements. In 2011, that had dropped to 7 percent, and in 2012 it was down to 5 percent.
These trends are interesting, but the most important point is that workers continue to suffer from employers who violate federal law in order to reduce their employees' rightful pay.
Source: Thomson Reuters News & Insight, "Wage-and-hour settlements rise in 2012 - NERA," Brendan O'Brien, March 20, 2013
]]>The Pittsburgh lawsuit has been approved as a collective action and is expected to go to trial before a jury starting April 2. The trial is scheduled to last for three weeks.
The proper classification of employees does not depend on their job titles. It depends upon their job duties. Just because these workers were given the job title "assistant branch manager" does not necessarily mean that they actually supervised anyone, and the outcome of this case will largely depend on what an assistant branch manager is actually responsible for.
For example, were they actually in charge of overseeing other employees' work? Did they make independent judgment calls over policy matters? Or did they merely perform the same work as other workers, such as opening bank accounts for clients and performing customer service?
]]> Citizens Financial and its parent company RBS Citizens Financial Group opposed the proposition that the lawsuit should be a collective action. It argues that its assistant branch managers experience "widely disparate employment circumstances" in the bank's hundreds of branches in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.The plaintiffs won on the collective action question, so the Pittsburgh case will move forward in that way. At the request of both parties, the trial will first address whether the bank has indeed misclassified the assistant managers. If the jury decides that it did, a separate phase will determine what damages the workers sustained. Their attorney is seeking as much as $14.4 million on their behalf, and the bank has declined to settle the case.
In many cases, employee misclassification cases can be filed in federal court under the FLSA or in state court under state employee rights laws. For example, if such a case were filed in a Massachusetts state court, a misclassified employee could be entitled to triple damages against the employer.
The case against Citizens Financial is one example of the substantial increase in class-action wage and hour disputes recently. According to one law firm's study of the matter, 7,064 federal wage-and-hour class actions were filed in 2012 -- three times the number filed in the previous 10 years.
Source: Thomson Reuters News & Insight, "Case to watch: Assistant branch managers seek overtime pay," Carlyn Kolker, March 14, 2013
]]>Especially in tight economic conditions, businesses looking to save a little money and increase their flexibility sometimes resort to independent contractor misclassification -- the illegal practice of claiming that workers whose work is wholly directed by the company are actually contractors. This abusive practice is prohibited by the federal Fair Labor Standards Act, in order to prevent people who perform the exact same work for the exact same company from being treated differently in terms of pay and benefits.
]]> Employers need to very clear on the law before classifying workers as independent contractors, says the report. Not only is there a potential for litigation by affected contractors, but costly tax and insurance problems could arise down the line should workers need to be reclassified retroactively. How costly? The retroactive application of pay and benefits, along with legal penalties under the FLSA, recalculation of past payroll, unemployment and Social Security taxes, and negotiating the addition of reclassified employees to workers' comp and liability insurance policies could add up to as much as 65 percent of the employee's annual pay.Further, if employers were willing to take the chance, the report said, they're not as likely as they once were to get away with it. California and New York, the law firm said, are known to be cracking down on independent contractor misclassification, and the U.S. Department of Labor also seems to be prioritizing the issue.
"Given the present state of the world economically, there are many jurisdictions that are focused on reviewing independent contractor arrangements as a way to generate further revenue," the report warned.
There are certainly perfectly legal reasons to employ contractors. For example, companies may hire them on a short-term basis if the business has rapidly fluctuating workforce needs. Or, a firm with a new product or service might hire contractors as it assesses market demand for that product.
Classifying those who are functionally employees as independent contractors simply to avoid paying healthcare and retirement benefits, however, is not one of those legal reasons. Nevertheless, the firm expects to see contractor misclassification continuing as a top employment law issue in the upcoming year.
Source: Thomson Reuters News & Insight, "Littler warns of legal dangers of misclassification," Brendan O'Brien, March 1, 2013
]]>A federal judge in New York, however recently released an order in an unpaid wage case that lawsuits brought under the Fair Labor Standards Act shouldn't need his approval before settling.
His primary argument seems to be, essentially, what's the point? Apparently, a situation has developed in which FLSA parties are simply assuming they no longer need to show up at court dates if they settle their disputes beforehand.
]]> In the unpaid wage case he was discussing in this particular opinion, the defendant's attorney hadn't even entered his appearance before the plaintiff advised the judge that the case had been settled. In another recent FLSA case, neither party showed up for an initial fairness hearing, having abandoned the case."I could have unleashed some of the tools that are available to compel compliance with court orders, but ultimately concluded that there was little point," wrote the judge. After a successful settlement, "[r]atcheting up the legal process to achieve some sort of Platonic form of the ideal of judicial vindication did not seem necessary to accomplish any purpose under the FLSA," he added.
The judge also argued that rule 41 of the federal rules of civil procedure allows plaintiffs to halt civil cases for any reason. Therefore, it is difficult to argue that a plaintiff has done anything wrong by agreeing to a favorable pre-trial settlement -- and defendants wouldn't be doing anything wrong by going along with the plan.
Ultimately, the New York judge's opinion is not binding on anyone, even in the federal courts in New York or the Second Circuit. Nevertheless, the judge's apparently reasonable position may have an impact on the thinking of other federal judges across the nation. It will be interesting to see if any courts here in the Eighth Circuit follow suit.
Source: Thomson Reuters News & Insight, "FLSA cases can be settled without judge's approval, opinion says," Carlyn Kolker, Feb. 25, 2013
]]>The class also accused Merrill Lynch of failing to keep records of the broker assistants' overtime and, in some cases, erasing or changing their recorded time so it would appear they worked fewer hours, or even no hours of overtime.
On Friday, Merrill announced that it has reached a settlement agreement with the workers. The settlement still must be approved a the U.S. District Court in order to go into effect, but Merrill has agreed to create a $12 million fund to pay the broker assistants' back pay, unpaid overtime and attorneys' fees.
]]> According to the lawsuit, Merrill employed the affected "client associates," who assist financial advisers, in New York, California, Florida, Washington State, and Maryland and in other locations nationwide. Whether individual employees are covered by this class action depends on the time period they worked at Merrill, and that depends on the location where they worked. In New York, broker assistants employed between 2006 are eligible, whereas in Maryland the covered period begins in 2009.Client associates at Merrill were non-exempt employees, which means they are entitled to overtime pay. Basically, "non-exempt" is a legal term meaning that the worker is not a highly-compensated or managerial employee, and there for is covered by the FLSA. Managers, executives and highly-compensated employees are exempt from the FLSA, while lower-level workers are not exempt. Non-exempt employees are virtually always paid hourly instead of at a salary.
Unlike most non-exempt employees, client associates at Merrill received both a base salary and commissions from the financial advisors they worked for. That wasn't a bad deal, and no one wanted to rock the boat. So, when the client associates were required to work overtime, according to the lawsuit, they didn't refuse or complain because they feared "disturbing their compensation agreements."
Nevertheless, those employees were entitled to overtime pay. While an employee's failure to seek redress through the employer's internal complaint system can be a serious issue in employment law cases, the issue wouldn't apply if the case is settled.
In addition to the unpaid overtime claims, the lawsuit also claims that Merrill steered women away from applying for higher-level positions.
Is $12 million enough to compensate more than 5,000 employees for unpaid overtime they worked over the course of two to seven years? The federal judge will have to decide.
Source: Thomson Reuters News & Insight, "Merrill Lynch settles overtime case," Brendan O'Brien, Feb. 19, 2013
]]>What the administrator was talking about was a shocking case of wage theft by Bloom Energy, a highly-profitable manufacturer of solid oxide fuel cell technology based in Sunnyvale, California. According to the agency, Bloom flew 14 Mexican workers into the U.S. to help its local employees refurbish power generators -- but it paid those workers Mexican pesos, and only the equivalent of $2.66 an hour with no overtime. That was a violation of the Fair Labor Standards Act.
In fact, the Wage and Hour Division found that the company had "willfully violated the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act." Among other things, the FLSA requires private companies in the U.S. to pay eligible employees at least $7.25 an hour plus one-and-a-half times their base pay in overtime whenever they work more than 40 hours in a week.
]]> If companies violate the law, there are serious consequences. First, the employer is liable for back pay and overtime, along with an equal amount in what are called "liquidated damages" to be paid directly to the workers. The Wage and Hour division assessed a total of $31,922 in unpaid wages and overtime for the men, and another $31,922 in liquidated damages -- an average of just over $4,560 for each worker.Second, the FLSA contains a sharp prohibition against employers who violate its minimum wage, overtime or child labor provisions: such companies are prohibited from shipping any goods into commerce that were produced in violation of the law.
Bloom Energy's customers include giants like Google, Wal-Mart, FedEx, Coca-Cola and Kaiser Permanente, and the Department of Labor told Bloom it could not ship any of its fuel cells until the FLSA violations were resolved.
As a result, Bloom paid the back wages and liquidated damages to the workers, along with fines to the Wage and Hour Division. It has also signed a consent decree with the agency. Consent decrees typically require the employer to take active steps to revise their personnel policies and retrain its management and HR staff to prevent such violations from ever occurring again.
"The department remains vigilant in protecting the rights of vulnerable workers and to ensuring they are paid the wages they have rightfully earned," concluded the regional administrator.
Source: U.S. Department of Labor, Wage and Hour Division, press release, "US Labor Department investigation reveals Silicon Valley employer significantly underpaid workers from Mexico," Feb. 4, 2013
]]>Anointed Cleaners LLC of Milwaukee is a janitorial service that was subcontracted to handle cleanup work at the Westlawn housing construction project, a public housing project currently undergoing revitalization. Because this was a federal service contract, the Davis-Bacon and Related Acts requires the prime contractor and subcontractors involved to pay the prevailing wage for similar jobs in the area. In addition, the Contract Work Hours and Safety Standards Act requires them to pay workers one-and-a-half times their base pay in overtime when they work more than 40 hours in a week.
]]> Anointed didn't do that, and it does not appear to have been a bookkeeping error. The Labor Department found "significant violations" of both the DBRA and the CWHSSA by Anointed. The agency also determined that Anointed actually falsified its payroll forms to make it look like it was paying the prevailing wage and lied about how many hours the employees actually worked.In fact, the workers were paid $2 to $3 less per hour than the prevailing wage and were not provided a $3 per hour fringe benefits required by federal contracting rules. And, even though many employees apparently did work more than 40 hours per week, the company did not pay them any overtime.
The City of Milwaukee Housing Authority discovered the deceptive documents and assessed liquidated contract damages against Anointed. If the falsified payroll forms resulted in an underpayment of payroll taxes, Anointed could be hearing from tax authorities, as well.
On projects covered by the DBRA, the prime contractor is ultimately legally responsible for all subcontractors' compliance with the law. Laudably, the prime contractor in this case, Altius Construction, immediately repaid the back wages and benefits upon being notified of Anointed's misdeeds and removed Anointed from its contracting list.
"In this competitive contracting environment, no contractor should gain an economic advantage by paying workers below the required wages and fringe benefits on a prevailing wage project. Not only does this practice undercut what is legally owed to the workers involved, it results in unfair competition," the director of the Wage and Hour Division's district office in Minneapolis said in a press release. "Enforcement of the prevailing wage laws levels the playing field for all contractors."
Source: U.S. Department of Labor Wage and Hour Division press release, "Anointed Cleaners LLC employees paid nearly $17,000 in back wages, benefits following US Labor Department investigation," Feb. 5, 2013
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