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DOL Forces Texas Company to Pay $433K in Back Wages For Employee Misclassification

August 5, 2011

The U.S. Department of Labor has demanded $433,426 in back wages after going after yet another employer for employment misclassification, a workplace epidemic that continues to be hurt employees across the country, as our attorneys discussed in a related Costa Mesa, California employment blog post.

C and K Rentals, a company that rents and leases equipment to oil companies at drilling and production sites in Texas, was found by the DOL to have misclassified 124 current and former oil equipment cleaners and gate guards as independent contractors, or "exempt" from federal wage and hour laws, denying them their right to overtime compensation and minimum wage.

The DOL investigation discovered that the gate guards received a minimum wage rate that fell far below the federal minimum wage, $7.25 an hour, and that the oil equipment cleaners were not paid proper overtime for all hours worked beyond forty in a workweek. The company also failed to properly maintain accurate records of employees' hours, wages, and employment conditions.

Under the Fair Labor Standards Act (FLSA), all covered employees are required by law to be paid the minimum of $7.25 per hour, federal minimum wage, as well as one and one-half their normal pay rates for any hours worked over forty in a week, which includes commissions, incentive compensation and bonuses. Employers must also maintain accurate time and payroll records, according to federal law.

According to the history of wage and hour violations that the DOL has uncovered, employment misclassification is a serious problem in "high-risk" industries, like the construction industry, which employs vulnerable and low-wage workers. As our attorneys have discussed in a previous Santa Ana labor blog, employee misclassification can rob employees of their legal rights by forcing them to work through meal breaks, with less than minimum wage, no overtime payment, and late pay and with lack of payroll documentation.

Misclassifying employees who have a right to fair paying jobs not only deprives the workers of minimum wages and overtime compensation, but forces them to pay taxes that their employers are legally obligated to pay. The act of employee misclassification also hurts other honest employers who obey the federal wage and hour laws, as employers who cheat trying to avoid paying minimum wage, overtime, and other employment benefits gain an unfair competitive advantage.

In Irvine, Pomona and Azusa, California contact Howard Law, PC today.

C and K Rentals in Cuero, Texas, to pay more than $433,000 in back wages to 124 employees following US Labor Department investigation, U.S. Department of Labor Press Release, June 29, 2011

Related Web Resources:

U.S. Department of Labor: Wage and Hour Division (WHD), Fair Labor Standards Act (FLSA)

Related Blog Posts:

AT&T Sued for Employment Misclassification by At-Home Call Center Employees, California Employment Lawyers Blog, August 1, 2011

CA Drug Sales Reps Sue Novo Nordisk in Class Action Wage and Hour Lawsuit, California Employment Lawyers Blog, July 28, 2011

Aon Corp. Settles Employee Misclassification Lawsuit for $10.5M , California Employment Lawyers Blog, July 8, 2011

Workers File $60M Lawsuit Against Blackwater/Xe for Employee Misclassification, California Employment Lawyers Blog, June 18, 2011

Court Awards Over $200K to Security Guards in Employment Misclassification Lawsuit Resolution, California Employment Lawyers Blog, June 14, 2011

DOL's Smartphone App Could Reduce Wage Theft, Overtime Disputes, California Employment Lawyers Blog, May 25, 2011

"White Collar" Exemptions under the FLSA, California Employment Lawyers Blog, November 12, 2010

New Study Reveals More Abuse of Low-wage Workers in Los Angeles, California Employment Lawyers Blog, January 11, 2010