Texas Hospitality Industry Investigated by DOL for Employee Misclassification
March 16, 2012
Our Newport Beach, California employment lawyers blog frequently reports on the state of wage and hour law developments in the California and federal workplace--often focusing on the topic of wage and hour issues and the illegal practice of employee misclassification.
As Vincent Howard has previously discussed, the U.S. Department of Labor (DOL) considers the hospitality industry a high-risk industry for federal wage and hour violations, as the industry depends on a wide variety of employment arrangements, including subcontracting, staffing agencies, franchising and third-party management that complicate the relationship between the worker and employer.
In a recent development that Vincent Howard has been watching unfold, the DOL has launched a wage and hour enforcement initiative focusing on the Dallas-area hotel and motel industry, after previous investigations revealed significant and repeated violations of the Fair Labor Standards Act's (FLSA) overtime compensation, minimum wage and record-keeping provisions, along with the willful misclassification of employees as independent contractors.
The DOL reports that the division continues to find that staffing agencies often provide workers for many types of jobs in the hospitality industry, including food service, housekeeping, janitorial maintenance, and landscaping--and sometimes misclassify these employees as independent contractors, to avoid paying minimum wage, overtime compensation and other important employee protections. According to the DOL, hotels and motels that use staffing agencies must comply with the FLSA requirements and properly classify and pay employees for all hours worked--instead of hiding behind the use of staffing agencies in order to shirk important employee benefits and protections.
As Vincent Howard has reported previously, employee misclassification is a serious problem in low-wage industries across the country, as employees are frequently denied the important benefits and protections that they are entitled to, such as minimum wage payment, overtime compensation, unemployment insurance, and family and medical leave. In 2011, the DOL's Wage and Hour Division (WHD) discovered that over $5.3 million in back wage compensation was due to over 7,700 misclassified employees.
In 2011, the DOL's District Office in Dallas reportedly found widespread violations of the FLSA, where housekeepers were paid straight time, on a room-to-room basis, with no regard to actual hours they worked and no overtime payment for hours worked beyond forty in a workweek. Housekeepers also reportedly experienced illegal deductions from their wages, along with other wage and hour violations that came from the unlawful practice of employee misclassification.
In this particular DOL initiative, the WHD investigators will reportedly visit hotel and motels in the area, making unannounced appearances. When wage and hour violations are discovered, the division will pursue corrective action, collect back wage payments, and assess civil money penalties and liquidated damages, and explore litigation to ensure that employers comply with FLSA regulations in the future.
As our Carson wage and hour blog often reports, under federal law, employees covered by the act are required to receive the FLSA-mandated minimum wage of $7.25 per hour for all hours worked in a 40-hour workweek plus overtime compensation of time and one-half their standard hourly rates of payment for any hours worked over forty, including work bonuses, commissions and incentive compensation. Employers are also required to maintain payroll and time records for employees that are accurate.
In Santa Ana, Seal Beach, and Stanton, California, contact Howard Law's managing attorney Vincent Howard today, to discuss your wage and hour issue in the California workplace.
US Labor Department launches initiative to enforce wage and hour laws in Texas hotel and motel industry, U.S. Department of Labor Press Release, March 13, 2012
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