Wage and Hour Division (WHD)
U.S. Department of Labor
RICHMOND, Va. -- The U.S. Department of Labor's Wage and Hour Division is conducting an enforcement initiative in Virginia's construction industry to protect workers against wage violations by ensuring that they are not misclassified as independent contractors and by promoting sustained compliance among all contractors and subcontractors working on construction projects. Because the division has found significant noncompliance with the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act in the construction industry throughout the U.S., similar initiatives are underway in Connecticut, Oklahoma, Texas, Guam and other areas to remedy violations and achieve sustainable compliance.
Increasingly, large companies such as developers and prime contractors coordinate production and then subcontract the work out to smaller companies. These subcontractors either employ workers on-site or further subcontract out the skilled trades, such as masonry, carpentry, electrical work and roofing. Because these subcontractors have many competitors, they face intense pressure to lower the cost of their services at the expense of workers' wages and employment conditions. Accordingly, the division is documenting the structure and complexity of employment relationships in this industry to better target enforcement efforts and have a top-down impact on compliance behavior.
Since 2008, the division's Richmond District Office has conducted 230 investigations of construction industry employers in Virginia, resulting in the recovery of more than $1.6 million in back wages for approximately 1,800 employees. Common violations found include failing to pay employees for all hours worked, paying piece-work rates that result in compensation below the minimum wage, failing to pay overtime compensation and misclassifying FLSA-covered workers as independent contractors in order to circumvent wage laws.
"This initiative underscores our commitment to protecting construction workers against exploitation and ensuring a level playing field for honest employers who should not have to face unfair downward pressure in order to stay competitive," said Bruce Clark, the division's district director in Richmond. "Construction industry employers who misclassify workers may reduce labor costs by not paying overtime compensation payroll taxes or workers' compensation premiums, and in doing so, underbid competitors, leaving those who properly classify and compensate their workers at a significant disadvantage."
The initiative includes investigations of large construction projects in Virginia to assess compliance among general contractors, subcontractors and all other business entities providing services. Investigators are reviewing employment practices, pay records and circumstances of joint employment to identify and remedy common violations. When violations are found, the division will use all available enforcement tools – including litigation, assessing civil money penalties and liquidated damages, and holding liable all companies with joint-employment responsibilities – to ensure accountability among all parties and deter future violations.
Investigators are enlisting the cooperation of general contractors in ensuring compliance among all subcontractors as well as third-party staffing companies that provide labor for construction projects. Additionally, the division is reaching out to workers, industry associations, community organizations, unions, consulates, state and local agencies, and other stakeholders to inform them of the initiative and engage their participation in promoting industrywide accountability.
The misclassification of employees as independent contractors is an alarming trend, particularly in industries that often employ low-wage, vulnerable workers and in which the Wage and Hour Division historically has found significant wage violations. The practice is a serious threat to employees entitled to good and safe jobs, as well as to employers who obey the law. Too often employees are deprived of overtime and minimum wages, and forced to pay taxes that their employers are legally obligated to pay. Honest employers have a difficult time competing against scofflaws. The Labor Department is committed to ensuring that employees receive the pay and benefits to which they are legally entitled, and to leveling the playing field for employers that play by the rules. For more information, see the department's Misclassification Initiative Web page, http://www.dol.gov/whd/workers/Misclassification/index.htm.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour, as well as one and one-half times 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.
For more information on the FLSA and other laws enforced by the Wage and Hour Division, contact the division's toll-free helpline at 866-4US-WAGE (487-9243), its Richmond office at 804-771-2995 or its Norfolk office at 757-441-3490. Information also is available at http://www.dol.gov/whd.
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