Wage and Hour Division (WHD)
U.S. Department of Labor
WOODBRIDGE, Va. -- A&M Drywall Construction Inc. has agreed to pay $101,007 in back wages to 120 employees after an investigation by the U.S. Department of Labor’s Wage and Hour Division found that the company misclassified employees as independent contractors and failed to pay them proper overtime compensation in violation of the Fair Labor Standards Act and the Contract Work Hours and Safety Standards Act. The Woodbridge company provides commercial and residential construction services in the Washington, D.C., metropolitan area.
“Too often, employers are categorizing their employees as independent contractors to avoid paying them in compliance with the FLSA, as well as other federal, state and local laws,” said Mark Lara, director of the Wage and Hour Division’s Baltimore District Office. “Misclassification costs employees and taxpayers millions of dollars each year and gives unscrupulous employers an unfair competitive advantage.”
The division’s investigators determined that the company failed to pay employees an overtime premium for hours worked in excess of 40 in a week. The company also failed to keep time records for employees who were misclassified as subcontractors, in violation of the FLSA. Employees were paid on a piece-rate basis, without regard to how many hours had been worked.
These illegal practices continued during work performed by the company on a contract with the U.S. Department of Defense to design and build a new headquarters facility and mess hall in Quantico, Va. Failure to pay overtime at time and one-half employees’ basic rates of pay on a government-funded construction contract is a violation of the CWHSSA.
The misclassification of employees as independent contractors is an alarming trend, particularly in industries, such as construction, 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 both to employees entitled to good and safe jobs, as well as to employers who obey the law. Misclassified employees often are deprived of overtime and minimum wages, and are forced to pay taxes that their employers are legally obligated to pay. Misclassification also creates a competitive disadvantage for employers who comply with the law.
Under the FLSA, employers must distinguish employees from bona fide independent contractors. 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. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their hourly rates for hours worked beyond 40 per week. Additionally, accurate records of employees’ wages, hours and other conditions of employment must be maintained.
The CWHSSA applies to federal service contracts and to federal and federally assisted construction contracts exceeding $100,000. It requires contractors and subcontractors on covered contracts to pay laborers and mechanics employed in the performance of the contracts one and one-half times their basic rate of pay for all hours worked over 40 in a week. The act also prohibits unsanitary, hazardous or dangerous working conditions on federal and federally financed and assisted construction projects.
For more information about the FLSA and other federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Southern New Jersey office at 609-538-8310. Information also is available at http://www.dol.gov/whd.
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