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Court Finds Massachusetts Companies and Officers in Contempt For Withholding from Employees More Than $1 Million in Back Wages
BOSTON, MA – The U.S. District Court for the District of Massachusetts has found two Massachusetts construction companies and two of their officers in civil contempt for failing to fulfill certain terms of an August 2016 consent judgment and order requiring them to pay $2,359,685 in back wages and liquidated damages to 478 employees under the Fair Labor Standards Act (FLSA).
The court’s order on contempt grants a petition the U.S. Department of Labor filed to enforce the back wage provisions of the 2016 consent judgment, which restrained Force Corporation, AB Construction Group Inc., Juliano Fernandes and Anderson dos Santos from withholding from their employees $1,179,842.55 in back wages, plus interest.
Force Corp., AB Construction Group Inc. and dos Santos failed to present any evidence in response to the department’s petition, resulting in the court holding them in contempt. Fernandes argued that he was unable to pay the amounts owed under the consent judgment, but the court found that his “inability to pay argument is significantly undercut by the facts.”
While Fernandes should have been paying his employees under the consent judgment, the court determined that he purchased over a million dollars’ worth of real estate and, in what the court stated “can only be viewed as an act of hubris, he voted himself and his wife a raise” from one of his other companies, Turn Key Lumber Inc., “and chose to take an expensive vacation at the Fountainebleau Resort.” The court further concluded that Fernandes was “either hiding assets or deliberately obfuscating his financial position to avoid paying the Consent Judgment.” Because Fernandes intermingled his assets and liabilities with Turn Key, the court held that it could grant relief in the contempt action based on Turn Key’s assets.
As part of the contempt order, the judge appointed a special master to examine the finances of all four defendants, Fernandes’s wife and five non-defendant entities, including Turn Key, in which the individual defendants and/or Fernandes’s wife have an ownership or controlling interest. The court also ordered the defendants and companies owned or controlled by them not to make certain transfers of money, assets, or property at this time.
Based on an interim report filed by the special master, the court appointed the special master as a receiver and ordered him to take possession of and sell three real properties that were owned, controlled, or used by Fernandes, his wife, and/or Turn Key. The court recently allowed the special master/receiver to enter into specific agreements to list the three properties for sale.
“This decision shows that the U.S. Department of Labor will pursue necessary and effective legal actions to ensure that employers comply with the Fair Labor Standards Act,” said Solicitor of Labor Kate O’Scannlain.
“The U.S. Department of Labor will not stand by and allow employers to renege on their legal obligations. The department took this action to hold the defendants in contempt due to their continued defiance of the 2016 consent judgment, despite numerous attempts at resolution,” said Regional Solicitor of Labor for New England Maia Fisher in Boston. “The defendants’ failure to comply with the consent judgment not only deprived hundreds of workers of their wages but also placed law-abiding employers at a competitive disadvantage. Fernandes built Turn Key’s business using the wages that he had unlawfully withheld from his employees, which is unfair to employers that properly pay workers their wages when they are due.”
“The defendants’ ongoing refusal to pay their employees their hard-earned wages shortchanges workers still waiting a long time to be paid,” said Wage and Hour Division Regional Administrator Mark Watson. “The U.S. Department of Labor is committed to ensuring employees receive all the wages they have rightfully earned and employers compete on a level playing field.”
The FLSA violations underlying the 2016 consent judgment resulted, in part, from the defendants’ misclassifying the majority of their employees as independent contractors to avoid paying them overtime. The defendants have paid only $527,900 pursuant to the consent judgment, and continue to owe a total of $1,831,785, plus interest, to the affected employees.
The Boston District Office of the department’s Wage and Hour Division (WHD) conducted the original investigation. The department’s Boston Regional Office of the Solicitor is litigating the case.
For more information about the FLSA, and other laws enforced by WHD, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Employers who discover overtime or minimum wage violations may self-report and resolve those violations without litigation through the PAID program. Information is also available at https://www.dol.gov/agencies/whd, including a search tool to use if you think you may be owed back wages collected by the Division.
Scalia v. Force Corporation, AB Construction Group Inc., Juliano Fernandes, and Anderson dos Santos
Civil Action Number: 16-cv-40103-TSH