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Massachusetts companies to pay $2.4M in overtime, damages to 478 workers, most intentionally misclassified as independent contractors
BOSTON – A Lunenburg construction company and a Framingham company it used to avoid its legal responsibilities as an employer have been ordered to pay a total of $2,359,685 in back wages and liquidated damages to 478 employees and take other corrective actions to prevent future violations of federal labor law. Under a consent judgment they will also pay $262,900 in civil money penalties due to the willful nature of their violations.
An investigation by the department’s Wage and Hour Division found that Force Corp., AB Construction Group Inc. and employers Juliano Fernandes and Anderson Dos Santos misclassified the bulk of their employees as independent contractors to avoid paying them overtime wages and other benefits to which they were entitled under the Fair Labor Standards Act. In addition, the defendants used a combination of payroll checks and cash/check payments to pay their employees straight time when overtime pay was required, and kept inadequate and inaccurate time and payroll records.
“American workers go to their jobs each and every day and work hard to help their employers turn a profit,” said U.S. Secretary of Labor Thomas E. Perez. “To be cheated out of wages and denied other workplace protections by an employer who deliberately flouts the rules compounds the struggles too many middle class Americans already face. Workers who play by the rules deserve nothing less than to be paid what they are owed.”
Force Corp. is a year-round construction company operating in Massachusetts, Connecticut and Maine. The division’s investigation determined that the defendants created AB Construction to provide Force Corp. with much of its labor, and that Force Corp. prepared and controlled the payroll and payment procedures for both companies.
The department has now obtained a consent judgment in the U.S. District Court for the District of Massachusetts that orders the defendants to:
- Pay a total of $2,359,685 – $1,179,842 in back wages and an equal amount in liquidated damages – to 478 employees.
- Refrain from evading their responsibilities under the FLSA by misclassifying their employees as independent contractors
- Make, keep and preserve accurate records of employees’ wages, work hours and working conditions, as required by the FLSA.
- Engage one or more qualified independent consultants to create a payroll system or systems that will ensure that the defendants’ payroll and recordkeeping practices comply with the FLSA. The consultants will also review those practices quarterly and submit reports to the division detailing any problems and corrective actions.
“The misclassification of employees as independent contractors is a serious problem that hurts workers, taxpayers, and the entire economy in multiple ways,” said Michael Felsen, the department’s New England regional solicitor. “It robs employees of their rights to proper wages, safe workplaces, social security payments, and unemployment and workers compensation insurance. It deprives federal and state governments of needed tax revenues. And, it undercuts law-abiding employers who pay their workers legally and play by the rules.”
The $2,359,685 is the division’s largest such FLSA wage recovery in Massachusetts since 2009.
“The U.S. Department of Labor is committed to rooting out misclassification, and will take the enforcement actions necessary to achieve that goal, including injunctions to correct employers’ unlawful practices, collecting back pay and liquidated damages for the workers, and assessing serious penalties,” said Carlos Matos, the Wage and Hour Division’s district director in Boston.
In recent years, the employment relationship between workers and the businesses receiving the benefit of their labor has fissured apart as companies have contracted out or otherwise engaged in efforts to shed their responsibilities as employers. The misclassification of employees as independent contractors is one example of the effects of such splintered relationships in the workplace. To assist in combating the problem, the department has entered into agreements with more than 30 states to share information and to coordinate enforcement efforts. The department also engages in a robust education and outreach, and works with employers and other stakeholders to change behavior at the industry level.
The FLSA requires that covered, nonexempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one and one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.
For more information about federal wage laws administered by the Wage and Hour Division, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.
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Perez v. Force Corp.; AB Construction Group Inc.; Juliano Fernandes; and Anderson Dos Santos.
Civil Action Number: 4:16-cv-40103 - TSH.
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