Employer: R&R Construction Services Corp.

Sites: Maile Sky Court Hotel
2058 Kuhio Ave., Honolulu Hawaii

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division found R&R Construction Services Corp. violated overtime provisions of the Fair Labor Standards Act. Specifically, this employer misclassified its workers as independent contractors rather than employees. This practice resulted in overtime violations when R&R paid these workers fixed rates per day, without regard to how many hours they worked, and they worked more than 40 hours in a week. Workers on the project typically worked 10-hour days, 6 or 7 days per week.

Resolution: The company paid 95 workers, including painters, carpenters, plumbers, laborers and cleaners $185,688 in unpaid overtime and an equal amount in damages, for a total of $371,376.  The department also assessed a civil money penalty of $68,680 against the employer for the willfully violating the overtime provision. The Hawaii Department of Labor and Industrial Relations fined R&R Construction $767,000 recently for misclassifying construction employees as independent contractors.

Quote: “This case provides a great example of federal and state agencies working together on behalf of disenfranchised workers to more comprehensively safeguard their pay and work conditions,” said Terence Trotter, director of the Wage and Hour Division office in Honolulu. “We’ll remain vigilant in our efforts to find other employers utilizing similar schemes to gain a competitive advantage in the marketplace at the expense of workers and lawfully compliant employers.”

Background:  Employees subject to misclassification often are denied access to critical state and federal baseline benefits and protections, including minimum wage, overtime, family and medical leave, unemployment insurance, worker’s compensation, and safe workplaces. The Wage and Hour Division has entered into partnerships with 35 states, including Hawaii, to work together to combat misclassification.

Information: Headquartered in Houston, R&R Construction Services Corp. was hired by Selby Construction as a subcontractor to renovate the Maile Sky Court Hotel in Waikiki to reopen it as a Holiday Inn Express.

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/.

AUSTIN, Texas – In nearly every one of its investigations of restaurants in fiscal year 2016, the U.S. Department of Labor’s Wage and Hour Division says restaurant owners in the Austin area violated federal labor law by not paying their workers the wages they were legally owed.

The division found violations of the Fair Labor Standards Act in 95 percent of its investigations of area restaurants from Oct. 1, 2015, to June 30, 2016, down slightly from the 98 percent violation rate in fiscal year 2015. In just nine months ending in June 2016, investigators helped recover more than $330,000 in back wages for 500 Austin restaurant workers.

“The current level of noncompliance found in these investigations is not acceptable,” said Dr. David Weil, administrator of the Wage and Hour Division. “WHD will continue to use every tool we have available to combat this issue. This includes vigorous enforcement as well as outreach to employer associations and worker advocates to ensure that Austin restaurant workers receive a fair day’s pay for a fair day’s work."

Findings like these are all-too-common in restaurants across the nation. The industry traditionally employs some of the country’s lowest-paid workers who, due to a lack of knowledge of the law or a reluctance to exercise their rights, are vulnerable to labor violations.

Some of the common violations include employers:

• Requiring employees to work exclusively for tips, with no regard to minimum-wage standards.
• Making illegal deductions from workers’ wages for walkouts, breakages, credit card transaction fees and cash register shortages, which reduce wages below the required minimum wage.  
• Paying straight-time wages for overtime hours worked.
• Calculating overtime incorrectly for servers based on their $2.13 per hour base rates before tips, instead of the federal minimum wage of $7.25 per hour.
• Failing to pay proper overtime for salaried non-exempt cooks.
• Creating illegal tip pools involving kitchen staff.
• Failing to maintain accurate and thorough records of employees’ wages and work hours.
• Committing significant child labor violations, such as allowing minors to operate and clean hazardous equipment, including dough mixers and meat slicers.

The Wage and Hour Division uses data and evidence to focus its resources strategically on where violations rates are high but the likelihood of workers speaking up is low, and employs a combination of enforcement and education to boost compliance.  In Austin, the division continues to engage key employer associations and state agencies to educate the restaurant industry about the systemic violations typically found, and to provide employers with FLSA compliance assistance information to improve compliance in the future.

In 2017, the division will expand outreach, education, and enforcement in the industry to more cities and states in the Southwest and beyond to continue to combat these widespread violations.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Editor’s Note: Wage and Hour Division Administrator Dr. David Weil will be available to news media to discuss the state of labor violations in this industry Oct. 5 at 11 a.m. CDT at the Homer J. Thornberry Federal Judicial Building, 903 San Jacinto Blvd., Suite 1400, Austin, TX 78701.

Members of the news media wishing to attend should contact Juan J. Rodríguez via email.

BOSTON – The U.S. Department of Labor has filed a lawsuit with the department’s Office of Administrative Law Judges alleging a Massachusetts technology manufacturer engaged in discriminatory pay practices against female assembly workers at its Peabody headquarters.

A compliance review by the department’s Office of Federal Contract Compliance Programs found that Analogic Corporation’s compensation policies resulted in systemic discrimination against women employed in Assembler 2 and Assembler 3 positions, in violation of Executive Order 11246. Analogic paid female employees in those positions less than comparable males employed in those positions. The pay disparity remained after adjusting for differences in legitimate, pay-determining factors.

“Our investigation found that Analogic knew or should have known that its total compensation policies discriminated against female assemblers on the basis of gender,” said OFCCP Director Patricia A. Shiu. “Federal contractors must ensure taxpayer money never funds employment discrimination. Analogic’s failure is unacceptable, and our action today should serve to remind other federal contractors that we will aggressively pursue compensation discrimination cases.”

The suit also asks that Analogic be ordered to:

• Modify its compensation system to eliminate compensation disparities between males and females in the Assembler 2 and Assembler 3 positions.
• Provide back pay, interest, front pay, salary adjustments, fringe benefits, seniority and other benefits to the affected female workers.
• Train all employees involved in the company’s compensation process regarding its non-discrimination obligations as a federal contractor.
• Perform an in-depth analysis annually of its total employment process to determine whether and where impediments to equal employment opportunity exist.
• Develop an internal auditing and reporting system to measure the effectiveness of its affirmative action program.

In the event that – following a favorable ruling on its claims – Analogic fails to provide relief to the affected employees, the department is asking the court to cancel all of Analogic’s government contracts and to debar Analogic from receiving future government contracts until it satisfies the Secretary of Labor that its personnel and employment policies comply with Executive Order 11246.

Analogic designs and manufactures guidance, diagnostic imaging and threat detection technologies. The company holds contracts and performs work for such federal agencies as the National Institutes of Health, U.S Department of Veterans Affairs, Food and Drug Administration and Defense Health Agency. It has approximately 1,500 employees worldwide, including about 900 at the Peabody location.

The full complaint can be viewed here.

In addition to Executive Order 11246, OFCCP enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. These laws, as amended, make it illegal for contractors and subcontractors doing business with the federal government to discriminate in employment because of race, color, religion, sex, sexual orientation, gender identity, national origin, disability or status as a protected veteran. In addition, contractors and subcontractors are prohibited from discriminating against applicants or employees because they have inquired about, discussed or disclosed their compensation or that of others, subject to certain limitations. For more information, please call OFCCP’s toll-free helpline at 800-397-6251 or visit http://www.dol.gov/ofccp/.

Date of Action: Sept. 29, 2016

Type of Action:  Filing of lawsuit

Name of Defendant: Jani-King of Oklahoma Inc.
Addison, Texas

Allegation: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that Jani-King of Oklahoma Inc. violated the Fair Labor Standards Act when it sold cleaning “franchises” to individuals who were – in reality – employees. The division determined that the company sold franchises with a range of down payment and financing options. Contrary to typical franchise agreements, Jani-King controlled all aspects of the cleaning contracts held by the franchisee; these aspects included setting the cleaning rates, client relations, billing and payroll. Jani-King also controlled the assignment of cleaning contracts among its franchisees, collected payment from clients, kept what it considered to be its share and then distributed what was left to the “franchisee.” Given the characteristics of this business model and the franchisees’ economic dependence on Jani-King of Oklahoma, the division found the franchisees to be, in fact, employees who would be eligible for minimum wage and overtime under the FLSA.

The focus of the complaint filed today in federal court is the employment relationship between Jani-King of Oklahoma and its alleged franchisees. The Secretary of Labor seeks an injunction to compel Jani-King of Oklahoma to comply with the FLSA’s minimum wage, overtime, and record-keeping provisions in the future. The department also alleges that Jani-King of Oklahoma failed to keep the required records.

Quote: “What we are doing in this case is challenging the business model itself, which undermines compliance with our basic labor standards. Jani-King of Oklahoma dictated which jobs a person took and directed almost every aspect of the employment relationship – which makes them an employer not a franchisor,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Despite its claims, this company had an employee-employer relationship with its so-called franchisees. They were not in business for themselves – they were paying for a job, entirely dependent on Jani-King – a hallmark of an employment relationship. There are many legitimate forms of franchising, but this is not one of them.”

Resolution: The department seeks a court ruling that confirms Jani-King of Oklahoma is an employer as the FLSA describes, and that its franchisees are employees. The suit also seeks the court to order Jani King to abide by labor laws, maintain required time and pay records, and ultimately pay its employees accordingly.

Additional Information: The Wage and Hour Division continues to conduct investigations in low-wage industries where data and evidence show high rates of non-compliance, and where workers are less likely to complain. Both education and enforcement continue in the janitorial industry in which a high violation rate exists. The division filed another suit against Grammatico Enterprises Inc., doing business as Heits Building Services of Central and Northern New Jersey last year after an investigation determined that employer’s business model and employment relationship with its franchisees also attempted to circumvent compliance with the FLSA.

Court: U.S. District Court for the Western District of Oklahoma

Docket Number: 3:16-cv-01133-W

NEWARK, N.J. – One hundred and twenty-two employees at a Newark immigration detention facility will receive $4.8 million in back wages and fringe benefits from the County of Essex and one of the nation’s largest providers of re-entry and in-prison treatment services, following an investigation by the U.S. Department of Labor’s Wage and Hour Division.

After the division found the county and Community Education Center Inc. failed to pay prevailing wage and overtime rates in violation of federal labor laws, the department filed suit against both parties. Today, the department announced its Office of Administrative Law Judges approved consent findings and issued its order.

The division’s investigation revealed that – on or around Aug. 10, 2011 – prime contractor Essex County won a $129,785,750 contract from the U.S. Department of Homeland Security’s Immigration and Customs Enforcement to provide detention services for immigrant detainees at Delaney Hall Center in Newark. The county then subcontracted to Education and Health Centers of America Inc. to perform work at Delaney Hall. EHCA then awarded a subcontract to CEC to provide the services of detention and care of individuals in ICE’s custody at the facility.

From Dec. 20, 2013, to May 31, 2016, the county and CEC violated the McNamara-O’Hara Service Contract Act of 1965 by categorizing 122 detention officers improperly as operations counselors and failing to pay them the proper prevailing wage rate of $30.97 per hour required by law for that position, the investigation found. Instead, they paid $11.29 per hour based on a prior collective bargaining agreement that was invalidated by the National Labor Relations Board in December 2013.

Both employers also failed to pay fringe benefits of $4.02 per hour, the required rate for detention officers, in violation of the SCA. The total amount of back wages and benefits due for the SCA violations is $4,061,507.

The investigation further determined that the county and CEC violated the Contract Work Hours and Safety Standards Act when they did not pay 116 detention officers proper overtime wages. The employers owe a total of $738,492.13 in back wages for this violation.

“Enforcement of the prevailing wage laws levels the playing field for all contractors and protects the wages of hard-working, middle-class American workers,” said Dr. David Weil, administrator of the Wage and Hour Division. “The Wage and Hour Division will remain vigilant in its enforcement to ensure employees are paid in accordance with prevailing wage laws.”

CEC provides comprehensive management of county, state, and federal jail and detention facilities. Founded in 1996 as a detox and treatment center in Hoboken, CEC has since grown to be a national leader in the field of correctional treatment currently operating in 16 states and the Commonwealth of Bermuda.

The CWHSSA applies to federal service contracts and federal and federally assisted construction contracts over $100,000. These require 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 workweek.

The SCA applies to every contract valued in excess of $2,500 entered into by the U.S. federal government or the District of Columbia, the principal purpose of which is to furnish services in the U.S. using service employees. Contractors and subcontractors performing on covered service contracts must observe minimum wage and safety, health and welfare benefits and maintain certain 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/.

Date of Action: Sept. 29, 2016

Type of Action: Lawsuit filing

Name of Defendant: Martin Marietta Materials Inc.

Allegation: The U.S. Department of Labor has sued Martin Marietta Materials Inc. after an investigation by the department’s Wage and Hour Division found that the employer violated the Family Medical Leave Act.

Investigators from the division’s San Antonio District Office found that Martin Marietta wrongfully denied the complainant the right to reinstatement by refusing to restore him to his original position, or by offering an equivalent position within the company. The FMLA gives employees the right to take up to 12 weeks of leave and the right to be restored to his or her original position, or to a position equivalent in benefits, pay, and conditions of employment upon return from leave. Federal law prohibits any employer from interfering with, restraining or denying the exercise of – or the attempt to exercise – any right provided under this title.

Quote: “Workers should not have to choose between their jobs and their health,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “The law is very clear on these matters: employees must be allowed to take FMLA without fear that they will lose their job. This lawsuit demonstrates that the division will use every enforcement tool available to make sure employees are not denied their rights under the law.”

Resolution: The department seeks reinstatement for the employee and $12,886 in back wages and liquidated damages, and an injunction against future FMLA violations by Martin Marietta.

Background: Based in Raleigh, North Carolina, Martin Marietta Materials is a leading supplier of aggregates and heavy building materials, with operations spanning 26 states, Canada and the Bahamas. The company currently employs 330 workers in the San Antonio area.

Court: U.S. District Court for the Western District of Texas, San Antonio Division

Docket Number: 5:16-cv-961

WASHINGTON – The U.S. Department of Labor announced a final rule today requiring federal contractors to provide paid sick leave to employees who work on or in connection with certain federal contracts. The rule will allow these workers to use paid leave if they are sick, need to take care of a sick family member or must see a doctor or take a family member to a medical appointment. Workers may also use paid sick leave for reasons related to domestic violence, sexual assault or stalking.

"Part of the basic bargain of America is that if you work hard, you should be able to take care of your family,” said U.S. Secretary of Labor Thomas E. Perez. “Paid sick leave helps workers recover from illness, or be there for their families, whether it’s to take an elderly parent to the doctor or to stay home with a young child with a fever. It allows working families to focus on what really matters most without having to worry about the next paycheck.”

The final rule implements Executive Order 13706, signed by President Obama on Sept. 7, 2015. When fully implemented, the final rule:

• Provides up to 56 hours of paid sick leave per year to an estimated 1.15 million employees of federal contractors, including an estimated 594,000 employees who currently receive no paid sick leave.
• Ensures that employers have choices in how to best adapt the paid sick leave requirement to their businesses. For example, employers can choose to allow workers to accrue leave over time, or to frontload leave for ease of administration.
• Includes flexibilities related to integration with employers’ existing paid time off policies and leave provisions in existing collective bargaining agreements.
• Improves the health and performance of employees of covered federal contractors and brings benefits packages offered by those federal contractors in line with leading firms, ensuring they remain competitive in the search for dedicated and talented employees.
• Protects the public health by ensuring that covered federal contractors’ employees, customers and clients are able to stay home when they are sick.

The final rule applies to all covered contracts solicited and awarded on or after Jan. 1, 2017. For more details, please see “Fact Sheet: Final Rule to Implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors,” and Frequently Asked Questions available at http://www.dol.gov/whd/govcontracts/eo13706/.

Employer: Cambridge Management, Inc.

Sites: 1916 64^th Ave. West
Tacoma, Washington

Apartment complexes in Tacoma, Olympia, Chehalis, Spokane, Clarkson, Yakima, Pasco, Quincy, Kennewick, Richland Moses Lake, Sunnyside and Walla Walla

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division examined Cambridge’s pay practices for on-site property managers and maintenance technicians at more than 100 rental communities throughout Washington. They found Cambridge Management, Inc. violated recordkeeping, minimum wage and overtime provisions of the Fair Labor Standards Act .

Specifically, the employer categorized salaried property managers and maintenance technicians improperly as exempt from overtime requirements. When the employer failed to record and pay for time that these employees worked after hours resolving issues for residents, overtime violations resulted when workers’ total hours exceeded 40 in a week. Minimum wage violations occurred when the employer took credits larger than allowed by law toward worker’ wages for company provided apartments. Additionally, when technicians were required to provide their own tools, those expenses resulted in minimum wage violations when they brought the workers’ effective wages below $7.25 per hour.

Resolution: Cambridge Management will pay $239,373 in unpaid minimum wages, overtime, and damages to 79 workers, and will comply with the FLSA in the future.  The employer has also agreed to change its pay and recordkeeping practices. Cambridge agreed to classify salaried employees properly, pay overtime after 40 hours per week to all non-exempt employees, discontinue claiming housing as part of the employees’ wages, pay for all hours worked and provide a tool allotment when employees begin their employment.

Quote: “Employees who work around the clock to provide clean and safe environments at these apartment complexes deserve to be paid properly for their efforts,” said Jeanette Aranda, director of the Wage and Hour Division’s office in Seattle. “Employers need to realize that simply paying an employee a salary does not mean that they are exempt from overtime. We will continue our efforts to educate and enforce labor standards on behalf of all workers, so that they take home every penny they have rightfully earned.”

Information: A property management company specializing in rental communities for low-income families, Cambridge Management, Inc. manages approximately 130 communities and more than 9,300 apartment homes in Washington, California, Hawaii, South Dakota, Florida and Georgia. 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/.

Date of Action: Sept. 23, 2016

Type of Action: Complaint, Consent Judgment and Order

Name of Defendants: Jacky's Galaxie Providence, Inc., doing business as Jacky's Waterplace & Sushi Bar, and Kin Wah Ko. 200 Exchange St., Providence, Rhode Island.

Allegations: An investigation by the Providence Area Office of U.S. Department of Labor's Wage and Hour Division found that the defendants violated the minimum wage, overtime and recordkeeping requirements of the Fair Labor Standards Act. Specifically, the investigation found multiple instances in which defendants:

• Paid servers, bartenders, cooks, bussers and dishwashers at rates less than the federal minimum wage.
• Failed to pay overtime pay to both tipped and non-tipped employees who worked more than 40 hours in a workweek.
• Required servers and bartenders to pay for breakages, customer walkouts and ordering errors out of their tips, reducing their pay to below the federal minimum wage.
• Paid a flat salary to non-exempt employees regardless of the number of hours they worked each week, creating an overtime violation when these employees worked more than 40 hours in a week.
• Took a set percentage of servers' and bartenders' tips to pay other employees.
• Required employees to work without pay at charity events.
• Failed to keep accurate records showing the hours worked each day by employees and the total hours worked during each workweek.

Quote: "These employees were denied their legally required rates of pay. While they will now be compensated, these violations should not have occurred in the first place. Underpaying workers not only harms those workers for whom each week's pay is a vital necessity, it also undercuts those businesses that play by the rules and pay their workers correctly," said Don Epifano, the Wage and Hour Division's assistant district director in Providence. "The resolution of this case sends a clear message — we will continue to use every enforcement tool available to us to ensure workers take home every penny they have rightfully earned."

Resolution: The Labor Department has obtained a consent judgment ordering the defendants to:

• Pay $283,977 in back wages plus an equal amount in liquidated damages to the 104 affected employees.
• Engage a qualified independent consultant with FLSA knowledge and experience to create a system to ensure that all businesses owned by defendant Ko will comply with the FLSA in the future; the consultant will on a biannual basis make available to the Wage and Hour Division, upon its request, reports of any violations and corrective actions taken.
• Hold biannual meetings at all company locations, including Providence, North Providence, Bristol, and Cumberland to inform employees of their FLSA rights.
• Train all managers and assistant managers to comply with the FLSA.
• Amend employee handbooks to include a section on practices prohibited by the FLSA.
• Pay $50,000 in civil money penalties to the Labor Department.

Senior Trial Attorney Susan Salzberg and Wage and Hour Counsel Merle Hyman of the Boston regional office of the Solicitor provided legal services in support of this enforcement action.

Background: As the result of separate investigations by the Wage and Hour Division the defendants previously paid a total of $80,350 in back wages and liquidated damages to 25 employees at the North Providence, Bristol, and Cumberland locations and also paid $13,750 in civil money penalties to the Labor Department for minimum wage and overtime violations.

The FLSA requires that covered, non-exempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus overtime at one and one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. Employers are prohibited from retaliating against workers who exercise their rights under the law.

For more information about federal wage laws administered by the Wage and Hour Division, or to file a complaint, call the agency's toll-free helpline at 866-4US-WAGE (487-9243). All services are free and confidential. Information also is available at http://www.dol.gov/whd/.

# # #

Civil Action Number: 1:16-cv-00525-S-PAS.

Court: U.S. District Court for the District of Rhode Island

Participants: U.S. Department of Labor’s Wage and Hour Division
Oklahoma Employment Security Commission

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the Oklahoma Employment Security Commission signed a three-year Memorandum of Understanding intended to protect employees’ rights and level the playing field for employers by preventing worker misclassification as independent contractors or other non-employee statuses. The two agencies will provide clear, accurate and easy-to-access outreach to employers, employees and other stakeholders; share resources; and enhance enforcement by conducting coordinated investigations and sharing information consistent with applicable law.

Background: The division is working with the U.S. Internal Revenue Service and 34 other U.S. states to combat employee misclassification and to ensure that workers get the wages, benefits and protections to which they are entitled. Labeling employees as something they are not – such as independent contractors – can deny them basic rights such as minimum wage, overtime and other benefits. Misclassification also lowers tax revenue to federal and state governments improperly, and creates losses for state unemployment insurance and workers’ compensation funds.

More information on misclassification and the effort are available at http://www.dol.gov/misclassification/.

Quotes: “The Wage and Hour Division continues to attack this problem head on through a combination of a robust education and outreach, and nationwide, data-driven strategic enforcement across industries,” said Dr. David Weil, administrator of the Wage and Hour Division. “Our goal is always to strive toward workplaces with decreased misclassification, increased compliance, and more workers receiving a fair day’s pay for a fair day’s work.”

– Dr. David Weil, U.S. Department of Labor Wage and Hour Division Administrator

“The Oklahoma Employment Security Commission is proud to enter into an agreement that will ensure greater efforts are made to properly classify Oklahoma’s workforce,” said Richard McPherson, Executive Director of the Oklahoma Employment Security Commission. “Proper classification of workers is vital to maintaining integrity in our workforce and ensuring a more robust business environment for individual workers as well as Oklahoma businesses.”

– Richard McPherson, Oklahoma Employment Security Commission Executive Director