SAN FRANCISCO – Oil and gas industry workers often work long hours to provide essential products for the nation’s economy. In return, these employees expect their employers to pay them fairly and fully, as the law requires. For 750 workers employed by one of the world’s largest industry operators, this was not the case.

An investigation by the U.S. Department of Labor’s Wage and Hour Division found that three subsidiaries of Chevron Corporation violated the Fair Labor Standards Act’s overtime provisions when they failed to pay hourly field operators for the hours they worked during mandatory pre-shift relief meetings, where they turned over their duties to employees on the next shift.

Investigators found Chevron Products Company in San Ramon, Chevron Pipeline Company in Bellaire, Texas and Chevron North America Exploration and Production Company in Houston, failed to pay workers fully. 

The division announced today that Chevron will pay more than $750,000 in overtime back wages and an equal, additional amount in damages to the affected workers. The investigation also identified recordkeeping violations as the company failed to record accurately the number of hours employees worked.

“Employers need to understand that workers must be paid for all the time they work, including time they must spend in briefings before or after their scheduled shifts,” said Susana Blanco, director of the Wage and Hour Division’s San Francisco District Office. “Our investigation will result in hundreds of workers receiving checks reflecting the hours they worked, and compensation for time that had been missing from their paychecks in the past. The back wages and damages in this case should send a strong message to employers – violating the law at the expense of your workers can be costly.”

Since 2012, the division has concluded more than 1,000 investigations nationally and recovered more than $41.5 million in back wages for more than 29,000 employees in an initiative focused on oil and gas and related industries. As part of its shift toward industry-based enforcement strategies, the division’s ongoing education and enforcement initiative seeks to improve oil and gas industry compliance focusing resources where data shows violations are common and business models lend themselves to violations.

Based in San Ramon, Chevron is one of the world’s leading integrated energy companies. Its subsidiaries conduct business worldwide in virtually every facet of the energy industry.

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/.

Read this news brief in Spanish.

Employer name: APDC Services Inc., 3059 Michigan Ave., Kissimmee, Florida 34744

Investigation sites:

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division found that the Kissimmee-based staffing agency violated the overtime and recordkeeping provisions of the Fair Labor Standards Act. The agency, which provides workers to the Wyndham Lake Buena Vista, B Resort & Spa, Westgate Lakes Resort & Spa, Westgate Palace Resort, Legacy Vacation Club, Reunion Resort and the Westgate Blue Tree Resort, paid hourly employees straight time for their overtime hours. The company also failed to maintain time and payroll records.

Resolution: APDC will pay a total of $133,778 in back wages to 811 workers and comply with the FLSA in the future. The agency also signed an agreement with the department to amend all of their contracts with hotels to include language to cover their obligations under the FLSA. Contracts will expressly state that the staffing agency will bill client hotels, and employees will be paid, time and one-half for hours worked beyond 40 in a workweek. The division also assessed $57,145 in civil money penalties for APDC’s repeated violations after having found similar violations in prior investigations of this employer.

Quote: “Staffing agencies, like all employers, must pay employees working on their behalf the hard-earned wages to which they are entitled to by law,” said Daniel White, district director for the Wage and Hour Division in Jacksonville. “Workers in the hospitality industry are among the most vulnerable that we see. The back wages and penalties collected in this case demonstrate the Wage and Hour Division’s commitment to protecting these workers, and to preventing employers from gaining an unfair competition advantage by skirting the law.”

Information: For more information about the FLSA and wage laws or to file a complaint, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243); the Jacksonville District Office at 904-359-9292 or visit http://www.dol.gov/whd/.

NEW ORLEANS – Two Gulf Coast staffing agencies have agreed to paid 353 workers nearly $516,000 in back wages after U.S. Department of Labor Wage and Hour Division investigators found they classified employees incorrectly as independent contractors and mislabeled wages as per-diem reimbursement for expenses never incurred.

Federal investigators found RBT Welders LLC and Contractor Labor Services LLC owed back wages to welders and pipe fitters who worked on maritime vessels and oil and gas industry projects in Louisiana and Texas. RBT paid $398,379 to 246 workers and Contractor Labor Services agreed to pay $118,128 to 107 workers for overtime violations under the Fair Labor Standards Act.

The investigations were part of an ongoing, multi-year initiative to curb the pervasive practice by staffing agencies to attribute part of an employee’s wages wrongfully as per-diem payments, often to avoid or reduce overtime, payroll taxes and other costs. Division investigators are monitoring staffing agencies and other employers throughout the 1,600-mile Gulf Coast region for signs of this practice.

The division found that RBT Welders and Contractor Labor Services:

• Attributed a portion of workers’ wages wrongfully as per-diem payments, rather than wages for hours worked, even though they did not incur lodging, meals and travel expenses as part of their employment. The practice based employees’ overtime hourly rate on an artificially lower rate, which excluded this mislabeled “per diem.”  
• Attempted to reduce their share of federal and state taxes, workers’ compensation, unemployment insurance and Social Security by designating wages as per diem pay, not subject to these costs.

“Illegal per diem practices hurt law-abiding employers, defraud local, state and federal governments, and leave taxpayers in the Gulf Coast region and across the nation picking up the tab,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Employers using this scheme gain an unfair advantage by lowering their labor costs while undercutting their own employees’ wages. They also compromise the benefits their workers would be entitled to receive in the event of a layoff, workplace injury or even at retirement.”

The Contractor Labor Services investigation also determined that the firm had misclassified employees as independent contractors. The practice resulted in overtime violations of the FLSA when the employer paid the misclassified employees an additional $2 per hour for overtime instead of the legally required time and one-half. Like the per-diem scheme, employers who misclassify attempt to shield themselves from business costs associated with overtime obligations, unemployment insurance, worker’s compensation premiums, unemployment insurance and Social Security payments required for employees.

Both staffing agencies signed agreements with the department to resolve concerns that surfaced in the investigations. The agreements require RBT Welders and Contractor Labor Services to:

• Not advertise that workers will receive per-diem payments as a part of the their regular rate of pay or otherwise suggest in any way that workers may receive per-diem payments regardless of how close the worker lives to the  assigned work site.      
• Issue genuine per-diem payments only to employees who incur expenses on behalf of the employer.
• Identify those employees who qualify for real per-diem payments for lodging, meals, mileage or fuel expenses based on their incurring actual, reimbursable expenses on behalf the employer.
• Ensure that employees do not receive per-diem payments that correspond directly with the number of hours worked.
• Communicate, and ensure employees understand and acknowledge what constitutes a legitimately reimbursable expense that is excludable from the regular rate of pay.

The investigation also found that the staffing agencies and the client companies that used the services of the welders, pipe fitters and other craft workers employed them jointly. Had the staffing agencies failed to resolve the violations disclosed by these investigations, the department could have held the client or host companies responsible.

Employers must distinguish employees from actual independent contractors. An employee, as distinguished from a person who is engaged in a business of his 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 serves. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

For more information about federal wage laws, or to file a complaint, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its New Orleans District Office at 504-589-6171. Information also is available at http://www.dol.gov/whd/.

Participants: U.S. Department of Labor’s Wage and Hour Division
Nebraska Department of Labor

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the Nebraska Department of Labor signed a three-year Memorandum of Understanding intended to protect employees’ rights by preventing their 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 33 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 improperly lowers tax revenues to federal and state governments, 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 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.”

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

“Nebraska looks forward to a productive partnership with the US Department of Labor as we move forward in our efforts to ensure compliance with existing wage and hour laws,” said Nebraska Commissioner of Labor John H. Albin.  “The misclassification of employees as independent contractors is a serious issue with far-reaching impacts.”

– John H. Albin, Nebraska Department of Labor Commissioner

NEW YORK – For more than a dozen sales clerks, cashiers, stock clerks and security guards at three beauty supply stores in the Bronx and Brooklyn, the hours were long but too often, their pay came up short.

Now, as a result of a U.S. Department of Labor Wage and Hour Division investigation and the department’s litigation, their employers must pay the 16 workers a total of $218,000 in back wages and liquidated damages.

The division found Exclusive Beauty Supply Inc.; Exclusive Beauty Supply 2 Inc., which does business as Virgin Beauty Supply; Exquisite Health & Beauty Supplies Inc., owner Hassan M. Esskander and his son Mahdhar Esskander willfully violated the overtime,  minimum wage and recordkeeping requirements of the Fair Labor Standards Act.

Investigators determined the stores’ employees worked between 50 and 68 hours per week typically and were paid only straight time when they worked more than 40 hours per week. The businesses did not always record daily stop or start times and total daily hours worked by each employee.  The companies’ timesheets and payroll records did not match and the employer recorded employees’ hourly wage rates incorrectly to conceal the violations. In addition, the agency found the companies did not pay two employees the federal minimum wage.

“These violations denied the employees the full wages to which they were legally entitled for their long hours of work, week in and week out,” said Sonia Chasin Rybak, the Wage and Hour Division’s acting district director in New York City. “Unscrupulous employers often try to intimidate and exploit vulnerable, immigrant, non-English-speaking workers. The defendants’ unacceptable short-changing of these employees also economically undercuts those retailers that pay their workers correctly.”

“The U.S. Labor Department rigorously pursues appropriate and effective legal measures to compensate vulnerable workers such as these, challenge and change the behavior of non-compliant employers and level the playing field for employers who play by the rules,” said Jeffrey S. Rogoff, the department’s regional solicitor in New York.

The department obtained a consent judgment in the U.S. District Court for the Southern District of New York that orders the defendants to:

• Pay 16 employees $218,000 – $109,000 in back wages and an equal amount in liquidated damages.
• Comply with the FLSA’s overtime, minimum wage and recordkeeping requirements.
• Amend their pay practices to include a time clock or other automated timekeeping system; pay each employee based on the hours they actually worked; provide each employee with a printed statement of their work hours and the opportunity to correct the statement if necessary,
• Retain a third-party examiner knowledgeable about the FLSA to perform quarterly compliance audits, prepare written compliance status reports and submit them to the Wage and Hour Division upon request.
• Refrain from requiring the employees to return or ‘kick back’ the wages and damages to the defendants.
• Refrain from retaliating against employees or telling them to not cooperate with Labor Department investigations.
• Provide employees with information, publications and a notice of their FLSA rights in English and Spanish.

If the defendants fail to pay the back wages and liquidated damages, the court is authorized to appoint a receiver to carry out the terms of the consent judgment at the defendants’ expense. A lien on residential property owned by defendant Hassan M. Esskander will serve as security for the payment of the back wages and liquidated damages.

The consent judgment resulted from a settlement agreement reached by the parties after three days of bench trial proceedings before District Judge Richard J. Sullivan, during which the department presented testimony from nine current and former employees of the defendants. At the start of the fourth day of trial, before the defendants themselves were to take the witness stand, the defendants agreed to pay the full amount of back wages and liquidated damages that the department had computed and demanded for the trial.

The division’s New York City District Office investigated the case. Attorneys Orly Shoham, Patrick Dalin and Daniel Hennefeld from the department’s New York solicitor’s office litigated the case for the division.

The stores and their locations:

• Exclusive Beauty Supply Inc., 714 Broadway, Brooklyn.
• Virgin Beauty Supply, 2042 Jerome Ave. Bronx.
• Exquisite Health & Beauty Supplies Inc., 737 East Tremont Ave., Bronx.

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/.

# # #

Perez v. Exclusive Beauty Supply Inc.; Exclusive Beauty Supply 2 Inc. d.b.a. Virgin Beauty Supply; Exquisite Health & Beauty Supplies Inc.; Hassan M. Esskander; and Mahdhar Esskander, Individually.

Civil Action Number:  1:15-cv-07712-RJS

Read this news brief in Spanish.

Employer name: Roadmaster Transportation Inc.

Investigation site: 1640 Stone Ridge Drive, Stone Mountain, Georgia 30083

Investigation findings: Investigators with the U.S. Department of Labor’s Wage and Hour Division, Atlanta District Office, found that Roadmaster Transportation Inc. violated the wage requirements of the McNamara-O’Hara Service Contract Act. The trucking company failed to pay drivers the prevailing wage rates and fringe benefits required by law as part of its contract with the U.S. Postal Service. The company transports mail and packages for the USPS in Alabama and Georgia.

Resolution: Roadmaster will comply with the SCA and has paid 99 workers $429,176 in back wages and $541,979 in fringe benefits, totaling $971,155.

Quote: “No federal contractor should gain an economic advantage by paying employees below the prevailing wages and fringe benefits their contracts require,” said Eric Williams, the Wage and Hour Division’s district director in Atlanta. “This practice not only undercuts what is legally owed to employees – it also results in unfair competition.”

Information: The SCA requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the prevailing wage rates and fringe benefits found in the locality, or the rates contained in a predecessor contractor’s collective bargaining agreement.

For more information about the SCA and wage laws or to file a complaint, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243), the Atlanta District Office at 678-237-0521, or visit http://www.dol.gov/whd/.

Participants: U.S. Department of Labor’s Wage and Hour Division
North Carolina Industrial Commission

Partnership description: The U.S. Department of Labor’s Wage and Hour Division and the North Carolina Industrial Commission signed a three-year Memorandum of Understanding intended to protect employees’ rights by preventing their 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 32 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 improperly lowers tax revenues to federal and state governments, 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 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.”

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

“The Industrial Commission is excited about this agreement with the U.S. Department of Labor to share information critical to identifying potential employee misclassification, and we are looking forward to this collaboration as it will assist us in achieving our strategic goals.” 

-- Charlton L. Allen, North Carolina Industrial Commission Chairman

Employer: Brownlow Plastering LLC

Site: 19031 Trippi Road, Hammond, Louisiana 70403

Investigation Findings: A U.S. Department of Labor Wage and Hour Division investigation found that Brownlow Plastering violated the overtime and record-keeping provisions of the Fair Labor Standards Act. An investigation by the division’s New Orleans District Office revealed that the company misclassified employees entitled to protections under the FLSA as independent contractors.

The division found an alleged labor broker used by the firm was an employee working directly for Brownlow Plastering. Workers hired by the “broker” to work for Brownlow were, in fact, direct employees. The alleged broker worked only for Brownlow – as did the workers he hired – providing no services to any other business. Despite the facts that none of these individuals were in business for themselves, that Brownlow bid all the work and supplied all the materials, and that Brownlow paid workers fixed hourly rates determined by the company, the employer claimed they were independent contractors because they were recruited through this “broker.”

This misclassification resulted in Brownlow violating the overtime and recordkeeping provisions of the FLSA when they:

• Paid straight time rates for all hours worked, failing to pay overtime premium for hours worked beyond 40 in a workweek.
• Failed to maintain accurate daily and weekly record of hours worked.

Resolution: Brownlow Plastering will pay $365,291 in overtime back wages to 147 employees. The employer also signed an enhanced compliance agreement in which the employer is required to provide:

• Wage and Hour information about the employment relationship in all future subcontracts.  
• The division’s Fact Sheet on the employment relationship to current and future employees.
• Training to supervisors and managers on FLSA requirements at least once annually. 

Quote: “Employees labelled incorrectly as ‘independent contractors’ do not lose their legal rights to earn overtime wages,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Workers denied these rights suffer, as do their families. Misclassification also hurts law-abiding employers who must compete with employers that game the system to undercut the competition. The Wage and Hour division considers misclassification a top enforcement priority and is working alongside our state, local and federal partners to achieve greater compliance with the law.”

Background:  The investigation in this case is typical of those the division refers to the Internal Revenue Service and the Louisiana Workforce Commission, as per its memoranda of understanding with those agencies to combat worker misclassification.

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.

Information: For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its New Orleans District Office at 504-589-6171. Information is also available at http://www.dol.gov/whd/.

WASHINGTON – At the U.S. Department of Labor headquarters in Washington today, U.S. Secretary of Labor Thomas E. Perez renewed partnership agreements with embassy officials representing the governments of Ecuador, Guatemala, Honduras, Peru and the Philippines. The renewals come as the department kicks off Labor Rights Week 2016, from today through Sept. 4. This year’s theme is “Your Work Has Dignity. Know Your Rights.”

Under these renewed agreements, the department’s Occupational Safety and Health Administration and Wage and Hour Division will continue their ongoing collaboration with consulates in providing information to workers about U.S. labor laws, including workers under H-2A and H-2B visas.

“Partnerships and outreach play a critical role in advancing workers’ rights and enforcing the laws that protect people at work,” said Secretary Perez. “By renewing these five embassy agreements, we will continue to enhance workers’ awareness about their rights and promote a better understanding of labor laws and practices in the U.S.”

Partnerships like these help the department enforce U.S. labor laws more effectively, especially in high-risk and low-wage industries where violations are more likely to occur. They also help the department’s enforcement agencies improve their information outreach efforts by identifying problems workers typically face.

Ecuadorian Ambassador Francisco Borja Cevallos emphasized the importance of his country’s government working together with OSHA and the Wage and Hour Division. “This renewed partnership will improve the Ecuadorian workers’ standard of living, through a better understanding of labor laws and their rights in the U.S. The Embassy and the Department will cooperate to provide outreach and training, as well as assist with enforcement efforts as needed, so Ecuadorian workers in the U.S. exercise effectively their labor rights in a safer workplace.”

Echoing their support of the effort, Honduran Ambassador Jorge Alberto Milla Reyes said, “Partnerships like these help to acknowledge the value of the labor and the rights of the Honduran people working in the U.S.”

Labor Rights Week is an annual campaign in the week leading up to Labor Day that heightens awareness of workplace rights issues through a series of training events, workshops and information-sharing programs. As participants, consulates sponsor events throughout the U.S. and invite representatives from area OSHA and Wage and Hour Division offices to deliver informational sessions on U.S. health, safety and wage laws and explain the resources available to workers and their employers.

More information about these and other consulate agreements and department programs designed to protect foreign workers is available at http://www.dol.gov/dol/cpp/.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to ensure these conditions for America’s working men and women by setting and enforcing standards, providing training, education and assistance. For more information, visit http://www.osha.gov/.

The Wage and Hour Division enforces federal minimum wage, overtime pay, record-keeping and child labor requirements of the Fair Labor Standards Act, the Migrant and Seasonal Agricultural Worker Protection Act, the H-2A and H-2B programs under the Immigration and Nationality Act, and other federal labor laws. More information is available at http://www.dol.gov/whd/.

Read this news brief in Spanish.

ST. LOUIS – Their drivers may have delivered the mail through snow, rain, heat and the gloom of night, but 16 mail haulers contracted by the U.S. Postal Service failed to pay full wages and benefits to more than 250 of their drivers in violation of federal law, an investigation by the U.S. Labor Department’s Wage and Hour Division has found.

Investigators determined the companies – operating in the Midwest – owe $538,887 in back wages to 255 drivers after the employers failed to pay them the prevailing wage and provide fringe benefits as required by the McNamara O’Hara Service Contract Act.

 “Companies that enter into federal contracts are made fully aware of their requirement to pay prevailing wages and fringe benefits to employees performing work on those contracts,” said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. “When we find that companies fail to meet the requirements of their contracts, the division will continue to use every tool at our disposal to ensure that employers pay workers every penny they have rightfully earned. We will also act so that employers in this industry who play by the rules do not face unfair competition from those who do not.”

Several of the companies also failed to accurately record employee’s work hours and pay for all hours worked. The following is a list of the companies, number of employees affected and total wages owed:

In 2014, the division began an education and enforcement initiative focused on companies that have federal contracts to transport mail. In addition to conducting investigations, the division’s ongoing initiative includes educational outreach events for employers and industry stakeholders to provide compliance assistance and information on legal rights and responsibilities. The initiative also raises awareness among workers, community organizations and others regarding federal wage and hour laws and protections.

“We have provided informational sessions to the Star Route Mail Contractors Association to assist their members with compliance in government contracting,” said Norma Cervi, district director for the Wage and Hour Division in St. Louis, which is conducting the initiative. “The violations disclosed in these cases are far too common. We continue to work diligently to increase understanding and awareness of the laws so workers are paid their hard earned wages.”

Nationwide, in fiscal year 2015 the Wage and Hour Division found more than $35 million in back wages and unpaid fringe benefits for more than 18,000 workers under the McNamara-O’Hara Service Contract Act.

Accessible and searchable information on enforcement activities by the department is available at http://ogesdw.dol.gov/homePage.php.

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