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/.

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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

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/.

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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/.