WASHINGTON – Hundreds of workers who prepare and serve meals for Capitol Hill lawmakers and their staffs in the U.S. Senate cafeterias will receive more than $1 million in back wages after a U.S. Department of Labor investigation found their employers failed to pay prevailing wages required of federal contractors.

The department’s Wage and Hour Division announced today that Restaurant Associates and its subcontractor, Personnel Plus, will pay 674 workers $1,008,302 in back wages. The division found the two employers violated the McNamara-O’Hara Service Contract Act when they improperly classified workers – paying them for lower-paying jobs than they actually performed – and required employees to work prior to their scheduled starting times without compensation. Paying below the required rates also caused the companies to fail to pay the workers overtime at the proper rates.

“Employers given the opportunity to earn a profit by providing a service to the government at a cost to the tax payer have a legal obligation to follow the letter of the law, especially when it comes to paying their workers,” said the department’s Wage and Hour Division Administrator David Weil. “Workers in the restaurant industry are among the lowest-paid workers in our economy. Most struggle to afford life’s basic expenses and pay their bills; they shouldn’t have to deal with paychecks that don’t accurately reflect their hard work and the wages to which they are legally entitled.” 

The agency also determined the employers failed to pay required health and welfare benefits and violated the SCA’s recordkeeping requirements.  

Investigators found that Restaurant Associates’ failure to pay workers proper overtime and failure to maintain a record of hours employees worked prior to their scheduled shifts also violated the Fair Labor Standards Act.  

“Enforcement of the prevailing wage laws levels the playing field for all contractors and protects the wages of hard-working employees,” said Mark Watson, Regional Administrator for the Wage and Hour Division in the Northeast. “These contractors’ actions put vulnerable, low-wage workers and their families in jeopardy. The division will remain vigilant in its enforcement of these laws to protect both workers and employers.”  

The division is reviewing the findings to determine whether to seek debarment of the employers from obtaining contracts with the federal government in the future.

The SCA applies to every contract valued in excess of $2,500 entered into by the U.S. 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.

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 rates of pay 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/.

Employer: DCO Custom Builders LLC  

Site: 800 West Shell Drive, Suite H, Nogales, Arizona

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that DCO Custom Builders misclassified construction workers as independent contractors, failed to keep accurate records of the hours that they worked and paid employees straight time rates for overtime hours worked, in violation of the Fair Labor Standards Act.

Resolution: DCO Custom Builders will pay $24,255 in overtime back wages and an equal, additional amount in damages to 31 employees. The employer has also been assessed a $4,604 civil penalty.   

Quote: “The people who work hard building our homes must be paid every penny they have rightfully earned,” said Eric Murray, director of the Wage and Hour Division’s district office in Phoenix. “Misclassifying workers as independent contractors cheats workers and their families, an employer’s competitors and taxpayers in general. In this case, DCO Custom Builders’ also failed to pay overtime. As this outcome shows, we are committed to protecting the rights of construction workers and will use every tool available to hold employers accountable.” 

Information: The FLSA requires that covered, non-exempt 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 must maintain accurate time and payroll records, and 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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Employer: Atwater Construction Company, Inc.

Sites: 22640 N. 21^st Ave., Phoenix, Arizona

Investigation findings: Investigators with the U.S. Department of Labor’s Wage and Hour Division found that the Atwater Construction failed to pay employees one and one-half times their hourly rate for hours worked beyond 40 in a work week, in violation of the Fair Labor Standards Act’s overtime provision. The investigation revealed that employees regularly worked in excess of 40 hours per work week but were not paid an overtime premium; rather, they were paid straight time for all hours. The employer also failed to maintain accurate time and payroll records in violation of the law.

Resolution: Atwater Construction has paid $42,889 in overtime back wages and an equal amount in liquidated damages to 68 employees. The company has also paid over $18,300 in civil penalties to the federal government for willful violations of the FLSA.

Quote: “Many of Atwater Construction’s workers were regularly putting in more than 50 hours a week without any overtime pay. That is unacceptable and illegal,” said Eric Murray, director of the Wage and Hour Division office in Phoenix. “Thanks to this investigation, these workers will receive the pay they rightfully earned and should have received in the first place.”

Information: 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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Type of Action: Fair Labor Standards Act consent judgment

Names of Defendants: Best Aire Compressor Services Inc.
Thomas Russell

Allegations: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that Best Aire Compressor Services Inc., which does business as Best Aire CSI, misclassified salaried parts managers and some office clerical staff as exempt from overtime. The Grand Rapids, Michigan-based air compressor sales company and its owner, Thomas Russell, failed to pay these employees and, on some occasions, hourly service technicians overtime for hours worked beyond 40 in a work week in violation of the FLSA. The employer also failed to maintain accurate pay records.

Resolution: Under terms of a consent judgment, the company has agreed to pay a total of $13,603, including $6,801 in back wages and an additional $6,801 in liquidated damages to 13 former and current employees. Five of the employees work in the Grand Rapids office, six in Millbury, Ohio, and two in Greenfield, Indiana.

The company is also required to provide information on the FLSA and specific Wage and Hour Division fact sheets on rules governing overtime to employees.

Quote: “Simply paying an employee a salary does not necessarily mean the employee is not entitled to overtime,” said Mary O’Rourke, district director for the Wage and Hour Division in Grand Rapids. “When these employees were shorted their overtime pay, it not only hurt them and their families, it also created a competitive disadvantage for this employer’s competitors. We remain committed to ensuring that workers take home every penny they have earned rightfully, and to leveling the playing field for employers who play by the rules.”

Information: The FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. For an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the department's regulations.

The FLSA requires that covered, non-exempt 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 must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages.

Court: U.S. District Court for the District, Western District of Michigan, Southern Division

Docket Number: 1:15-cv-00842-RJJ-RSK, Perez v. Best Aire Compressor Services Inc., and Thomas Russell

NEW YORK – Thirty-one workers employed on the federally funded cobblestone reconstruction project on Manhattan’s Peck Slip will receive $431,715 in back wages and interest following an investigation and litigation by the U.S. Department of Labor.

The department’s Wage and Hour Division found that the workers did not receive the proper prevailing wages and fringe benefits required under the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act.

Sam Schwartz Engineering, a first-tier subcontractor under prime contractor MFM Contracting Corp. employed the workers. Investigators found that the employees who worked as flaggers on the project were incorrectly classified. The division alleged that – between August 2011 and January 2014 – they were paid $15 to $25 per hour instead of the prevailing wage rate of $44.49 per hour. The investigation also found workers did not receive all the overtime they were due under CWHSSA when they worked more than 40 hours in a week, did not receive holiday pay and that they were not paid on a weekly basis, as required.

The department’s Office of the Solicitor filed an administrative proceeding in 2015 against MFM Contracting and Sam Schwartz Engineering. The case is now being resolved with a consent findings and order approved by the department’s Office of Administrative Law Judges. Under the order, workers from the Peck Slip project will receive $431,715 in unpaid wages.

“Prevailing wage standards provide a safety net of fair wages to workers, their families and communities and level the playing field for local contractors and subcontractors to compete,” said Wage and Hour Division Regional Administrator Mark Watson.

“Federally funded construction projects are ultimately funded by the taxpayers. It’s imperative that employees working on these projects be properly compensated. When that doesn’t happen, the Labor Department will pursue appropriate legal remedies on the workers’ behalf,” said Regional Solicitor of Labor Jeffrey Rogoff. “Our investigation and actions show the department’s commitment to enforcing these laws to protect both employers and employees. We will continue to use all of the enforcement tools at our disposal to ensure that taxpayer dollars used to fund such contracts are properly spent.”

Read the Consent Findings and Order and the Final Order.

The Davis-Bacon and Related Acts require all contractors and subcontractors performing work on federal and certain federally funded projects to pay their laborers and mechanics the proper prevailing wage rates and fringe benefits, as determined by the secretary of labor. The Contract Work Hours and Safety Standards Act requires contractors and subcontractors on federal and federally assisted construction contracts over $100,000 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 investigation was conducted by the Wage and Hour’s Division’s New York City District Office. Attorneys from the department’s Office of the Regional Solicitor in New York litigated the case for the division.

For additional information about these and other laws enforced by the Wage and Hour Division, call its toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd/.

# # #

In the Matter of:

MFM Contracting Corp., Prime Contractor
Sam Schwartz Engineering D.P.C., First-Tier Subcontractor
Sam Schwartz Engineering PLLC, First-Tier Subcontractor
Case Number: 2015-DBA-00029

BOSTON – Employees at United Plastics manufacturing plants in Leominster, Massachusetts, and Sardis, Mississippi, will receive a total of $1,433,618 in back wages and liquidated damages as part of a consent judgment and order obtained in federal court by the U.S. Department of Labor.

An investigation by the department’s Wage and Hour Division found that the Leominster-based plastic products manufacturer and ASI Staffing Group Corp., which supplied contract labor to United Plastics jointly employed and systematically underpaid employees at both plants over approximately a three year period by denying them the overtime pay they were entitled to under the Fair Labor Standards Act.

The investigation found that to avoid paying proper overtime, ASI Group developed a scheme under which they created additional company names. When employees worked more than 40 hours in a week, the overtime hours were recorded under a separate company name, and some or all of their overtime hours were paid at straight time rates. These contract employees worked as machine operators, maintenance workers, molding technicians, color mixers and quality control workers, often in excess of 48 hours per week.

The investigation disclosed that United Plastics and its principals were aware that ASI Group workers at the Massachusetts and Mississippi United Plastics plants were not being paid proper overtime. United Plastics and ASI Staffing also failed to maintain legally required records of the number of hours worked by the employees and the rates at which they were paid.

“Employers who use staffing agencies as a cover for short-changing workers of their hard-earned wages are breaking the law, plain and simple,” said Mark Watson, Jr. the Wage and Hour Division’s regional administrator. “Violations like this not only deprive workers of money they need to meet their living expenses, they also undercut law-abiding employers who pay their workers legally and play by the rules. The resolution of this case should send a strong message that employers can’t hide behind staffing agencies to avoid their responsibilities to their workers.”

Despite United Plastics’ use of a contractor to provide this labor, the Wage and Hour Division determined that it bears responsibility as a joint employer under the FLSA, and is liable along with ASI Group for the back wages, liquidated damages and penalties.

“This is an example of the changing nature of work in what can be described as a ‘fissured workplace’ – one where the employment relationship between the workers and the business receiving the benefit of their labor has fractured – it is no longer direct because the company has contracted out various activities to be performed by staffing agencies to cut costs,” said Michael Felsen, the Labor Department’s New England regional solicitor.  “In such arrangements, workers are frequently deprived of the full wages to which they’re entitled. And, as was true in this case, the company using the contract labor is often jointly responsible for compliance with the law as an employer, along with the staffing agency that provides the workers.”

The judgment, filed in the U.S. District Court for the District of Massachusetts, orders the defendants to:

• Pay 566 employees a total of $1,433,618 – $716,809 in back wages and an equal amount in liquidated damages – by December 2016.
• Pay $100,000 in civil money penalties to the U.S. Labor Department due to the willful and repeated nature of their violations.
• Hire expert consultants to create pay and recordkeeping systems to help ensure compliance with the FLSA. The consultants will provide quarterly progress reports to the Wage and Hour Division.

The wages and damages cover violations committed at the Massachusetts and Mississippi locations between November, 2011 and October, 2014. No violations were identified at the United Plastics Gilbert, Arizona location.

The complaint and consent judgment can be viewed here and here.  

The case was investigated by the Wage and Hour Division’s Boston District Office with assistance of the agency’s Jackson, Mississippi and Phoenix, Arizona, district offices, and the Boston regional office of the solicitor.  The complaint and consent judgment were filed by Boston solicitor’s office attorneys Susan Salzberg and Mark Pedulla.

As part of its strategic enforcement efforts, the department works with employers and industry stakeholders to provide compliance assistance and information on legal responsibilities.  The division also engages with worker centers, community organizations and other stakeholders, to raise awareness of the protections of federal labor laws and to encourage participation in promoting industrywide compliance. In this case, Metrowest Worker Center and Greater Boston Legal Services worked with the department to help ensure that affected workers received the protections to which they’re entitled.   

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/.

The Wage and Hour Division offers publications translated into many different languages. These include the following languages: Spanish, Vietnamese, Korean, Chinese, Thai, Haitian, Russian, Hmong, Tagalog, Polish, Brazilian Portuguese, Urdu, Hindi, Bahasa Indonesian, Somali, Samoan and Punjabi.

# # #

Perez v. United Comb and Novelty Corp., doing business as United Solutions and United Plastics; Edward W. Zephir Jr., owner and president; Gregory Pojani, vice-president of operations and distribution; and John Bergeron, plant manager.

ASI Staffing Group Corp. doing business as ASI Group Corp.; and Mohammed (a.k.a. Eric) Islam, vice-president of operations.

Civil Action Number:  4:16-cv-40047-DHH.

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CINCINNATI, Ohio – Pipefitters and bricklayers constructing the Viking Village Shared Facility Pool in Sharonville under a federal contract will recover a total of $147,000 in back wages and benefits following an investigation by the U.S. Department of Labor’s Wage and Hour Division.

Federal investigators found Gall Construction of America LTD underpaid the workers up to $17 per hour in salary and benefits, and violated provisions of the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act, which govern wage rates for projects receiving federal funds. The company operates as Acapulco Pools.

The division determined the company classified 21 bricklayers and pipefitters as general labors and failed to pay prevailing wages, fringe benefits and overtime at the rate due for their job titles. Gall also failed to keep accurate time and payroll records for employees. To resolve these violations the company agreed to pay the workers the monies owed in back wages and benefits.

“When companies fail to follow the guidelines to which they agree when bidding a federal contract, they gain an unfair advantage,” said George Victory, director of the Wage and Hour Division’s Columbus District Office. “The payment of these hard-earned back wages will make a big difference in the lives of these workers and their families.”

The pool construction was funded by The American Recovery and Reinvestment Act.

Gall Construction was the project’s prime contractor. The Canadian company is based in Kitchener, Ontario.

The DBA requires all contractors and subcontractors performing work on federal and certain federally funded projects to pay their laborers and mechanics the proper prevailing wage rates and fringe benefits, as determined by the secretary of labor. On a DBA project, the prime contractor is responsible for the compliance of subcontractors and lower-tier subcontractors

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 rates of pay for all hours worked over 40 in a workweek.

For more information about the DBA, the CWHSSA and other federal laws, contact the Wage and Hour Division’s Columbus District Office at 614-469-6944 or call the division’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

BOSTON – The U.S. Department of Labor’s Wage and Hour Division will offer a comprehensive compliance seminar for employers, representatives of community rehabilitation programs, family members and guardians of workers with disabilities and other stakeholders on rules governing the payment of workers with disabilities under Section 14(c) of the Fair Labor Standards Act. 

The seminar will be held August 3^rd, 2016, from 8:30 a.m. to 5 p.m. EDT at John F. Kennedy Federal Building, 15 New Sudbury Street, Boston. Registration begins at 8 a.m., EDT. There is no charge to attend. 

“The Labor Department is committed to ensuring that all of our stakeholders – employers, community rehabilitation programs, advocates, workers and other interested parties – fully understand the rules that apply to employing workers with disabilities at subminimum wages,” said Wage and Hour Division  Hour Division Deputy Administrator Laura Fortman. “We are pleased to provide this free seminar and to offer this training. It is a key component of the department’s ongoing effort to increase awareness and enhance compliance of this program to prevent the curtailment of opportunities for employment of individuals with disabilities.”

The division enforces all requirements to protect both workers and employers, and in providing assistance to enable employers to proactively achieve compliance with Section 14(c) of the FLSA. Training will cover topics including the certification process, performing prevailing wage surveys, and conducting time studies. The department’s Section 14(c) on-line calculators that determine commensurate wage rates for employees will also be demonstrated.

Participants will learn about common compliance problems for Section 14(c) certificate holders, such as calculating commensurate wages and accurately tracking hours worked, and how to avoid them. The seminar will also address the impact of Executive Order 13658, which establishes a minimum wage for certain federal contractors, as well as the provisions of the Workforce Innovation and Opportunity Act that will directly affect an employer’s ability to pay workers a subminimum wage.

There is no fee to attend this conference; however, space is limited. Registration can be completed online at http://www.dol.gov/whd/specialemployment/FreeSeminar_Section14c.htm. An email will be sent to confirm registration. Members of the public with questions about the conference should call 603-606-3118.

For more information on Section 14(c) of the FLSA and other federal wage laws administered by the Wage and Hour Division, call the department’s toll-free helpline at 866-4US-WAGE (487-9243) or visit the agency’s website at http://dol.gov/whd/.  

Employer: WadeCo Specialties Inc., an oilfield services chemical provider

Site: 8115 West Industrial Avenue, Midland, Texas 79706

Investigation Findings: U.S. Department of Labor’s Wage and Hour Division investigators found that WadeCo Specialties Inc. violated the overtime and recordkeeping provisions of the Fair Labor Standards Act. The employer incorrectly classified service technicians and their billing support manager as exempt from the overtime requirements of the FLSA. The employer paid these workers flat salaries, without regard to the number of hours they actually worked. This practice resulted in violations when they failed to pay the workers overtime when they worked more than 40 hours in a week. The employer also failed to keep accurate time records as required by the FLSA.

Resolution: WadeCo Specialties will pay $219,515 in back wages and an equal, additional amount in liquidated damages for a total of $439,030 to 50 employees. The employer has reclassified the positions in question correctly as non-exempt, pays workers in those positions overtime, and now keeps records as required to comply with the FLSA.

Quote: “Simply paying workers on a salary basis does not necessarily mean they are not due overtime,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Failing to pay workers the wages they have rightfully earned will come at high cost to the employer. When employers fail to pay workers legally, it harms the workers and their families and puts law-abiding employers at a competitive disadvantage. The liquidated damages paid to workers in this case demonstrate that the division will continue to use every remedy available to ensure workers are paid what they have earned.”

Background: Headquartered in Midland, WadeCo Specialties Inc. supplies, transports, services and stores chemicals required for oil field services and operation. Since 2012, the Wage and Hour division has concluded more than 1,000 investigations nationally and recovered more than $40 million in back wages for more than 29,000 employees in an initiative focused on oil and gas and related industries.

Information: The FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the department’s regulations.

The division is committed to ensuring that workers receive every penny they have rightfully earned. For more information about the FLSA, 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/.