BOSTON – The U.S. Department of Labor is suing two Gloucester fish processing companies and their owner for violations of the Fair Labor Standards Act. The department’s Wage and Hour Division found that Zeus Packing Inc., Cape Ann  Seafood Exchange and owner Kristian Kristensen owed $203,998 in unpaid wages and an equal amount in liquidated damages totaling $407,996  to 132 workers for the period October 2011 through September 2014. The defendants paid the back wages to the division in December 2015, but have so far refused to pay the liquidated damages.

The department’s lawsuit was filed in the U.S. District Court for the District of Massachusetts. It asks the court to order the defendants to pay the $203,998 in liquidated damages to the workers, plus any back wages and additional liquidated damages owed them for violations committed after September 2014, and to permanently enjoin and restrain the defendants from any future FLSA violations.

The division also assessed $49,368 in civil money penalties against the employer because of the willful nature of the FLSA violations. The defendants are contesting the penalties in a separate proceeding before a department administrative law judge.

“Where employees are paid in violation of the Fair Labor Standards Act, they are entitled – as a general rule – not only to payment of back wages, but also to an equal, additional amount in liquidated damages,” said Michael Felsen, the department’s regional solicitor of labor for New England.  “This case sends a strong message that the department will use all tools at its disposal, including litigation, to ensure that workers receive every penny they have rightfully earned, to provide strong incentives for employers to comply with the law, and to level the playing field for responsible businesses.”

Zeus/Cape Ann violated the FLSA’s overtime and recordkeeping requirements when they:

• Paid the employees who cleaned, cut and packaged fish by the pound without regard to how many hours they had worked. This resulted in overtime violations when employees worked more than 40 hours in a workweek and employees were paid only their piece rates, with no overtime.
• Failed to make, keep and preserve adequate records of payrolls and work hours.
• Provided inaccurate payroll records to investigators.           

Zeus/Cape Ann used workers provided by local staffing agencies to perform the cleaning, cutting, and packaging tasks at its Gloucester plant. Despite the processing companies’ use of this outsourced labor, the division determined that Zeus/Cape Ann was the employer of the workers and bears responsibility as such under the FLSA.

 “These workers put in long, hard hours for this processor, and deserve to be paid the wages they’re legally due,” said Carlos Matos, the Wage and Hour Division’s Massachusetts district director.

The case was investigated by the division’s Boston District Office and is being litigated by attorneys James Glickman and Sheila Gholkar of the department’s Boston regional office of the solicitor.

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. Zeus Packing Inc., Cape Ann Seafood Exchange Inc. and Kristian Kristensen.
Civil Action Number:  1:16-cv-10442

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Employers: Elite Energy Efficiency

Sites: 669 Quinn Road #1, Pocatello, Idaho

Investigation findings: Investigators with the U.S. Department of Labor’s Wage and Hour Division found that Elite Energy Efficiency violated the Fair Labor Standards Act by misclassifying employees as independent contractors even though:

• Workers performed services integral to the business as insulation technicians. 
• The technicians had little opportunity for profit and loss. The employer simply them paid set piece rates.
• The workers had little investment in the business.
• The technicians’ skills lacked a specialty nature since other technicians trained them. 
• The work relationship was permanent.
• The employer controlled the manner in which employees performed the work.

The employer failed to pay employees for hours they regularly worked beyond 40 in a work week, and the employer failed to maintain records of hours of work. Overtime violations occurred as a result of the employer paying straight time for all hours worked. 

Resolution: Elite Energy will comply with the FLSA, correctly classify technicians as employees and will pay $41,000 in back wages to 44 employees.  

Quote: “Elite Energy Efficiency went to great lengths to avoid paying employees their rightful wages, instead claiming employees were independent contractors,” said Thomas Silva, director of the Portland District Office. “The U.S. Department of Labor is committed to changing this kind of behavior in the construction industry.  We will ensure that hard-working, vulnerable workers are paid correctly, and that contractors who abide by the law aren’t hurt competitively by those who violate it.”

Background: Elite Energy Efficiency is a home-energy efficiency contractor operating in Idaho, Colorado, Minnesota, Utah and Virginia.

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/.

Employer: Joined, Inc., an academic recruitment, technology and curriculum services provider

Sites: 2010 Main St., Suite 550 Irvine, California

Investigation findings: Investigators with the U.S. Department of Labor’s Wage and Hour Division found that Joined, Inc. missed paying wages to staff in several pay periods. The company blamed clients who failed to pay for services rendered and a slowdown in company business.

Resolution:     The employer will pay 58 employees $439,000 in back wages.

Quote: “Poor financial management by Joined, Inc. or any company should never translate into missed paychecks for workers,” said Rodolfo Cortez, director of the Wage and Hour Division Office in San Diego. “With this settlement, dozens of hardworking people can now catch up on bills and other living expenses.”

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/.

Participants: U.S. Department of Labor’s Wage and Hour Division
Oregon Bureau of Labor and Industries

Partnership description: The division and bureau 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 IRS and 28 other states to combat employee misclassification and to ensure that workers get the wages, benefits, and protections to which they are entitled.

***EXERCISE, EXERCISE, EXERCISE***

Mislabeling employees as independent contractors can deny them of basic rights such as minimum wage, overtime and a host of other benefits. Misclassification also reduces federal and state tax revenues, and prevents contributions to 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 with a combination of a robust education and outreach campaign and a nationwide, data-driven, strategic enforcement across industries. 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

Quote: “When corporations misclassify their workforce, they make it much more difficult for workers facing wage theft, civil rights abuse or other unfair treatment on the job. This agreement will create a new tool to help protect the rights of Oregon workers cheated on the job.”

Brad Avakian, Oregon Bureau of Labor and Industries Commissioner

LITTLE ROCK, Ark. – More than 40,000 hospital workers at Mercy Health System and affiliated locations around the nation are no longer required to have their health care providers answer a litany of unnecessary and illegal questions before requesting leave for their own serious health conditions or to care for a family member.

The resolution comes after an investigation at the Mercy Hospital Fort Smith facility conducted by the U.S. Department of Labor’s Wage and Hour Division found violations of the Family and Medical Leave Act in the process the organization had for employees requesting leave. The FMLA requires that employees provide enough information so their employer knows that their need for leave is due to an FMLA-qualifying condition before responding to a leave request. However, Mercy required that their employees’ medical certifications for leave include answers to intrusive and personal questions, well beyond the scope of what is allowed by law. For example, the forms provided by the hospital requested health information outside the scope of the illness related to the leave request and the name of the medication prescribed. The requirement to provide more information than is legally necessary or required can prevent workers who need and are qualified for FMLA leave from requesting such leave. 

“Employers should take care to request only information needed to designate leave correctly,” said Betty Campbell, the division’s Southwest regional administrator. “Employees’ health conditions and those of their family members are between them and their health care providers. Demanding answers to unnecessary and possibly illegal questions may stop workers from taking much needed medical leave or time to take care of a loved one. The Wage and Hour Division is committed to ensuring workers’ access to this important workplace protection.”

The division conducted investigations as part of an education and enforcement initiative focused on FMLA compliance in hospitals and clinics. Investigators found that Mercy was not the only large Arkansas medical industry employer in violation of the FMLA. Mercy and two other organizations, Washington Regional Medical Center and HealthSouth Rehabilitation Hospital in Fort Smith, in some instances failed to meet the notification requirements of the FMLA, which require that employers notify employees of their eligibility for protected leave within five business days of the first leave request. Violations were disclosed at all three organizations in instances where that timeframe was exceeded. At the same time employers provide an eligibility notice, they are also required to provide a written FMLA Notice of Eligibility and Rights and Responsibilities. At HealthSouth this information was provided orally, not in writing.

Investigators found enterprise-wide violations potentially affecting about 40,000 workers at Mercy Health, 2,177 at Washington Regional and 173 at HealthSouth.

For more than 20 years, the FMLA has been a major component in the department’s effort to promote work-family balance, providing workplace protections for those living with a serious health condition, or caring for a family member with a serious health condition. The act helps to ease the burden that can come with needing time away from work when faced with such an illness. 

The FMLA provides eligible employees up to 12 weeks of unpaid, job-protected leave due to their own or a family member’s serious health condition with continuation of health care coverage under the same terms and conditions as if the employee had not taken leave.

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: The initial release incorrectly identified one of the hospitals that had been investigated. It was the HealthSouth Rehabilitation Hospital in Fort Smith that was investigated.

Employer name: 929 Restaurant Corp., doing business as Clairmont Diner

Investigation site: 929 Yonkers Ave., Yonkers, New York

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that the Clairmont Diner violated the minimum wage, overtime and recordkeeping requirements of the federal Fair Labor Standards Act. Investigators found the employer  

• Paid all employees a straight salary without regard to hours worked.  This resulted in minimum wage violations when the salary divided by the actual hours worked resulted in employees earning less than the current federal minimum wage of $7.25 per hour.
• Failed to pay overtime to employees, including wait staff, dishwashers and cooks, who worked 43-63 hours per week.
• Maintained incomplete and inaccurate payroll records, failed to record all employees on the payroll and failed to keep records of all hours worked and wages paid.

Resolution:  The restaurant has agreed to pay $101,467 in back wages plus an equal amount in liquidated damages totaling $202,934 to 28 employees. The employer will also install a time clock; put all employees on its payroll records; and record all hours worked by all employees and pay legally required minimum wage and overtime. Clairmont Diner will also pay the Labor Department $10,472 in civil money penalties.

Quote: “These Clairmont Diner employees work long hours and are entitled to all of their hard-earned wages. An employer who short-changes workers also gains an unfair advantage over those employers who obey the law” said Sonia Chasin Rybak, the Wage and Hour Division’s assistant district director in White Plains. “Unfortunately, the minimum wage, overtime pay and record-keeping violations that were found at this restaurant are all too common in the restaurant industry. The Wage and Hour Division will not hesitate to enforce the law – seeking remedies like back wages, liquidated damages and civil money penalties – to ensure that employers comply with the law.”

Information: 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/. 

WASHINGTON – U.S. Department of Labor Secretary Thomas E. Perez issued the following statement on today’s ruling by the U.S. Supreme Court in Friedrichs v. California Teachers Association

“Today’s Supreme Court ruling is an important victory for public employees, for their right to have a voice at work, for their right to stand together and speak up for the things that matter to them, their families and their communities.

“The court’s 4-4 decision in Friedrichs v. California Teachers Association affirms longstanding precedent that, for decades, has enabled teachers, police officers, fire fighters, EMTs, social workers and others to come together and bargain collectively for better wages, benefits and working conditions.

“Unions have enabled public sector employees to secure a foothold in the middle class. But those public servants have faced a powerful headwind in recent years. Despite a robust economic recovery, government employment hasn’t rebounded as private sector jobs have.

“These are our friends and neighbors. They do tough and often thankless work – and they aren’t getting rich doing it. They do so much to give us stronger schools, safer streets and more vibrant communities. In return for their heroic efforts every day to support us, they should be able to support their own families.

“Today’s ruling will mean greater economic stability for millions of families. It’s a critical step toward creating shared prosperity and a balanced economy that works for everyone.”

HOBBS, N.M. – Nova Mud Inc., Nova Hardbanding LLC and Nova Sand LLC have paid $1.5 million – $750,000 in back wages and an additional, equal amount in liquidated damages – to 241 oil well service workers after an investigation by the U.S. Department of Labor’s Wage and Hour Division. All three commonly owned and operated businesses violated overtime and recordkeeping provisions of the Fair Labor Standards Act.

The companies paid employees fixed semi-monthly salaries; without regard to the number of hours they had actually worked, resulting in overtime violations when they worked more than 40 hours in a workweek. In this case, employees routinely worked well in excess of 40 hours per workweek, without being paid overtime.

“Companies need to understand that failing to pay workers the wages they have rightfully earned will come at high cost to the employer,” said Betty Campbell, Southwest regional administrator for the division. “When employers fail to pay workers legally, it harms 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 Wage and Hour division will continue to use every appropriate enforcement tool to ensure workers are paid what they have earned.”

Nova Mud Inc. and its related companies – Nova Frac Sand LLC and Nova Hardbanding LLC signed an agreement with the department requiring them to take several proactive measures to ensure workers are paid according to the law in the future. Measures include: setting up an anonymous complaint system for employees; posting information about recordkeeping requirements, and providing training to frontline managers and human resources staff about retaliation in the workplace.

The firms specialize in producing mud and chemical products used in multiple facets of oil and gas exploration and provide oil field services for most all major oil and gas producers, including Chesapeake, Concho Resources and Devon Energy. They have approximately 275 employees working in New Mexico, Oklahoma and Texas.

Since 2012, the Wage Hour division has concluded more than 1000 investigations nationally and recovered more than $40 million in back wages for over 29,000 employees in an initiative focused on oil and gas and related industries. As part of its shift toward industry-based enforcement strategies, focusing resources where data show violations are common and business models lend themselves to violations, the division’s ongoing education and enforcement initiative seeks to improve oil and gas industry compliance. This effort also expands to related businesses, such as water and stone haulers, trucking, lodging, and staffing companies. Common violations include considering salaried employees exempt from overtime requirements, and then failing to pay an overtime premium regardless of how many hours they work, as was the case in this investigation.  Failing to include bonus payments workers have received as part of their regular rates of pay when calculating how much overtime is due is another common violation.

The division offers training and education to promote compliance and awareness of FLSA requirements. It encourages industry leaders to serve as models for industrywide compliance. At the same time, the division informs workers and community groups about the initiative, their rights as workers, the division’s services and its availability to review and investigate worker complaints regarding violations. 

Simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime. 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. On June 30, 2015, the Wage and Hour Division announced a Notice of Proposed Rulemaking to update the regulations defining which white collar workers are eligible to receive pay for hours worked over 40 in a workweek. For more information, please visit www.dol.gov/whd/overtime/NPRM2015.

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 must 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/.

Type of Action: Fair Labor Standards Act Consent Judgment

Name of Defendants:

• Tampico Mexican Restaurant Inc., Marietta, Ohio
• Tampico LLC, Parkersburg, West Virginia
• Acapulco Mexican Restaurant Inc., Moundsville, West Virginia
• Luis Salas, majority owner and general manager

Allegations: The U.S. Department of Labor has obtained a consent judgment in federal court ordering the three full-service restaurants, which share common ownership, and majority owner and general manager Luis Salas, named individually in the lawsuit, to pay $190,000 in back wages to 67 employees. An investigation conducted by the department’s  Wage and Hour Division found that the companies and Salas violated the Fair Labor Standards Act’s minimum wage and overtime provisions.

The minimum wage and overtime violations resulted when the employer:

• Required tipped employees to contribute a portion of their tips to an invalid tip pool.
• Paid kitchen staff less than the current federal minimum wage, currently $7.25 per hour.
• Paid workers some of their wages in cash, which was not recorded on their payroll
• Failed to pay employees overtime at time and one-half when they worked more than 40 hours in a workweek.
• Failed to keep accurate records of hours worked and wages paid.

Resolution: Tampico and Salas will pay a total of $190,000 in back wages before March 31, 2016 as follows:

• $54,623.87 to 23 employees at Tampico Mexican Restaurant in Marietta, Ohio.
• $93,525.98 to 29 employees at Tampico LLC based in Parkersburg, West Virginia  
• $41,850 to 18 employees at Acapulco Mexican Restaurant in Moundsville, West Virginia.
• Three employees worked at more than one location.

Under terms of the consent judgment, in addition to paying the back wages, the restaurants will provide additional training and education for managers and employees about the FLSA, install a computerized time keeping system and provide detailed pay stubs to employees. The restaurants will provide a paper copy of this consent judgment, including all exhibits to all current employees and to all new hires until Feb. 28, 2017. The employer will also post copies of the consent judgment at all of their restaurants in locations where employee notices are customarily posted, where they will remain posted until Jan. 31, 2018.

Quote: “This judgment restores rightfully earned wages to 67 workers who were vulnerable to exploitation – vulnerable because of language barriers, a lack of awareness of their rights, or a fear of speaking up when those rights were violated,” said George Victory, district director for the Wage and Hour Division in Columbus. “The Wage and Hour Division is committed to protecting vulnerable workers who are too often denied fair wages and to leveling the playing field for law-abiding employers."

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 hourly rates for hours worked beyond 40 per week. Additionally, the law requires employers to maintain accurate time and payroll records and prohibits retaliation against employees who exercise their rights under the law.

Court: U.S. District Court for the Southern District of Ohio, Eastern Division, Columbus

Docket Number: 2:16-cv-00044

Employer name: Toria’s Adult Living Facilities I & II, doing business as Toria’s Support Care Services Inc.

Investigation site: 3702 E. Osborne Ave., Tampa, Florida 33619

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division, Tampa District Office, found that Toria’s Support Care Services violated the minimum wage, overtime and recordkeeping provisions of the Fair Labor Standards Act. The employer misclassified one maintenance worker and one care provider as independent contractors instead of employees, and failed to pay them the federal minimum wage and overtime.

The employer also improperly paid other employees flat salaries without regard to how many hours they worked. In some instances, these salaries failed to cover the federal minimum wage of $7.25 per hour, and when employees worked more than 40 hours in a week the employer failed to pay them legally required overtime. Simply paying an employee a salary does not necessarily mean the employee is not entitled to receive minimum wage and overtime. There are specific requirements for exemptions for salaried employees.

Resolution: Toria’s Support Care Services will pay back wages totaling $56,256 to nine employees.

Quote: “This industry employs some of the most vulnerable, low-wage workers we see,” said James Schmidt, the Wage and Hour Division’s district director in Tampa. “Misclassification is particularly harmful to these workers, as it cheats them out of the benefits and protections they’re legally entitled to as employees. Unfortunately, we are seeing too many employers using this practice in an attempt to lower their labor costs. We continue to use all available resources to end this practice and to ensure that these workers, and others like them, bring home every cent they have rightfully earned.”

Information: Information regarding the department’s  initiative to combat the misclassification of employees as independent contractors is available at:  http://www.dol.gov/whd/workers/Misclassification/index.htm

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 of pay for hours worked beyond 40 per week. Employers are prohibited from retaliating against workers who exercise their rights under the law.

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 Tampa District Office at 813-626-1177 or visit http://www.dol.gov/whd.