Date of Action: April 12, 2016

Type of Action: Lawsuit seeking debarment from future government contract awards

Name of Defendant: Carney W. Potter, doing business as Arrowhead Starr Co. and Carney W. Potter, individually, in Plainview, Arkansas. Arrowhead Starr is a forest maintenance contractor that provides reforestation services to the federal government.

Allegation: The U.S. Department of Labor sued Carney W. Potter, doing business as Arrowhead Starr Co. and Carney W. Potter individually, seeking to debar both from future government contract awards as the result of a long history of failing to pay workers the wages they were legally due. The latest violations disclosed by the department’s Wage and Hour Division occurred when the employer violated the McNamara-O’Hara Service Contract Act by failing to pay 14 employees more than $10,000 in legally required fringe benefits, including  vacation and holiday pay. The employer’s history of violations began in 2001; since 2008, the Wage and Hour Division has collected more than $130,000 in back wages paid to more than 70 workers.

Quote: “Reforestation is hard and dangerous work often performed in remote worksites. Many of these workers have little knowledge of their rights under the law, and depend on their employer to pay them what is legally required,” said Betty Campbell, the division’s Southwest regional administrator. “Contractors bid on government-funded contracts knowing their responsibilities. Failing to pay employees all their wages and benefits for the work they performed is unacceptable. This case should serve as a warning to other contractors performing work on government contracts – the Wage and Hour Division will use every tool available – including debarment, to protect workers and hold employers accountable.”

Resolution: The division’s most recent investigation recovered approximately $10,090 in SCA back wages for 14 employees. The department also seeks to declare Carney W. Potter individually and doing business as Arrowhead Starr Co., ineligible to receive any further federal contacts for a period of three years.

Information: Debarment is an important and effective tool the department uses to ensure that employers pay workers as the law requires, and that the federal government is doing business with responsible contractors. Employers who fail to comply with the law risk debarment and face losing the ability to do business with the federal government. 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.

Court: Office of Administrative Law Judges

Docket Number: 2016-SCA-00009

SAN FRANCISCO – A San Leandro-based human resources outsource provider will pay $1 million in back overtime wages and damages combined to hundreds of employees after a U.S. Department of Labor investigation that found widespread Fair Labor Standards Act violations.

The department’s Wage and Hour Division cited TriNet Human Resources Corp. for failing to pay time-and-a-half to 267 employees who worked more than 40 hours per week. As a result, the company will pay back pay wages and damages to workers in amounts ranging from a few hundred dollars to more than $13,000 for one worker. The division also assessed $58,000 in civil penalties for the violations.

In 2012, the company paid $326,000 in back wages and damages after the division found similar violations.

“TriNet falsely believed that raising an employee’s salary exempted them from receiving overtime pay,” said Susana Blanco, the division’s Wage and Hour director in San Francisco. “Hopefully, the company will now pay better attention to the rules going forward and pay its employees the wages they earned.”

TriNet provides human resources outsource solutions to small and midsize businesses. It offers payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance.

Enforced by the division, 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.  Employers are prohibited from retaliating against workers who exercise their rights under the law.

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

Employer name: Los Arcos Seafood & Grill Inc., doing business as Los Arcos Mexican Grill & Seafood Jose Gutierrez, Jr.
Martin Romo

Investigation site: 3798 Nolensville Road, Nashville, Tennessee 37211

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division found that Los Arcos Mexican Grill & Seafood violated minimum wage and overtime provisions of the Fair Labor Standards Act. The employees were working as cooks, dishwashers and servers. Their employer paid the workers a salary for all hours worked, but not overtime for hours beyond 40 in a workweek as required. In some pay periods, the parties involved did not pay employees the current federal minimum wage of $7.25 per hour. The department filed a complaint on Nov. 1, 2012, in U.S. District Court for the Middle District of Tennessee against Los Arcos Mexican Grill & Seafood and owners Jose Gutierrez, Jr., and Martin Romo. Gutierrez and Romo were subject to a prior injunction issued in September 2009 that required compliance with the FLSA.

Resolution: On April 13, 2016, a federal judge from the U.S. District Court for the Middle District of Tennessee, Nashville Division, approved a consent judgment between the department and Los Arcos Mexican Grill & Seafood, Gutierrez and Romo. As a result, Los Arcos and its owners will pay 44 employees a total of $175,000, which include back wages and liquidated damages. The judgment also requires Gutierrez and Romo to hire a consultant to audit their restaurants for three years and submit quarterly reports to the division. Additionally, the owners have agreed to provide current and prospective hires with information on the FLSA and to purchase an ad in a local Hispanic newspaper regarding compliance with the FLSA. The division’s Nashville District Office conducted the investigation and the department’s Regional Office of the Solicitor in Nashville litigated the case.

Quote: “The outcome of our investigation of Los Arcos Mexican Grill & Seafood and its owners demonstrates that the underpayment of employees’ wages is unacceptable, and will not be tolerated. The U.S. Department of Labor will use all available tools, including litigation, to identify and root out such labor violations and make whole the affected workers,” said Nettie Lewis, director of the division’s Nashville District Office. “The violations found in this investigation are unfortunate and all too common in the restaurant industry. We will continue our industry enforcement effort to protect workers’ rights and the interests of employers that obey the law and face unfair competition from those who do not.”

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 Nashville District Office at 615-781-5344 or visit http://www.dol.gov/whd/.

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Employer: ViaSource Solutions Inc., formerly INW Contact LLC, a call-center provider to businesses that market products on television infomercials

Location: 223 East Thousand Oaks Blvd., Suite 222, Thousand Oaks, California

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division found ViaSource Solutions misclassified hundreds of call-center agents as independent contractors rather than employees, and subsequently denied them minimum wage and overtime for hours they worked, in violation of the Fair Labor Standards Act. The firm also failed to pay employees for time spent in training, creating additional violations of the FLSA.   

Resolution:  ViaSource has reclassified all call-center agents as employees and will pay $101,491 in back wages for minimum-wage violations to 435 employees plus $48,893 for unpaid overtime due to 165 employees.  

Quote: “The resolution of this investigation of ViaSource Solutions sends a clear message to employers who try to reduce overhead costs at the expense of their workers,” said Kimchi Bui, director of the Wage and Hour Division in Los Angeles. “Whether a worker is an employee or an independent contractor under the FLSA is a legal question, determined by the actual employment relationship – not by any title, or any agreement between an employer and employee. We take worker misclassification very seriously, and will hold employers accountable to classify workers properly and to provide them with all the benefits entitled by law.”

Information: Misclassifying employees as independent contractors or some other nonemployee status often denies them minimum wage, overtime, workers’ compensation, unemployment insurance and other workplace protections. Employers often intentionally misclassify workers to reduce labor costs and avoid employment taxes. 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/.

Employer: C and D’s Guest Homes, Inc., provider of residential care services for adults with developmental disabilities, doing business as C and D’s Guest Home and New Horizon’s Residential

Sites: 2960 Palomino Lane, Atwater, California (main office)
336 Judy Drive, Atwater, California
263 Elm Ave., Atwater, California
3626 Langtry Ave., Merced, California
804 East Clinton Ave., Atwater, California
6314 Atwater Jordan Road, Atwater, California
2585 Roselle Drive, Merced, California (doing business as New Horizon’s Residential)

Investigation findings:  The U.S. Department of Labor’s Wage and Hour investigators found C and D’s Guest Homes in violation of overtime, minimum wage and record-keeping provisions under the Fair Labor Standards Act. The employees received overtime pay only after working 80 hours in a two-week pay period rather than after the 40-hour weekly threshold. The employer also paid a differential to employees working a split shift, and did not include the differential when computing the worker’s overtime rate. Additionally, the firm deducted eight hours of sleep time from 24 hours shifts regardless of repeated interruptions throughout the night, resulting in employees earning less than the current federal minimum wage of $7.25 per hour. 

Resolution: C and D’s Guest Homes will pay 31 workers $43,582 in back wages. The employer will install a timekeeping system for employees to record their worked hours.

Quote: “This industry employs some of the most vulnerable, low-wage workers we see, working in a field plagued by labor violations,” said Richard Newton, director of the Wage and Hour Division’s Sacramento District Office. “The division continues to fight this disturbing wage violation trend in residential care facilities, which harms not only workers and their families, but creates a competitive disadvantage for those businesses that follow the law.”

Information: For more information about federal wage laws administered by the 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: Litke Investments LLC, a San Francisco-based real estate investment enterprise, acquires, maintains and manages hotels and residential apartments.

Sites: Numerous hotels and apartments operating under various legal and trade names in California, Texas, Oregon and North Dakota.

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division found Litke Investments:

• Violated the overtime provisions of the Fair Labor Standards Act when it improperly classified hourly-paid property managers and exempt from receiving overtime and paid them at straight time rates for hours worked.
• Incurred further overtime violations when it paid other workers straight time for hours worked beyond 40 per week.
• Failed to combine the hours worked by employees working at multiple locations throughout the week when determining whether overtime was due.
• Did not keep complete and correct time records for employees, in violation of FLSA’s record keeping provisions.

The division investigated Litke in 2011 and found similar overtime violations.

Resolution: The owner of Litke Investments has paid $51,429 in overtime back wages and an equal, additional amount in liquidated totaling $102,858 to 75 employees. In addition, the company paid civil money penalties totaling $8,030 due to the willful nature of the repeated violations found.

Quote: “Litke Investments deprived its workers of hard-earned overtime wages to which they are entitled by law,” said Susana Blanco, director of the U.S. Department of Labor’s Wage and Hour Division in San Francisco. “Other employers should review their pay practices to ensure that they are in compliance. The back wages, damages and penalties paid in this case demonstrate that the department is determined to ensure workers receive a fair day’s pay for a fair day’s work. We will stop those employers who skirt the law so that we ensure other businesses can compete fairly.”

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

FLSA: 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.

NEW YORK – Nail salon workers in one of the world’s largest cities work hard to serve their customers. At the same time, they are what the U.S. Department of Labor refers to as vulnerable workers – unaware of their rights, sometimes with language barriers, or reluctant to step forward to complain.

Working amid possible health hazards, nail salon workers also frequently go home underpaid or not paid at all for their labor. The Wage and Hour Division is actively determined to address this injustice as shown by its actions involving two New York City salons found to be in violation of federal overtime and recordkeeping rules.

The division’s investigators found that Ada Nails & Spa, at 81 W. Broadway in Manhattan, paid employees a flat rate per day plus commissions without regard to the number of hours they worked. Consequently, the salon failed to pay overtime when employees worked more than 40 hours in a workweek; failed to record all hours worked by employees; and failed to maintain other basic employment and payroll records as required by law. The second investigation found Hai Hua Beauty Salon Inc., at 151-91B Cross Island Parkway in Whitestone, also paid flat daily rates without regard to the number of hours actually worked; failed to pay overtime for hours worked beyond 40 in a week; and failed to keep accurate and complete payroll records.

Ada Nails & Spa paid $23,704 in overtime back wages to 12 employees while Hai Hua Beauty Salon Inc. paid $23,643 in overtime back wages to nine employees.

“The experience of these employers should serve as a lesson to all of New York City’s nail salon owners. This industry employs large numbers of vulnerable workers, many of whom may be unaware of their rights, may face language barriers, or may be reluctant to step forward to complain. We want nail salon employees to know their rights, and employers to know their responsibilities to prevent these violations from occurring,” said Debbie O. Lau, the Wage and Hour Division’s assistant district director in Manhattan. “We provide numerous tools to educate employers and employees in a variety of languages, including Chinese, Spanish, Korean, Thai, Vietnamese and Nepali. Our investigators are fluent in most of these languages and can obtain translations for others. Both workers and employers can speak with Wage and Hour representatives confidentially. All parties should also understand that we enforce the law regardless of a worker’s immigration status.”

Here are some of the basic protections required by the Fair Labor Standards Act:

Payment for Hours Worked:

• Workers must be paid for all the time they spend performing work, whether or not the employer approves the work in advance. This includes time spent in training, traveling from site to site during the day, and any work performed “off the clock.”

Minimum Wage and Deductions:

• Workers must be paid at least the federal minimum wage of $7.25 per hour for every hour that they work.
• Even if paid by the day or at a piece rate, the payment received, when divided by the number of hours actually worked, must equal at least the federal minimum wage for every hour worked.
• Some state laws require higher minimum wages and/or greater employee protections. Employers must comply with all laws that apply to their businesses.

Overtime Pay:

• Generally, workers must be paid 1½ times their regular rates of pay for every hour worked beyond 40 in a workweek.

Recordkeeping:

• Employers must keep accurate records of all their employees’ daily and weekly hours worked, and wages paid.
• Employees should keep their own records of their work hours and wages, and their employer’s name, address and phone number.

Independent Contractor or Employee?

Some salons incorrectly label workers “independent contractors” when they are actually employees. It is important for workers to know the difference between the two because employees are legally entitled to greater health and safety protections, wage protections and other benefits.

• Workers who are not sure whether they are employees or independent contractors should contact the Wage and Hour Division, who can provide information to help determine employees’ workplace rights.

It is illegal for an employer to fire workers or retaliate against them in any way for contacting the Wage and Hour Division or for exercising their workplace rights.

If workers believe their rights have been violated or have any questions, they can call the Wage and Hour Division at 1-866-487-9243 or in New York City at 212-264-8185 (Manhattan) or 718-254-9410 (Brooklyn). The division can assist in nearly any language, and its services are free and confidential.

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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/.

# # #

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/.