PHOENIX – The U.S. Department of Labor sued a Phoenix-based pallet manufacturer after an investigation found that the company employed a combination of tactics to circumvent federal labor laws, including using fictitious names for workers, improperly labeling others as ‘vendors,’ and routinely destroying time cards at the end of each pay period.

The Department’s Wage and Hour Division conducted an investigation of Colmenero’s Pallets Inc. and found that the manufacturer violated the overtime and recordkeeping provisions of the Fair Labor Standards Act.

The employer attempted to conceal the employment of many of the workers by fraudulently claiming them as “vendors” rather than employees. These workers were paid straight time for all the hours they worked, including those over forty in a workweek, when the law requires those hours to be paid as overtime, at time and a half the workers’ regular rates. The employer did not deduct federal or state income taxes, social security or Medicare taxes from these employees’ wages, and did not pay the employer’s share of social security or Medicare taxes, worker’s compensation or unemployment insurance premiums.

The company allowed another group of workers, whom they did classify as employees, to record only up to 80 hours of work in a 2 week pay period, regardless of how many hours they actually worked. These employees regularly worked more than 60 hours per week, yet were paid only at straight time rates for their overtime hours, either in a separate check, often made out to a fictitious worker, or in cash.

Investigators established that Colmenero’s Pallets destroyed timecards at the end of each pay period, in violation of the recordkeeping provisions of the FLSA, and began to falsify time records during the investigation by clocking workers out prior to 40 hours in the work week, paying the overtime hours worked in cash, off-the-books.

“The Wage and Hour Division will not tolerate egregious violations such as those found in this case.  Denying these hard-working employees their rightful pay and misclassifying employees as vendors or independent contractors are unacceptable actions,” said Eric Murray, director of the division’s Phoenix District Office. “The court order obtained in this case demonstrates our commitment to pursue all available legal measures to ensure that workers are properly classified and compensated for their work. Other employers should take note, and ensure that they are paying their employees in compliance with the law.”

After the investigation findings and subsequent litigation, the U.S. District Court for the District of Arizona has ordered Colmenero’s Pallets to pay $139,154 in back wages and an equal amount in liquidated damages to 58 current and former workers. The employer will also pay an additional $21,692 in civil money penalties because of the willful nature of the violations. As part of the consent judgment reached, the company has agreed to notify all current and former employees of the case’s resolution, and to provide employees copies of their time cards showing the accurate number of hours worked. In addition, the Wage and Hour Division will provide worker education and training.

Employees misclassified as independent contractors, or in this case, vendors, are often denied access to critical benefits and protections to which they are entitled, such as minimum wage and overtime, family and medical leave, and unemployment insurance. Misclassification of workers may also generate losses to the U.S. Treasury, and Social Security and Medicare funds, and to state unemployment insurance and worker compensation funds. For more information about whether a worker is an “employee” under the FLSA, visithttp://www.dol.gov/whd/regs/compliance/whdfs13.htm http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

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. The FLSA provides that employers who violate the law are liable to employees for back wages and an equal amount in liquidated damages.

For additional 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/.

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TAMPA, Fla. – Assisted living facilities are often judged by how well they care for their patients – but how well are they caring for their workers?

The U.S. Department of Labor’s Wage and Hour Division launched an initiative in 2015 to evaluate how well the adult assisted living facility industry in Central Florida complied with federal labor law requirements to pay workers their legally-required wages, including minimum wage and overtime. The education and enforcement effort focused on licensed facilities within Hillsborough, Pinellas, Manatee, Sarasota and Sumter counties, determining if workers were paid in compliance with the Fair Labor Standards Act . 

In nearly 100 investigations in 2015, the division’s Tampa District Office found more than $413,000 in unpaid wages owed to 367 former and current employees. These investigations revealed a high level of noncompliance in the industry, prompting the division to collaborate with the Florida Department of Health’s Agency for Health Care Administration. The arrangement makes it easier to share information, helping the division to refer cases to the licensing agency for additional enforcement action, which may even result in license suspension.

“Our goal for this strategic initiative is to move the entire assisted living facility industry into compliance, not just the facilities we investigate. We will continue to use all of the tools and resources available to us to protect workers and create a level playing field for law-abiding employers,” said James Schmidt, director of the division’s Tampa District Office. “We are excited about our partnership with the state of Florida, and the results that we are seeing. Workers in this industry work long, hard hours, and deserve to take home every penny they rightfully earn.”

As an industry, assisted living facilities often use employment arrangements – such as subcontracting, and third-party management – that can obscure the worker-employer relationship, often at the expense of workers’ wages. Under these arrangements, violations of the FLSA’s minimum wage, overtime and record-keeping provisions may become more likely, as the distance between those performing the work and those profiting from it increases. The division’s fact sheet on the industry’s common pay practices explains the types of violations that often result, including the improper rounding of employees’ hours, failure to pay for travel time or on-call time, and failure to pay employees for time worked off the clock.

In addition to conducting investigations, the division conducts outreach events as part of the initiative for employers and industry stakeholders to provide compliance assistance and information on legal rights and responsibilities. The outreach also raises awareness among workers, community organizations and others regarding federal wage and hour laws and protections.

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 also are required to maintain accurate time and payroll records and to comply with the hours worked requirements.

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 813-288-1242, or visit http://www.dol.gov/whd/.

Employers: Garcia Recycling Center & Metals, Inc.

Sites: 631 S. Main St., Santa Ana, California
2429 W. McFadden Ave., Santa Ana, California
13862 Seaboard Circle, Garden Grove, California

Investigation findings: Investigators with the U.S. Department of Labor’s Wage and Hour Division found that Garcia Recycling Center & Metals paid employees at its recycling centers flat salaries, in cash, regardless of the number of hours employees worked, resulting in an overtime violation when employees worked more than 40 hours in a work week. The company also failed to keep records of hours worked and of cash payments made to workers, all violations of the Fair Labor Standards Act. 

Resolution: The company will pay $100,189 in back pay and an equal, additional amount in damages, totaling $200,378, to 15 employees. An investigation like this one is typical of those referred to the department’s partner agencies for further review of  federal and state compliance.

Quote: “Some recycling industry employers may believe they fly under the radar of law enforcement agencies when it comes to paying workers a fair day’s pay for a fair day’s work,” said Rodolfo Cortez, director of the Wage and Hour Division’s San Diego District Office. “Our investigation of Garcia Recycling Centers & Metals proves them wrong. Employers who deny these workers their hard-earned wages create financial hardships for workers and their families.”

Background: The department issued a press release in 2015 chronicling the high rates of wage and hour violations in Southern California’s recycling industry.

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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SCOTT, La. – While Billy’s Boudin & Cracklins food preparers were mixing rice, meat and seasoning to make the company’s popular Cajun sausage, their employer was cooking the books. Instead of paying workers the wages they legally earned, investigators from the U.S. Department of Labor’s Wage and Hour Division found that the owners were using those unpaid wages to lower their costs and increase profits.

“Denying employees their rightfully-earned wages is not only wrong, it’s illegal,” said Betty Campbell, regional administrator for the division in the Southwest. “This industry employs some of the most vulnerable workers we see.  Shorting these workers makes it even more difficult for them to make ends meet, and gives the employer an unfair advantage over its competitors. Cost-saving measures must never include breaking the law at the expense of workers’ livelihood.”

The division’s New Orleans District Office investigation determined that the employer violated the overtime, minimum wage and recordkeeping provisions of the Fair Labor Standards Act. Specifically, the employer:

• Paid employees in cash, at straight time, when they worked more than 40 hours in a week, rather than paying them legally-required overtime, at time and a half their regular wages, for those hours.
• Paid employees for their first 40 hours of work each week on its payroll from one location, but paid for any overtime hours on the payroll from another of its locations, at straight time. Employees paid in this manner never actually worked at second locations. Their overtime hours were simply shifted to another set of books to disguise the fact that overtime had been earned.

As a result of the investigation, the enterprise is paying $112,724 in back wages to 102 employees and $25,750 in civil money penalties due to the willful nature of the violations. Additionally, the employer signed an agreement with the division which requires the enterprise to:

• Prove it is currently in compliance and agree to comply with the FLSA in the future.
• Provide general notice of the FLSA protections to its employees.
• Provide an FLSA Handy Reference Guide link to all current and future employees and maintain evidence of such notification in personnel files.
• Train supervisors and managers on FLSA requirements at least twice per year.

The enterprise consists of three Louisiana-based establishments offering retail grocery and prepared food items owned by William ‘Billy’ Frey, II, and his wife Patsy Frey. They are Billy’s Mini Mart Inc. doing business as Billy’s Mini Mart and Diner in Krotz Springs; Billy’s Boudin & Cracklins LLC doing business as Billy’s Boudin & Cracklins in Scott; and Ray’s LLC doing business as Ray’s in Opelousas, Louisiana.

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/.

AMES, Iowa – In “college towns” like the city of Ames, hospitality industry jobs are often filled by students, temporary, or foreign workers – many of whom are new to the workforce. Among the nation’s lowest paid workers, they are often unfamiliar with wage laws and their rights.  Language barriers, fear of retaliation, and fears about immigration status can also cause them to be among those least likely to exercise their rights, leaving them vulnerable to labor violations.

In 2014, the U.S. Department of Labor’s Wage and Hour Division began an education and enforcement initiative in the hospitality industry in Midwest college towns and resorts. In the Ames area, the effort has found employers owed back wages of nearly $100,000 to 158 restaurant and hotel workers so far.

“Many of these workers already struggle to makes ends meet. Paying them less than they are legally entitled to is unacceptable,” said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. “Unfortunately, labor violations like these are all-too-common in the restaurant and hotel industry.  Our agency is committed to ensuring that workers take home every cent they have rightfully earned, and to providing a level playing field for employers who play by the rules.”

Currently, the Wage and Hour Division is investigating restaurants and hotels in Bloomington, Indiana; and the twin cities of Bloomington-Normal, Illinois; Lawrence, Kansas; and Madison, Wisconsin. In the coming months, the effort will expand to other cities including Iowa City, Iowa, and Champaign-Urbana, Illinois.

In the Ames cases, investigators found violations of the FLSA’s overtime, minimum wage, and record-keeping provisions at seven of the 13 restaurants and hotels they examined. Violations include:

• Paying employees fixed salaries without regard to how many hours they worked, leading to overtime violations when they worked more than 40 hours in a week. 
• Paying overtime only after 80 hours in a two-week period.  Overtime is due after 40 hours in a workweek, regardless of how often an employer pays employees. 
• Deducting the cost of uniforms from workers’ pay, this reduced workers’ effective hourly wages to below the federal minimum wage.
• Failing to maintain accurate and thorough records of employees’ wages and hours worked.
• Improperly calculating overtime for tipped employees.

Investigators found violations at the following Ames establishments:

• West Towne Pub: Employer paid 65 workers a total of $70,169 in back wages.
• El Azteca (Strange Road): Employer paid $12,907 in back wages to 15 workers.
• El Azteca (South Dayton Avenue): Employer paid $10,068 in back wages to 18 workers.
• Dublin Bay: Employer paid $1,567 in back wages  to 10 workers.
• LaFuente: Employer paid $2,460 owed to seven workers.
• Olde Main Brewing Co. & Restaurant: Employer paid $2,338 owed to 42 workers.
• Best Western Plus University Park Inn & Suite: Employer paid $2,084 owed to one worker.

During an education and enforcement initiative, in addition to conducting investigations, the division conducts outreach events for employers and industry stakeholders to provide compliance assistance and information on legal rights and responsibilities. The initiatives also raise awareness among workers, community organizations and others regarding federal wage and hour laws and protections.

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 for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay no less than $2.13 an hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage of $7.25 per hour. If an employee’s tips, combined with the employer’s direct wages do not equal the minimum wage, the employer must make up the difference. Employers also are required to provide employees notice of the FLSA tip credit provisions and to maintain accurate time and payroll records.

Employers are required to comply with all laws that apply to their businesses, including federal, state and local labor laws. Some state and local laws provide greater protections for workers.

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

For more information about the FLSA and other federal labor laws, call the division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Des Moines office at 515-323-2194. Information also is available at http://www.dol.gov/whd/.

Employer: Kazu Construction LLC

Type of Action: Fair Labor Standards Act Lawsuit    

Names of Defendants: Kazu Construction LLC Vernon Lowry, owner

Allegations: An investigation by the U.S. Department of Labor’s Wage and Hour Division in Honolulu found that Kazu Construction LLC, and its owner Vernon Lowry, violated the overtime and minimum wage requirements of the Fair Labor Standards Act willfully and repeatedly. The contractor systematically “banked” hours worked over 40 in work week at a straight time rate only to be claimed by workers in future weeks when they worked less than 40 hours, such as for sick leave or other time off. As a result, the employer failed to pay some workers at least minimum wage and overtime rates for all the hours they worked beyond 40 in a week. The employer has refused to pay the wages that the division determined the company owes its employees.

Resolution: The department’s suit asks the court to require Kazu and its owner to pay more than more than $500,000 in back wages and liquidated damages to 17 employees.

Quote: “Banking overtime hours instead of paying employees is an illegal practice used commonly in the construction industry,” said Janet Herold, the department’s regional solicitor in San Francisco. “Employers who fail to pay the wages required by law hurt the workers and their families, and gain an unfair advantage over competitors. We will go to court when necessary to stop illegal labor practices and to restore the lawful wages owed to workers.”

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), or the Honolulu office at 808-541-1361. Information also is available at http://www.dol.gov/whd/.

Court: United States District Court for the District of Hawaii

Docket Number: 1:16-cv-00077-ACK-KSC

LOS ANGELES – In downtown Los Angeles, as dozens of workers constructed a new affordable housing complex for veterans and chronically homeless individuals in MacArthur Park, their employers were cheating them out of lawfully earned wages in 2015.

Funded in part by the city of Los Angeles and the U.S. Department of Housing and Urban Development, the “Six Apartments” project, awarded to The Six Veterans Housing LP, the project’s contractors are subject the requirements of the federal Davis-Bacon and Related Acts. The law requires all federal contractors and subcontractors to pay their workers prevailing wage rates and fringe benefits, and to certify payrolls for all work on the job.

Investigators from the U.S. Department of Labor’s Wage and Hour Division found that general contractor G.B. Construction, Inc. doing business as Golden Bear Construction, and six subcontractors on the project violated the DBRA’s prevailing wage, fringe benefit and recordkeeping requirements. As a result, federal investigators recovered $190,161 in unpaid wages for 53 workers. Division officials and inspectors from the city’s Housing Community Investment Department worked together to hold the contractors accountable. 

“Taxpayers have a right to expect that federal contractors paid with our tax dollars will comply with the law. The U.S. Department of Labor will not allow companies to abuse that trust,” said Eduardo Huerta, assistant district director for the Wage and Hour Division in Los Angeles. “Golden Bear Construction and their subcontractors put vulnerable, low-wage workers and their families in serious jeopardy. Employers enter into federal contracts knowing they must pay prevailing wages and benefits. When they ignore their responsibilities, they cheat their employees and gain an unfair advantage over those employers who obey the law.”

The Six Veterans Housing LP is a nonperforming prime contractor and subcontracted all construction work to G.B Construction, Inc. that managed the project and hired all subcontractors. The firms found in violation include G.B. Construction and subcontractors G.S. Electrical, Inc., Line Tech Plumbing, Inc., Duracon Development, Inc., DLE Construction, KSM Construction and Best Merit. The department is currently considering debarment action against most of these contractors. Debarment would prohibit them for three years from bidding on federally funded construction contracts.

The Six Apartments investigation found the following violations:

• Paying workers less than the prevailing wage rates for the work they performed.
• Failing to pay required fringe benefits.
• Falsifying certified payrolls to give the appearance of compliance with the law.
• Failing to report some workers on the project at all, instead paying them a fraction of the actual wages due, in cash. For example, one contractor paid workers employed as plumbers less than 20 percent of the hourly wage required on this federally funded contract, and falsified their certified payrolls, which they are required to submit weekly, to claim that they paid the required amounts in full.

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

SAN FRANCISCO – The U.S. Department of Labor has taken action to take away a Central Valley labor contractor’s permit to provide agricultural workers to local growers following a series of safety violations that culminated in 2015 with a vehicle accident that killed four farmworkers.

The department’s Wage and Hour Division is working to revoke the farm labor contractor certificate issued to C.A.T. Labor Services, and its owner Cecilio Arredondo Terrazas, for failing to comply with the Migrant and Seasonal Agricultural Worker Protection Act, which requires contractors who transport farmworkers to and from job sites to meet prescribed safety requirements. In January 2015, four passengers in a minivan were killed in a collision with a tractor trailer near Fresno. The van driver was a C.A.T. foreman carrying farmworkers employed by C.A.T. None of those who died were wearing seatbelts.

“C.A.T. Labor Services’ continued negligence and failure to follow basic safety requirements led to four deaths and countless others being put at risk,” said Wage and Hour Regional Administrator Ruben Rosalez. “The life of a migrant farmworker is already difficult. Tragedies like this one – which devastated the families of these hardworking men and their communities – are avoidable by following basic safety rules and requirements. The Wage and Hour Division is committed to making that happen.”

Based in Reedley, C.A.T. has a history of federal violations. In 2011, division officials cited the company for failing to meet basic transportation safety requirements for transporting farmworkers, including failing to require valid driver’s licenses for drivers, failing to obtain minimum levels of required vehicle insurance and other related violations. The agency also found C.A.T. found in violation of other MSPA requirements in 2008. In both instances, C.A.T. paid fines and back wages and agreed to comply with the MSPA provisions in the future.

Agricultural contractors must apply to the U.S. Department of Labor for a Certificate of Registration before performing any “farm labor contracting activities,” which authorizes them to provide those services. Persons employed by farm labor contractors to perform such these activities must register with the department. The department maintains a list of individuals or corporations that have had their authorizations as farm labor contractors revoked.

The Wage and Hour Division is responsible for enforcing transportation protections under the MSPA, including requiring farmers and their contractors to obtain proper insurance, have vehicles inspected, and ensure other driver qualifications and basic safety measures. The department can fine growers, packer/shippers, or farm labor contractors for failing to ensure safe transportation.

C.A.T. has the option to appeal the department’s findings and request a hearing on the matter. 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/.

Employers: Elizabeth Homes Adult Residential Care, owned by Elizabeth G. Santos, Inc.

Sites: 7161 Stanton Ave., Buena Park, California (main office)
18 other facilities throughout Orange County

Investigation findings: Wage and Hour investigators found Elizabeth Homes Adult Residential Care in violation of the Fair Labor Standards Act for overtime, hourly wage and record-keeping provisions. The employer failed to pay employees time-and-a-half for overtime hours and also failed to pay for all hours worked during employee’s shifts.

Resolution: The employer will pay 138 workers $113,652 in back wages and an equal amount in liquidated damages. The employer agreed to pay the back wages and liquidated damages under a three-month installment plan, and to comply with FLSA in the future.

Quote: “Many employers in the residential home care field continue to fail to properly compensate workers for their long, hard work in this crucial but challenging field,” said Rodolfo Cortez, director of the Wage and Hour Division’s San Diego District Office. “Better cared-for workers results in better cared-for patients.”

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/.

PORTLAND – For the second time since 2010, the U.S. Department of Labor is suing the same major Pacific Northwest drywall company for failing to pay its workers $800,000 or more in overtime.

The department’s Wage and Hour Division has filed a lawsuit in the U.S. District Court, District of Oregon, to compel Westside Drywall Inc., and its owner, Moshen Salem, to comply with the Fair Labor Standards Act and to pay back wages to more than 100 employees denied legally required overtime.  

The employer continues to commit willful and repeated violations of the FLSA, including failing to pay piece-rate employees the required time-and-one-half overtime premium when they work more than 40 hours in a workweek. The company is also failing to pay these workers for travel time, as the law requires, and continues to commit recordkeeping violations. 

To date, the affected workers are due at least $800,000 in back wages and liquidated damages, an amount that may increase over the course of litigation. In 2010, the department sued Westside for similar violations that resulted in the payment of $200,000 to 62 drywall workers.

“We will not tolerate employers, like Westside Drywall, that cheat workers out of their hard-earned wages by ignoring their legal responsibilities,” said Thomas Silva, district director for the Wage and Hour Division in Portland. “This lawsuit sends a clear message that the U.S. Department of Labor will not hesitate to ask a court to intervene and enforce the law when an employer willfully withholds wages. When employers fail to play by the rules, like Westside has done repeatedly, they harm workers and their families and gain an unfair advantage over their competitors who pay fair wages.”

Headquartered in Hubbard, Westside is one of the Pacific Northwest’s largest drywall companies. The company has contracts with well-known builders for many commercial and residential contracts.

The division enforces the FLSA that 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/.