NEW YORK — MDG Design & Construction LLC has reached a settlement with the U.S. Department of Labor that resolves wage violations at the federally-assisted Grand Street Guild construction project in New York City's Lower East Side. MDG and other respondents will pay $3.8 million in back wages and fringe benefits to about 200 of MDG's subcontractors' construction workers. Previous, separate investigations led to the repayment of more than $1.1 million in back wages to approximately 300 laborers and mechanics who worked for MDG's subcontractors on the Lower East Side project.

MDG was the general contractor for the Grand Street Guild project, which involved the refurbishment and rehabilitation of three 26-story apartment towers. The department's Wage and Hour Division found numerous Davis-Bacon and Related Acts violations by MDG subcontractors on the project, including failure to pay required prevailing wages and submitting inaccurate or falsified payroll records to the government.

"This settlement reinforces the Labor Department's commitment to take strong action to ensure that workers are properly compensated for their work," said Dr. David Weil, administrator of the Wage and Hour Division. "General contractors on federally-assisted projects have a responsibility to ensure that their subcontractors comply with prevailing wage laws and properly compensate their employees."

"The department will take steps to get workers their hard earned wages and prevent future violations," said Carl P. Smith, northeast deputy regional administrator of the division. "Failure to adhere to this agreement and obey wage laws can result in the debarment of MDG and its affiliates from seeking and obtaining future federal contracts."

Under the settlement, MDG commits to implementing and abiding by a comprehensive enhanced compliance agreement to ensure future compliance with the Davis-Bacon and Related Acts, the Fair Labor Standards Act, and applicable state and local wage laws. MDG will also take steps to require that its subcontractors comply with applicable wage and hour laws.

As part of the settlement, MDG will retain an independent monitor, approved by the Wage and Hour Division, for a period of three years with responsibilities for conducting regular reviews of the company and its subcontractors to confirm compliance with applicable wage and hour laws on all prevailing wage and federally-assisted projects. The monitor's findings will be reported to the division. The monitor will also provide training to MDG staff, as well as to MDG subcontractors, and establish a hotline, staffed 24 hours a day, to collect confidential reports of wage violations and other instances of noncompliance.

MDG has agreed to implement substantial internal control measures at its prevailing wage and federally-assisted projects. These measures include: assigning dedicated supervisors to these projects, providing written notification of pay rates to employees and taking steps to determine whether subcontractor bids ensure the payment of prevailing wage rates.

The apartment towers for the Grand Street Guild project are located at 410 Grand St., 460 Grand St. and 131 Broome St. MDG, formed in 1988, specializes in the moderate rehabilitation and new construction of residential apartment buildings in New York City and Long Island, according to the company's website.

In addition to MDG, the settlement agreement includes Charis Consulting LLC, Kona Contracting LLC, as well as Michael Rooney and Nicola DeAcetis — owners of all three companies — and Neys Escobar, an owner of Kona. All of the companies are based in Huntington Station, New York.

Previously, the Wage and Hour Division obtained debarments for a period of three years for the following MDG subcontractors that worked on the Grand Street Guild project: ACJ Construction Corp., JECA Construction Corp., Millennium Century Construction Inc. and Omega Interior Corp.

The MDG settlement was negotiated by the northeast regional office of the Wage and Hour Division and the department's regional Office of the Solicitor in New York. It is contained in a consent findings and order that was submitted to and is subject to the approval of the department's Office of Administrative Law Judges.

The Davis-Bacon and Related Acts requires all contractors and subcontractors performing work on federal and certain federally-funded projects to pay the proper prevailing wage rates and fringe benefits as determined by the secretary of labor. The Contract Work Hours and Safety Standards Act also applies to contractors and subcontractors with federal service contracts and federally-funded and assisted construction contracts exceeding $100,000.

For information on federal wage requirements and laws, contact the Wage and Hour Division's New York City District Office at 212-264-8185 or its toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

PHOENIX — As a result of a Wage and Hour investigation, Paul Johnson Drywall Inc. severed its relationship with Arizona Tract LLC., a construction labor contractor. Beginning April 2013, Paul Johnson Drywall entered into a contract with Arizona Tract for the provision of drywall labor. Arizona Tract classified former Paul Johnson Drywall workers as "member/owners" instead of employees, which stripped them of basic worker protections afforded to employees.

Today, the U.S. Department of Labor filed a consent judgment in the U.S. District Court for the District of Arizona by which Prescott-based Paul Johnson Drywall Inc., and its owner Robert Cole Johnson, agreed to take concrete steps to ensure that misclassification of its workforce does not occur again and to pay $556,000 in overtime back wages and liquidated damages to at least 445 current and former employees. The employer also agreed to pay $44,000 in civil monetary penalties.

"This case exemplifies our commitment to eradicating unfair competition and pay schemes that result in employees not getting their fair pay for honest, hard work," said Administrator of the Wage and Hour Division Dr. David Weil. "Employers in this industry and others should take notice that we will not tolerate the misclassification of employees as independent contractors, and we will use all legal remedies available to recover unpaid wages for these workers."

The judgment resolves an investigation by the department's Wage and Hour Division in Phoenix that began to look into construction contractors Arizona Tract solicited. Investigators found that the drywall contractor violated the Fair Labor Standards Act's overtime and record-keeping provisions.

"This resolution will bring a lot of positive change for hundreds of employees working in residential construction," said Janet Herold, the department's regional solicitor in San Francisco. "Paul Johnson Drywall is a leader in this industry in Arizona, and we are pleased that, as a result of our investigation, the company has taken such a public stand against the scourge of misclassification, which deprives vulnerable workers of their wages and the full rights and benefits of employee status and deprives taxpayers of the payroll taxes. Everyone but the misclassifying employer loses, and loses greatly, when misclassification occurs."

As part of the resolution in this case, Paul Johnson Drywall agreed that all workers will be properly classified as employees and paid FLSA's required wages. The investigation also established that the employer, prior to being solicited by Arizona Tract, failed to pay employees paid on a piece-rate basis – the proper overtime at time and one-half their regular rates of pay for all hours worked beyond 40 in a single workweek. In addition, investigators found that Paul Johnson Drywall failed to keep complete and accurate records, which is also required under the FLSA.

In addition to the payment of $600,000 in back wages, damages and penalties, Paul Johnson Drywall has agreed to take specific proactive steps to ensure that its workers are properly classified and paid as employees and to improve compliance in the construction industry. Paul Johnson Drywall will hire a third-party monitor to ensure compliance by the company and require any drywall subcontractors to conduct regular training of supervisors and employees regarding the requirements under the FLSA. Furthermore, if Paul Johnson Drywall hires a subcontractor, the consent judgment requires the company to ensure that the subcontractor is properly licensed and insured, and that the subcontractor complies with the FLSA.

"With increasing frequency, we are entering into agreements, like this one, with employers found in violation," said Ruben Rosalez, regional administrator for the Wage and Hour Division's west region. "In addition to paying back wages, damages, and penalties, ongoing efforts like those called for with Paul Johnson Drywall keep compliance prominently on the employer's radar. These agreements greatly enhance our efforts to maintain compliance and to protect workers' wages long after an investigation."

Paul Johnson Drywall also agreed to implement an educational campaign to promote awareness of the importance of compliance with the FLSA in the Arizona residential construction industry. In the months ahead, Paul Johnson Drywall will make presentations to local home builder associations addressing the importance of properly classifying and paying workers in the drywall industry as employees and identify the costs workers, taxpayers and law-abiding employers, due to the resulting unfair competition, endure from the unlawful misclassification of employees as independent contractors.

Under the FLSA, employers must distinguish employees from bona fide independent contractors. The inquiry to determine a worker's status as employee or independent contractor is whether the worker, as a matter of economic reality, is dependent on the employer or in business for himself. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

The FLSA requires that covered 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. Liquidated damages are paid directly to the affected employees.

For more information about the FLSA, call the Wage and Hour Division's Phoenix District Office at 602-514-7100 or call the division's toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd/.

HOUMA, La. — B & D Contracting Inc., a labor recruiting and staffing agency that caters to oil field services and maritime fabrication facilities along the Gulf Coast, has agreed to pay $1,660,438 in back wages to 1,543 current and former employees. An investigation by the U.S. Department of Labor found that the company engaged in improper pay and record-keeping practices that resulted in employees being denied overtime compensation in violation of the Fair Labor Standards Act. The employees were assigned to client work sites throughout Louisiana, Mississippi and Alabama to work as welders, pipe fitters and shipfitters.

Investigators from the Wage and Hour Division's New Orleans District Office found the company mischaracterized certain wages as per diem payments and impermissibly excluded these wages when calculating overtime premiums, denying employees earned overtime compensation.

"Temporary staffing agencies serve valuable and legitimate business needs in today's economy," said Dr. David Weil, administrator for the Wage and Hour Division, "But employers may not manipulate these arrangements and use evasive pay practices to avoid paying workers their rightful wages."

"The labor violations we found in this case are not unique to B & D Contracting Inc.," said Cynthia Watson, regional administrator for the division in the Southwest. "We are increasingly finding the use of per diem schemes as a means of decreasing overtime pay and tax obligations in the staffing and support services industry in this region. The resolution of this case demonstrates our continued focus on combating such labor violations in order to improve compliance in this industry."

Following the investigation, B & D Contracting agreed to pay back wages owed to employees. The company also signed a settlement agreement with the department, committing itself to implement specific measures to prevent future FLSA violations. These measures include: setting standards to accurately identify and compensate workers who qualify for bona fide per diem payments; paying accurate overtime and ensuring per diem payments are not automatically excluded from overtime calculations; informing employees about their pay and employment conditions; and obtaining written acknowledgment from employees that they understand the criteria for receipt of per diem payments.

Additionally, B & D Contracting agreed to maintain accurate records demonstrating that employees received bona fide per diem payments and that such payments are based either on applicable Internal Revenue Service guidelines or upon a reasonable approximation of the expenses incurred.

Pursuant to the department's partnerships with the IRS and the Louisiana Workforce Commission, this case has also been referred to those agencies for review under their respective laws.

This investigation was conducted under the Wage and Hour Division's ongoing initiative focused on strengthening labor compliance among temporary labor providers, such as staffing and support services companies in the Gulf Coast region. The division's enforcement and compliance assistance efforts are focused on identifying and remedying labor violations involving temporary employment arrangements, and the agency is also working with stakeholders and state agencies to ensure compliance with all applicable laws. Between fiscal years 2011 and 2013, the division's New Orleans District Office conducted 24 investigations in the temporary help industry securing more than $2.5 million in back wages for more than 3,000 workers.

An employee's regular pay rate, upon which overtime must be computed, includes all wages for employment, except certain payments excluded by the FLSA, such as reimbursements for work-related expenses. Payments reasonably approximating travel or other expenses incurred on the employer's behalf may be excluded from the employee's regular rate of pay when computing overtime. However, where an employee receives such payments but actually incurs no such additional expenses, such payments do not constitute bona fide reimbursements and must be included in the employee's regular rate of pay for purposes of computing an overtime premium.

The FLSA requires that covered employees be paid at least the national minimum wage of $7.25 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.

For more information about federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or its New Orleans District Office at 504-589-6171. Information also is available at http://www.dol.gov/whd/.

PHILADELPHIA — Philadelphia sports bar and restaurant chain Chickie's & Pete's has signed a consent judgment agreeing to pay current and former employees more than $6.8 million in back wages and damages for improperly taking tips from servers and violating federal minimum wage, overtime and record-keeping requirements. Following one of the U.S. Department of Labor's largest tipped employee investigations in recent years, the company and its owner, Peter Ciarrocchi, Jr., have agreed to pay $6,842,412 to 1,159 employees at nine of the company's locations, plus a $50,000 civil money penalty. The proposed consent judgment has been filed in the U.S. District Court for the Eastern District of Pennsylvania and is subject to the review and approval by the court.

"The egregious actions by Chickie's & Pete's harmed real people and violated the promise that a fair day's work deserves a fair day's pay," said U.S. Secretary of Labor Thomas E. Perez. "Restaurant servers are among the lowest paid workers in this country, with many earning incomes below the poverty line. Tipped workers deserve better and this action shows that the Department of Labor is ready to stand up for them."

Under the Fair Labor Standards Act, tips are the property of the employee who receives them; however, restaurant operators can benefit by claiming a credit based on the tips towards their obligation to pay those employees the full minimum wage. 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 during the pay period. An employer that claims a tip credit is required to pay a tipped employee only $2.13 an hour in direct wages provided that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour. The federal minimum wage of $7.25 per hour was last increased in 2009 and the federal tip credit's cash wage requirement of $2.13 has not been increased since 1991.

"When employers exploit tipped workers, they not only harm their employees who are working hard to earn a living, but also take advantage of the trust of their customers," said Laura Fortman, principal deputy administrator for the department's Wage and Hour Division. "Customers might not realize it, but their tips frequently are paying part of their servers' wages, not just giving them a little extra to go with their pay. Chickie's and Pete's behavior is troubling because they both unlawfully took tips from their workers and failed to pay them even the $2.13 per hour the law requires when an employer takes a tip credit."

Investigators from the Wage and Hour Division's Philadelphia and Southern New Jersey offices conducted investigations at locations in Northeast Philadelphia, South Philadelphia, Philadelphia International Airport, Parx Casino in Bensalem, Pa., Warrington, Pa., Drexel Hill, Pa., Audubon, Pa., Egg Harbor Township, N.J., and Bordentown, N.J. Investigators found that the company improperly retained a fixed portion of the tips servers received from customers.

The investigation disclosed that the company required servers to contribute a portion of their tips to an improper "tip pool," or tip-sharing arrangement, which was approximately between 2 percent and 4 percent of the server's daily table sales. The owner illegally retained approximately 60 percent of the tip pool. This amount had come to be known as "Pete's Tax" and was required to be paid to the manager in cash at the end of each shift, even if the server received all tips on credit cards and therefore did not have cash on hand. In some cases, the company required employees to use their own money to contribute to this pool by withdrawing cash from a nearby ATM or borrowing from another server.

Additionally, servers and bartenders were paid only a flat rate of $15 per shift at all locations except for Chickie's and Pete's airport establishment — an amount that was not sufficient in all cases to even cover the minimum cash wage of $2.13 per hour that must be paid to a tipped employee when an employer claims a tip credit under federal law. Additionally, the employer failed to pay the required overtime wages to these employees when they worked in excess of 40 hours in a week. Investigators also determined that employees were not paid for time spent in mandatory meetings and training, and were improperly required to pay for uniforms.

Under the provisions of the consent judgment filed in U.S. District Court for the Eastern District of Pennsylvania, and subject to court approval, the company will pay minimum wage and overtime back wages and is required to return the improperly retained tips to the servers, as well as pay liquidated damages. In addition, the company has agreed to enhanced compliance, including:

• External compliance monitoring for an 18-month period;
• Internal compliance monitoring for an additional 18-month period;
• Training for all employees on their rights under the FLSA;
• Providing a statement to any employee required to contribute to a tip pool detailing the amounts that were contributed by the employee, the job categories of workers included in the tip pool and the specific percentage each category receives; and
• Peter Ciarrocchi, Jr., will write an article for a restaurant trade publication that addresses an employer's obligations under the FLSA.

The consent judgment also calls for Chickie's & Pete's and Ciarrocchi to be permanently enjoined and restrained from violating the provisions of the FLSA in the future.

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 provide employees notice about the FLSA tip credit provisions, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18.

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

WASHINGTON — Officials of the U.S. Department of Labor's Wage and Hour Division, the New York State Labor Department and the New York State Attorney General Eric T. Schneiderman's Office today signed memoranda of understanding to protect the rights of employees by preventing their misclassification as independent contractors or other nonemployee statuses.

The memoranda of understanding represent a new effort on the part of the three agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The New York State Labor Department and New York State Attorney General's Office are the latest state agencies to partner with the Labor Department. In the last two years, the Wage Hour Division has secured over $18.2 million in back wages for more than 19,000 workers where the primary reason for minimum wage or overtime violations under the Fair Labor Standards Act was that workers were not treated or classified as employees. This represents a 97 percent increase in back wages following the implementation of these agreements.

"Working with the states is an important tool in ending misclassification," said M. Patricia Smith, U.S. Solicitor of Labor. "These collaborations allow us to better coordinate and ensure compliance with both federal and state laws alike."

"Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses," said Laura Fortman, the principal deputy administrator of the Wage and Hour Division. "These memoranda of understanding send a clear message that we are standing together with the State of New York to protect workers and responsible employers and ensure everyone has the opportunity to succeed."

"When employers misclassify employees as independent contractors for their own gain, they hurt their employees and they even hurt other businesses — the law-abiding employers who don't steal from their employees," said New York State Labor Commissioner Peter Rivera. "I'm proud of this partnership we're beginning here today to root out bad actors and bring them to justice."

"This partnership with the U.S. Department of Labor will help New York continue our work of aggressively enforcing the labor laws and ensuring a level playing field for employers who play by the rules. Sharing information and cooperating in investigations will help protect the rights of New York's workforce, and will lead to more effective enforcement and greater compliance by employers," said Terri Gerstein, Labor Bureau Chief for New York Attorney General Eric T. Schneiderman. The New York State Attorney General's office brings select cases to enforce the state's labor laws, including both civil and criminal cases. For more information, please visit the Labor Bureau's website at: http://www.ag.ny.gov/bureau/labor-bureau/.

Business models that attempt to change or obscure the employment relationship through the use of independent contractors are not inherently illegal, but they may not be used to evade compliance with federal labor law. Although legitimate independent contractors are an important part of our economy, the misclassification of employees presents a serious problem, as these employees often are denied access to critical benefits and protections–such as family and medical leave, overtime compensation, minimum wage pay and Unemployment Insurance–to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law.

Memoranda of understanding with state government agencies arose as part of the department's Misclassification Initiative, with the goal of preventing, detecting and remedying employee misclassification. California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington have signed similar agreements. More information is available on the Department of Labor's misclassification website at http://www.dol.gov/misclassification/.

The mission of the department is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and ensure work-related benefits and rights. To learn more about the FLSA's requirements, call the Wage and Hour Division's toll-free hotline at 866-4US-WAGE (487-9243) or visit its website at http://www.dol.gov/whd/.

Participants: U.S. Department of Labor, Kentucky Labor Cabinet

Description: Officials from the U.S. Department of Labor and the Kentucky Labor Cabinet signed a Memorandum of Understanding with the goal of protecting the rights of employees by preventing their misclassification as independent contractors or other non-employee statuses. Under the agreement, both agencies may share information and coordinate law enforcement.

Background: The MOU represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. Kentucky joins a growing list of states who are now partners in this effort with the U.S. Labor Department. Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Rhode Island, Texas, Utah, Washington, Wisconsin and Wyoming agencies have signed similar agreements. More information is available on the Department of Labor's misclassification website at http://www.dol.gov/misclassification/.

Duration: Three years

Quotes: "Misclassification deprives workers of their hard earned wages and undercuts law-abiding businesses. Combating misclassification is one of several important steps the U.S. Labor Department is taking to ensure that workers receive a fair day's pay for a fair day's work."

— David Weil, U.S. Department of Labor Wage and Hour Division Administrator

"Simply put, misclassification cheats workers, steals from taxpayers, hurts businesses that follow the law, and weakens our economy. Although legitimate independent contractors are an important part of our economy, the misclassification of employees presents a serious problem that is happening at public and private projects all over the Commonwealth."

— Larry L. Roberts, Kentucky Labor Cabinet Secretary

PHILADELPHIA — More than 160 workers at a Philadelphia direct mail and printing company will receive $1.45 million in back wages and damages after a federal investigation found their employer and a staffing agency failed to pay overtime wages.

The U.S. Department of Labor's Wage and Hour Division conducted an investigation that resulted in a consent judgment, filed in U.S. District Court for the Eastern District of Pennsylvania, in which ICS Corp., New Century Integrity Corp. and its owner Hokkito Teddy agreed to pay 166 workers $725,583 in overtime wages, and an equal amount in liquidated damages. The investigation found ICS, New Century and Teddy employed the workers jointly.

"Temporary staffing agencies are valuable contributors to our economy," said Wage and Hour Division Administrator Dr. David Weil. "These agencies should not be used by employers to attempt to avoid their obligations under the law. Those who do will be held accountable, as today's action shows."

An investigation of direct mail processor ICS and two staffing companies it retained, found significant violations of the Fair Labor Standards Act. Violations included paying some workers in cash at straight time rates for all hours instead of paying overtime when employees worked beyond 40 hours in a workweek. Other employees, provided by New Century received checks for their first 40 hours from ICS. New Century then paid these employees in cash for their overtime hours at rates less than their regular pay. For example, a worker who received $13 per hour for his first 40 hours received $11 per hour in cash for overtime hours.

Investigators also found that Richy Services Inc., a second staffing agency used by ICS, failed to produce time and payroll records.

In addition to back wages and damages, the consent judgment requires ICS to appoint a compliance officer to ensure that the company maintains proper records, and pays temporary workers in compliance with the FLSA.

"Companies that use temporary agencies have a responsibility and duty to pay legally required wages," said Oscar Hampton, the department's Regional Solicitor in Philadelphia. "ICS violated the law when it failed to pay its workers the wages they earned. The company cheated its employees and sought an unfair business advantage over competitors that abide by the law."

The FLSA requires that covered 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. Affected employees receive liquidated damages, as well.

The case was investigated by the Wage and Hour Division's Philadelphia District Office and litigated by attorneys in the Philadelphia Regional Solicitors Office.

NEW ORLEANS — Six Gulf Coast staffing agencies have agreed to pay thousands of workers nearly $3.5 million in back wages after U.S. Department of Labor Wage and Hour Division investigators found part of their wages were mislabeled as "per diem" payments as reimbursement for expenses they never incurred.

Federal investigators found the agencies owed back wages to more than 3,000 workers – welders, electricians, pipe fitters, and other craftspeople – on maritime vessels and other oil and gas industry projects.

The investigations are part of an ongoing, multi-year initiative aimed at ending an illegal and alarming trend of employers labeling part of employee wages as per diem payments, often to avoid overtime, payroll taxes and other costs. Investigators are actively monitoring staffing agencies and other employers in the 1,600-mile Gulf Coast region for signs of this practice.

"Workers don't often complain about receiving per diem pay in place of regular wages because they believe they make more money being paid this way," said Wage and Hour Division Administrator David Weil. "The truth is these workers are losing out. They are not getting all of the short- and long-term benefits their employer owes them."

Companies break the law when they label part of a worker's regular wages as per diem expense reimbursement instead of wages to lower labor costs, avoid paying overtime, and avoid making payments toward federal and state taxes, workers' compensation, unemployment insurance and Social Security payments. By attempting to reduce these obligations illegally with this scheme, these employers also gain an unfair advantage over their competitors.

Per diem pay is intended as a way for employers to reimburse workers for lodging, meals and other travel expenses incurred on behalf of their employer. Regular wages mislabeled as per diem cheat workers out of correct overtime wages. The payments may prevent workers from receiving full benefits in the event of a lay-off or workplace injury, and do not make full contributions toward a worker's Social Security benefits.

"Illegal per diem pay also hurts law-abiding employers, defrauds local, state and federal governments and cheats all of us who pay increased taxes as a result," Weil added. "Our division has dedicated the people and resources we need to stop this illegal pay practice on the Gulf Coast and throughout the nation."

The six companies found to be engaged in this practice in the latest investigations, the back wages found and the numbers of affected employees are as follows:

The initiative has also found troubling trends in the region's staffing industry in Alabama, Florida, Louisiana, Mississippi and Texas. Employers that use temporary staffing agencies may be liable if investigations find workers employed jointly by the staffing agency, and the business that contracted them, received illegal per diem payments.

The FLSA requires that workers receive 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. Under the FLSA, employers who violate the law are liable for employees' back wages and an equal amount in liquidated damages. Affected employees receive liquidated damages directly.

Employers must also distinguish employees from bona fide independent contractors. An employee, as distinguished from a person who is engaged in a business of his own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he serves. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

For more information about federal wage laws, or to file a complaint, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or its New Orleans District Office at504-589-6171. Information also is available at http://www.dol.gov/whd/.

COLUMBIA, S.C. — Jeffrey Angstadt didn't want days off to relax. In September 2010 and over the months that followed, the furniture sales executive told his employer, Staples Contract and Commercial, Inc., a subsidiary of Staples, Inc., that he needed to take leave to care for his critically ill wife. While Angstadt was eligible for federal workplace protections for those coping with the illness of a family member, no one at Staples notified him as the law requires.

For the next two years, Angstadt used his personal, sick and vacation days, and worked remotely as needed to balance his work obligations and to care for his wife.

In January 2012, his supervisors decided Angstadt wasn't meeting his job responsibilities, and the company fired him. Angstadt found himself without an income and critical health benefits when both were needed the most. Two months later, an investigation began by the U.S. Department of Labor's Wage and Hour Division district office in Columbia.

Following the investigation, the department then sued Staples in June 2013 for violating the Family and Medical Leave Act in its failure to inform Angstadt of his rights.

As part of a settlement agreement reached with Staples Inc. and Staples Contract and Commercial Inc., the Staples defendants have agreed to pay Angstadt $137,500 in lost wages and benefits, plus an equal amount in liquidated damages. The agreement was reached in a consent decree approved by a federal court.

"When an employee must be away from work to care for a loved one, there are no second chances to get it right," said Wage and Hour Division Administrator Dr. David Weil. "For more than 20 years, the Family and Medical Leave Act has been a critical safety net for working families. It ensures that no one should have to choose between the job they need and the family they love."

"This case shows the department's strong commitment to that principle, and our intention to use all enforcement tools at our disposal, including litigation, to uphold FMLA protections for workers and make sure that all employers operate in compliance with the law and get it right the first time," added Weil.

Angstadt's wife died in 2014.

As a part of the settlement, the company will also promote an enterprise-wide policy for compliance with the FMLA by providing training for human resources and other managerial personnel with respect to FMLA notice and eligibility requirements; post FMLA enforcement posters in the workplace; and investigate and respond to complaints of potential FMLA violations concerning an employee's notice of FMLA rights, including correcting violations when discovered.

Timeline of Key Events:

• March 2007: Angstadt starts work as market manager for Corporate Express in Miami.
• July 2008: Staples purchases Corporate Express.

Angstadt continues work as market manager for Staples.

• March 2009: Angstadt transferred to Staples Contract and Commercial's Columbia office.
• September 2010: Angstadt first informed Staples of his desire to take leave to care for wife.
• March 2011: Angstadt selected as a furniture sales executive.
• January 2012: Angstadt is fired.
• March 2012: Wage and Hour Division begins investigation.
• June 2013: Labor Department files suit in U.S. District Court for District of South Carolina.
• May 2015: District Court approves consent decree with the parties' settlement agreement.

The case was litigated by the department's Regional Office of the Solicitor in Atlanta.

Staples Contract and Commercial, Inc. offers business supplies to Fortune 1000 organizations as a subsidiary of Staples, Inc.

An employer is prohibited from interfering with, restraining or denying the exercise of, or the attempt to exercise, any FMLA right. Prohibited conduct includes failing to notify an employee of his or her rights under the FMLA when aware that the employee is taking FMLA-qualifying leave. Information on the FMLA is available on the Wage and Hour Division's website at http://www.dol.gov/whd/fmla/index.htm.

WASHINGTON — A nearly five-year federal investigation of illegal business practices by 16 defendants in Utah and Arizona has yielded $700,000 in back wages, damages, penalties and other guarantees for more than 1,000 construction industry workers in the Southwest, the U.S. Department of Labor announced today.

Consent judgments put an end to an effort by the defendants — operating collectively as CSG Workforce Partners, Universal Contracting, LLC and Arizona Tract/Arizona CLA — to claim that their workers were not employees. The defendants required the construction workers to become "member/owners" of limited liability companies, stripping them of federal and state protections that come with employee status. These construction workers were building houses in Utah and Arizona as employees one day and then the next day were performing the same work on the same job sites for the same companies but without the protection of federal and state wage and safety laws. The companies, in turn, avoided paying hundreds of thousands of dollars in payroll taxes.

"Hiding behind deceptive legal partnerships to reduce wages owed to employees is wrong. We will not tolerate denying overtime and other employment rights to workers," said U.S. Secretary of Labor Thomas E. Perez. "We will combat schemes like these with every enforcement tool we have, including partnering with other federal and state agencies to ensure that workers are not misclassified as owners or members of LLCs or otherwise. Deceptions like these deny workers hard-earned wages, hurt families who depend most on those wages, and leave workers without important protections if they're injured on the job or laid off."

A misclassified employee — with independent contractor or other non-employee status — lacks minimum wage, overtime, workers compensation, unemployment insurance, and other workplace protections. Employers often misclassify workers to reduce labor costs and avoid employment taxes. By not complying with the law, these employers have an unfair advantage over competitors who pay fair wages, taxes due, and ensure wage and other protections for their employees. These illegal practices lower standards for all workers, especially in highly competitive markets and industries where employers try to reduce overhead, often at the expense of their workers.

"Employers who misclassify workers do not pay their fair share of payroll taxes, which cheats critical state and federal programs," Perez added. "The misclassification of workers shortchanges every single taxpayer by forcing them to pick up the slack for those who break the law."

The consent judgments are the result of a combined effort of the U.S. Department of Labor, U.S. Department of Justice and the state of Utah. The investigation began in southern Utah and then moved to Arizona after the passage of state legislation in Utah that required LLCs to provide workers' compensation and unemployment insurance to their "members." To avoid legal jeopardy in Utah, the defendants moved their operations south to Arizona.

Utah officials assisted the department by sharing information through the state's Worker Classification Coordinated Enforcement Council, an entity created by the state legislature to combat misclassification. Working together in the investigation and litigation, the U.S. Attorney's Office for the District of Utah and the U.S. Department of Labor presented findings to federal courts in Utah and Arizona. The courts, in turn, approved consent judgments on April 21 against the above-named companies and their respective owners.

The consent judgments require the defendants to:

• Pay $600,000 in back wages and liquidated damages to employees in Utah and Arizona and an additional $100,000 in civil penalties;
• Stop using limited liability companies to avoid Fair Labor Standards Act compliance;
• Treat themselves as "employers" and their current and future workers as "employees" under the FLSA;
• Comply with the FLSA's minimum wage, overtime, recordkeeping, and anti-retaliation provisions;
• Pay all applicable federal, state and local taxes; and
• Work with the department to identify those workers who were harmed by their misclassification scheme and determine proper individual payment of back wages.

"Legitimate independent contractors are valuable contributors to our economy, but those who deliberately misclassify actual employees as independent contractors — or partners — are a serious problem in many industries, especially in construction," said Wage and Hour Division Administrator David Weil. "We will continue to work together with other enforcement authorities to ensure a fair and level playing field for businesses, and fair and full pay for workers."

"We are pleased that this multi-agency effort has helped so many workers find justice, and produced a change in business practices in the regional construction industry," said M. Patricia Smith, U.S. Solicitor of Labor. "This kind of cooperation among state and federal law enforcement authorities will serve as a model for preventing misclassification and similar practices that deny workers' their wages and protections, and undermine law-abiding employers. The resolution of this case should send a strong message to any other employers, in any industry, contemplating such a scheme."

Workers who believe they might be owed back wages by the defendants can contact the Wage and Hour Division's Salt Lake City District Office at 801-524-5706, or Arizona District Office at 602-514-7100.

In a separate but related case, the department obtained a consent judgment against a major client of the Arizona defendants in this case. The judgement in the U.S. District Court for the District of Arizona against Paul Johnson Drywall, LLC, required the company to stop using the Arizona defendants' unlawful LLC business model and to pay $600,000 in back wages, liquidated damages and civil money penalties.

The Wage and Hour Division has aggressively expanded its efforts to combat employee misclassification in sectors where workers are especially vulnerable and violations are rampant. The department currently has 20 Memoranda of Understanding with states, including the Utah Labor Commission, through which it collaborates with states agencies to combat misclassification. More information is available on the department's misclassification Web page at http://www.dol.gov/misclassification.

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, including commissions, bonuses, piece-rate earnings and incentive pay, for hours worked beyond 40 per week. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained.

For more information about the FLSA and other 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.

The named defendants are:

Arizona Arizona CLA, LLC Arizona Tract, LLC Arizona Superstition Management, LLC Cory Atkinson Jared Martin Glen Ormiston Alpine Building, LLC

Utah Universal Contracting, LLC Grove Creek, LLC CSG Workforce Partners, LLC CSG Exteriors, LLC CSG Drywall, LLC CSG Framing, LLC CSG Interiors, LLC CSG Painting, LLC CSG Landscaping, LLC. Cory Atkinson Jared Martin Alpine Building, LLC Arizona CLA, LLC

Perez v. Universal Contracting LLC et al Civil Action Number: 2:13-cv-253-DS

Perez v. Arizona CLA LLC et al

Civil Action Number: 2:15-cv-00461-JAT

Arizona press should contact Leo Kay, and Utah press should contact Juan Rodriguez using the contact information provided above.