WASHINGTON — Officials from the U.S. Department of Labor and the Florida Department of Revenue today signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as independent contractors or other nonemployee statuses. Under the agreement, both agencies will share information and coordinate law enforcement. 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. The Florida Department of Revenue is the latest state agency to partner with the Labor Department.

In Fiscal Year 2013, WHD investigations resulted in more than $83,051,159 in back wages for more than 108,050 workers in industries, such as janitorial, food, construction, day care, hospitality and garment. WHD regularly finds large concentrations of misclassified workers in low-wage industries.

"Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses," said Dr. David Weil, administrator of the Wage and Hour Division. "This memorandum of understanding sends a clear message that we are standing together with the state of Florida to protect workers and responsible employers and ensure everyone has the opportunity to succeed."

"Working with the states is an important tool in ending misclassification," said Wayne Kotowski, the Wage and Hour Division's regional administrator for the southeast. "These collaborations allow us to better coordinate compliance with both federal and state laws alike."

"By partnering with the U.S. Department of Labor we are actively working to level the playing field for Florida's businesses to stop the misclassification of workers. Businesses that misreport workers obtain an unfair advantage over other law-abiding businesses," said Florida Department of Revenue Executive Director, Marshall Stranburg.

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. Independent contractors are often 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. Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington state agencies 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/.

WASHINGTON — Officials of the U.S. Department of Labor's Wage and Hour Division and the Alabama Department of Labor today signed a memorandum of understanding to protect the rights of employees by preventing their misclassification as something other than employees, such as independent contractors. The memorandum of understanding 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. The Alabama Department of Labor is the latest state agency to partner with the U.S. Labor Department.

In Fiscal Year 2013, WHD investigations resulted in more than $83,051,159 in back wages for more than 108,050 workers in industries, such as janitorial, food, construction, day care, hospitality and garment. WHD regularly finds large concentrations of misclassified workers in low-wage industries.

"Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses," said Dr. David Weil, administrator of the Wage and Hour Division. "This memorandum of understanding sends a clear message that we are standing together with the state of Alabama to protect workers and responsible employers and ensure everyone has the opportunity to succeed."

"Working with the states is an important tool in ending misclassification," said Wayne Kotowski, the Wage and Hour Division's regional administrator for the southeast. "These collaborations allow us to better coordinate compliance with both federal and state laws alike."

"We are pleased to be able to partner with the U.S. Department of Labor in order to better serve all employers and employees in Alabama," said Alabama Department of Labor Commissioner Fitzgerald Washington. "This sharing of information between agencies can lead to better benefits for and a better understanding of the law by employees, as well as serving to level the playing field for employers who are legitimately reporting their employees' classifications."

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. Independent contractors are often 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, New York, Utah and Washington state agencies 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/.

WASHINGTON — Upholding President Obama's promise to make 2014 a year of action to expand opportunity, reward work and grow the middle class, U.S. Secretary of Labor Thomas E. Perez today announced a final rule that raises the minimum wage for workers on federal service and construction contracts to $10.10 per hour. The final rule implements Executive Order 13658, which was announced by the president on Feb. 12, and it will benefit nearly 200,000 American workers.

"No one who works full time in America should have to raise their family in poverty, and if you serve meals to our troops for a living, then you shouldn't have to go on food stamps in order to serve a meal to your family at home," said Secretary Perez. "By raising the minimum wage for workers on federal contracts, we're rewarding a hard day's work with fair pay. This action will also benefit taxpayers. Boosting wages lowers turnover and increases morale, and will lead to higher productivity."

The final rule provides guidance and sets standards for employers concerning what contracts are covered and which of their workers are covered. The rule also establishes obligations that contractors must fulfill to comply with the minimum wage provisions of the executive order, including record-keeping requirements. It provides guidance about where to find the required rate of pay for all workers, including tipped employees and workers with disabilities. Additionally, the rule establishes an enforcement process that should be familiar to most government contractors and will protect the right of workers to receive the new $10.10 minimum wage.

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after Jan. 1, 2015, and to contracts that are awarded outside the solicitation process on or after Jan. 1, 2015. The minimum wage applicable under this final rule will be indexed to inflation in future years. The final rule makes clear that the executive order minimum wage requirement applies to all contracts for construction covered by the Davis-Bacon Act; contracts for services covered by the Service Contract Act; concessions contracts, such as contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands and recreational equipment; and contracts to provide services, such as child care or dry cleaning, on federal property for federal employees or the general public. The final rule came after consideration of extensive comments from the federal contracting community, workers and other interested parties.

For more information about the final rule, including fact sheets and answers to frequently asked questions, please visit http://www.dol.gov/whd/flsa/eo13658/. The rule will be published on the Federal Register Oct. 7, and it is available at https://federalregister.gov/a/2014-23533.

HOUSTON — Shell Oil Co. and Motiva Enterprises LLC, which markets Shell gasoline and other products, have agreed to pay $4,470,764 in overtime back wages to 2,677 current and former chemical and refinery employees as a result of investigations by the U.S. Department of Labor that found violations of the Fair Labor Standards Act.

The department's Wage and Hour Division conducted investigations at eight Shell and Motiva facilities in Alabama, California, Louisiana, Texas and Washington, which found that the companies violated FLSA overtime provisions by not paying workers for the time spent at mandatory pre-shift meetings and failing to record the time spent at these meetings.

"Employers are legally required to pay workers for all hours worked," said U.S. Secretary of Labor Thomas E. Perez. "Whether in the international oil industry, as in this case, or a local family-run restaurant, the Labor Department is working to ensure that responsible employers do not experience a competitive disadvantage because they play by the rules."

The Wage and Hour Division's Houston District Office coordinated investigations with the Gulf Coast, New Orleans, San Francisco and Seattle District Offices to ensure nationwide compliance by Shell and Motiva. The findings revealed that those eight Shell Oil and Motiva refineries failed to pay workers for time spent attending mandatory pre-shift meetings. The companies required the workers to come to the meetings before the start of their 12-hour shift. Because the companies failed to consider time spent at mandatory pre-shift meetings as compensable, employees were not paid for all hours worked and did not receive all of the overtime pay of time and one-half their regular rate of pay for hours worked over 40 in a workweek. Additionally, the refineries did not keep accurate time records.

Shell, with U.S. headquarters in Houston, is an oil and natural gas producer involved in processing crude oil to manufacture energy products, including gasoline, diesel fuel, jet fuel and petroleum coke. Motiva, which is partially owned by Shell, is a leading refiner, distributor and marketer of fuels in the Eastern and Gulf Coast regions of the United States. It markets petroleum products under the Shell brand.

Shell and Motiva have signed settlement agreements that call for training of managers, payroll personnel and human resources personnel on the FLSA's requirements. The training will stress the importance of requiring accurate recording and pay for all hours worked with emphasis on pre-and post-shift activities.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Workers who are not employed in agriculture and not otherwise exempt from overtime compensation are entitled to time and one-half their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and it prohibits employers from retaliating against employees who exercise their rights under the law.

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 Houston District Office at713-339-5500. Information also is available at http://www.dol.gov/whd/.

LAS VEGAS — The U.S. Department of Labor has recovered $1,914,681.50 in back wages and fringe benefits for 147 workers at Proimtu Mmi-Nv LLC, a Henderson-based subcontractor providing construction services at the federally funded Crescent Dunes Solar Energy Project in Tonopah. This project, which received a $737 million loan guarantee from the U.S. Department of Energy, is a 110 MW solar energy power plant that will power up to 75,000 homes during peak electricity periods.

"The money we've recovered for these workers is not a windfall — it is their hard-earned pay that their employer was legally obligated to pay them but did not," said Dr. David Weil, administrator of the department's Wage and Hour Division. "Companies that benefit from federal funding must see to it that the money is used properly, and that their workers are compensated according to the law."

An investigation found that Proimtu Mmi-Nv violated the prevailing wage and fringe benefits requirements of the Davis-Bacon and Related Acts for the majority of their employees working at the Tonopah desert solar energy project. The Crescent Dunes Solar Energy Project is subject to specific requirements under the DBRA since its funding includes hundreds of millions of dollars in federal loan guarantees from the U.S. Department of Energy under the American Recovery and Reinvestment Act of 2009.

Investigators established that from June 2013 through April 2014, Proimtu Mmi-Nv failed to pay workers the correct prevailing wage rates and fringe benefits for their particular job duties. The contractor paid "general laborers" rates to workers that routinely performed duties in skilled trades, such as ironworking, electrical work, painting or bridge crane operation, that should have commanded fringe benefits and prevailing wages of up to two times more than they were paid.

In addition to paying back wages and fringe benefits, Proimtu Mmi-Nv now properly classifies its workers by paying them the correct prevailing wages and fringe benefits for all hours worked, including overtime, as required. In addition, the subcontractor has also agreed to raise awareness with other employers working at Crescent Dunes about prevailing wage requirements.

For information on federal wage requirements and laws, contact the Wage and Hour Division's Las Vegas District Office at 702-928-1240 or 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/.

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WASHINGTON — U.S. Secretary of Labor Thomas E. Perez announced today a proposed rule extending the protections of the Family and Medical Leave Act to all eligible employees in legal same-sex marriages regardless of where they live. The proposal would help ensure that all families will have the flexibility to deal with serious medical and family situations without fearing the threat of job loss. Secretary Perez is proposing this rule in light of the Supreme Court's decision in United States v. Windsor, in which the court struck down the Defense of Marriage Act provision that interpreted "marriage" and "spouse" to be limited to opposite-sex marriage for the purposes of federal law.

The FMLA, enacted in 1993, entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. Employees are, for example, entitled to take FMLA leave to care for a spouse who has a serious health condition. Millions of workers and their families have benefited since the FMLA's provisions became effective and even more American families would be made secure as a result of the proposed rule.

"The basic promise of the FMLA is that no one should have to choose between succeeding at work and being a loving family caregiver," said Secretary Perez. "Under the proposed revisions, the FMLA will be applied to all families equally, enabling individuals in same-sex marriages to fully exercise their rights and fulfill their responsibilities to their families."

The proposed rule would change the FMLA regulatory definition of "spouse" so that an eligible employee in a legal same-sex marriage will be able to take FMLA leave for his or her spouse or family member regardless of the state in which the employee resides. Currently, the regulatory definition of "spouse" only applies to same-sex spouses who reside in a state that recognizes same-sex marriage. Under the proposed rule, eligibility for FMLA protections would be based on the law of the place where the marriage was entered into, allowing all legally married couples, whether opposite-sex or same-sex, to have consistent federal family leave rights regardless whether the state in which they currently reside recognizes such marriages.

Following the Windsor decision, noting that it was "a victory... for families that, at long last, will get the respect and protection they deserve," President Obama directed the Attorney General to work with the Cabinet to review federal statutes to ensure the decision, including its implications for federal benefits and obligations, is implemented.

For additional information on the FMLA, including information and fact sheets on the proposed revisions, visit http://www.dol.gov/whd/fmla/nprm-spouse. The department encourages all interested parties to view the proposed rule and submit comments at http://www.regulations.gov. The regulation identification number is 1235-AA09. Comments must be received within 45 days following publication in the Federal Register.

WASHINGTON — Fulfilling President Obama's commitment to make 2014 a year of action to strengthen the economy and grow the middle class, U.S. Secretary of Labor Thomas E. Perez today announced a proposed rule raising the minimum wage for workers on federal service and construction contracts to $10.10 per hour. The proposed rule implements Executive Order 13658, which was announced by the president on Feb. 12.

"A core American value is that hard work should be rewarded with fair pay. And as the president said in his State of the Union address, if you cook our troops' meals or wash their dishes, you shouldn't have to live in poverty," said Secretary Perez. "Raising the minimum wage for workers on federal contracts will provide a much needed boost to many who are working hard, but still struggle to get by, and it will also benefit taxpayers with improved employee retention and productivity. Today the department took an important step toward making the promise of the executive order a reality for thousands of workers."

"In America, nobody who works full time should have to raise their family in poverty," said White House Domestic Policy Director Cecilia Muñoz. "President Obama is leading by example, raising the minimum wage for federal contract workers, and governors, mayors and businesses around the country are answering the call to join him. Now it's time for Congress to finish the job and raise the wage for everyone."

The proposed rule provides guidance and sets standards for employers concerning coverage, including coverage of tipped employees and workers with disabilities. It also establishes an enforcement process familiar to most government contractors that will protect the right of workers to receive the new minimum wage. The proposed rule includes an economic analysis showing that nearly 200,000 workers will benefit from the increase.

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after Jan. 1, 2015, and to contracts that are awarded outside the solicitation process on or after Jan. 1, 2015. The order applies to four major categories of contractual agreements: contracts for construction; service contracts under the Service Contract Act; concessions contracts; and contracts entered into by the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public. The department's proposed rule came after extensive outreach to the federal contracting community, workers, and procurement and contracting officials throughout the executive branch.

In addition to the proposed rule the department issued for public comment, today the Office of Management and Budget and the department jointly provided initial guidance to agencies on steps they should take to begin implementing the increased minimum wage in advance of the rule being finalized. By issuing this guidance, OMB and the department are asking agencies to take reasonable and legally permissible steps immediately to begin implementing the order, so that workers on federal contracts can benefit from wage increases as soon as possible after Jan. 1.

The department encourages all interested parties to view the proposed rule and submit comments at http://www.regulations.gov. The regulation identification number is 1235-AA10. Comments must be received within 30 days following publication in the Federal Register. The department will review comments received and issue a final rule by Oct. 1. More information about the proposed rule and the joint guidance to federal agencies is available at http://www.dol.gov/whd/flsa/nprm-eo13658/.

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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/.

WASHINGTON — LinkedIn Corp. has paid $3,346,195 in overtime back wages and $2,509,646 in liquidated damages to 359 former and current employees working at company branches in California, Illinois, Nebraska and New York. An investigation by the U.S. Department of Labor's Wage and Hour Division found that LinkedIn was in violation of the overtime and record-keeping provisions of the Fair Labor Standards Act. When notified of the violations, LinkedIn agreed to pay all the overtime back wages due and take proactive steps to prevent repeat violations.

"This company has shown a great deal of integrity by fully cooperating with investigators and stepping up to the plate without hesitation to help make workers whole," said Dr. David Weil, administrator of the Wage and Hour Division. "We are particularly pleased that LinkedIn also has committed to take positive and practical steps towards securing future compliance."

LinkedIn failed to record, account and pay for all hours worked in a workweek, investigators found. In addition to paying back wages and liquidated damages, LinkedIn entered into an enhanced compliance agreement with the department that includes agreeing to: provide compliance training and distribute its policy prohibiting off-the-clock work to all nonexempt employees and their managers; meet with managers of current affected employees to remind them that overtime work must be recorded and paid for; and remind employees of LinkedIn's policy prohibiting retaliation against any employee who raises concerns about workplace issues.

"Off the clock' hours are all too common for the American worker. This practice harms workers, denies them the wages they have rightfully earned and takes away time with families," said Susana Blanco, district director for the division in San Francisco. "We urge all employers, large and small, to review their pay practices to ensure employees know their basic workplace rights and that the commitment to compliance works through all levels of the organization. The department is committed to protecting the rights of workers and leveling the playing field for all law-abiding employers."

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees. Additionally, the law requires employers to maintain accurate time and payroll records, and it prohibits retaliation against employees who exercise their rights under the law.

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.

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/.