Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: March 19, 2013
Contact: Michael D'Aquino
U.S. Department of Labor
Wage and Hour Division
Release Number: 13-227-ATL (54)
H&W Printing Inc. in Marietta, Ga., pays more than $39,000 in back wages and penalties following US Department of Labor investigation
Employer misclassified employees as independent contractors during probationary period, denied overtime
MARIETTA, Ga. -- H&W Printing Inc. has paid 69 employees $31,863 in back wages following an investigation by the U.S. Department of Labor’s Wage and Hour Division that found violations of the Family and Medical Leave Act as well as the Fair Labor Standards Act’s minimum wage, overtime and record-keeping provisions. The department also assessed $7,741 in civil money penalties for the company’s repeat violations of the FLSA.
The department’s investigation determined that the employer failed to post the required FMLA poster in the workplace; failed to notify an employee of their rights and responsibilities under FMLA; and failed to designate an eligible employee’s qualifying leave as FMLA-protected.
The investigation further determined that the employer misclassified employees as independent contractors during a 90-day probationary period and, consequently, denied them overtime compensation. The employees were paid a straight time rate for all hours worked instead of time and one-half their regular rates of pay for hours worked over 40 in a workweek, as required by the FLSA. Three employees were not paid the minimum wage of $7.25 per hour for all hours worked. Additionally, the employer failed to maintain records of hours worked, destroying time sheets after employees were paid.
“Far too often, employers misclassify their employees as independent contractors to avoid paying them in compliance with the FLSA, as well as other federal, state and local statutes,” said Caryl Stribling, acting director of the Wage and Hour Division’s Atlanta District Office. “Misclassification costs taxpayers enormous sums of money each year in uncollected employment taxes, and gives unscrupulous employers an unfair advantage. The Wage and Hour Division is vigorously pursuing corrective action in those situations when workers are, in fact, employees, to ensure that they are paid required wages and to level the playing field for employers who play by the rules.”
In addition to paying the back wages and civil money penalties, the company has agreed to maintain future compliance by ensuring employees are properly classified, adhering to FMLA notice requirements and compensating employees for all hours worked, in accordance with the FLSA.
The misclassification of employees as independent contractors 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, and unemployment insurance—to which they are entitled. Additionally, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law. Employee misclassification also generates substantial losses for state Unemployment Insurance and workers’ compensation funds.
Since 1993, the FMLA has been a major component in the department’s effort to promote work-family balance, providing workplace protections for those living with a serious health condition, or caring for a covered family member with a serious health condition. The FMLA helps to ease the burden that can come with needing time away from work when faced with such an illness by providing eligible employees unpaid, job-protected leave with continuation of health care coverage under the same terms and conditions as if the employee had not taken leave. Leave may be taken all at one time, or may be taken from time to time as the medical condition requires. An employer is prohibited from interfering with, restraining or denying the exercise of, or the attempt to exercise, any FMLA right. Prohibited conduct includes refusing to authorize FMLA leave for an eligible employee.
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 workweek. Additionally, the law requires that accurate records of employees’ wages, hours and other conditions of employment be maintained.
Under the FLSA, employers must 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.
The Wage and Hour Division’s Atlanta District Office can be reached at 404-893-4600. Information about the FLSA and other federal labor laws is available by calling the division’s toll-free helpline at 866-4US-WAGE (487-9243) or visiting http://www.dol.gov/whd.
U.S. Department of Labor releases are accessible on the Internet at www.dol.gov. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at (202) 693-7828 or TTY (202) 693-7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit www.dol.gov/compliance.