Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: Feb. 20, 2013
Contact: Elizabeth Todd, Juan Rodriguez
Phone: 972-850-4710, 972-850-4709
U.S. Department of Labor
Wage and Hour Division
Release Number: 13-43-DAL
US Labor Department investigation finds Emerald Coast Quality LLC missed payroll, misclassified employees
LUBBOCK, Texas -- Emerald Coast Quality LLC has paid nearly $4,000 in minimum wage and overtime back wages to six construction employees following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found minimum wage, overtime and record-keeping violations of the Fair Labor Standards Act.
The investigation by the division’s Albuquerque District Office revealed that Emerald Coast Quality, based in Freeport, Fla., failed to make its payroll for two pay periods while performing work on a student apartment building in Lubbock. Investigators found that the employer misclassified employees as independent contractors when they were employees entitled to federal minimum wage and overtime compensation for hours worked over 40 in a workweek. Additionally, the employer failed to maintain payroll records as required by the FLSA.
“Employers who misclassify employees as independent contractors to reduce labor costs not only harm their employees, they harm local businesses and the whole economy,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “Misclassification costs taxpayers millions of dollars each year in uncollected employment taxes, cheats employees out of wages they have rightfully earned and gives unscrupulous employers an unfair advantage. The Wage and Hour Division is vigorously pursuing corrective action in those situations when workers are employees to ensure that they are paid required wages and to level the playing field for employers who play by the rules.”
One employee on the job site told investigators that he was living in his car after being evicted from his apartment because he had not been paid. Emerald Coast Quality, which provided framing and roofing work during the Lubbock construction project, has agreed to comply with the FLSA in the future. Back wages have been paid in full.
The misclassification of employees as independent contractors presents a serious problem for affected employees, employers and the entire economy. Misclassified employees often are denied access to critical benefits and protections—such family and medical leave, overtime, minimum wage and Unemployment Insurance—to which they are entitled. Employee misclassification generates substantial losses to the U.S. Treasury and the Social Security and Medicare funds, as well as to state Unemployment Insurance and workers’ compensation funds. Misclassification also creates a competitive disadvantage for employers who comply with the law.
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.
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. Additionally, employers must maintain accurate time and payroll records.
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) or the division’s Albuquerque office at 505-248-6100. Information also is available at 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.