Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: June 10, 2013
Contact: Diana Petterson, Juan Rodriguez
Phone: 972-850-4710, 972-850-4709
U.S. Department of Labor
Wage and Hour Division
Release Number: 13-963-DAL
Ratech Construction Inc. in Rhome, Texas, pays more than $176,000 in back wages following US Labor Department investigation
Employees were misclassified as independent contractors and denied overtime pay
RHOME, Texas -- Ratech Construction Inc. has paid $176,204 in back wages to 17 maintenance employees following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found the employees were misclassified as independent contractors and, consequently, were denied overtime compensations in violation of the Fair Labor Standards Act.
Ratech is a general contractor that provides services to heavy industrial and commercial sector construction projects throughout Texas. An investigation by the division’s Dallas District Office found that Ratech provided maintenance employees to Hanson Aggregates LLC, a mining operation in Bridgeport, but misclassified these employees as independent contractors and paid them straight time wages, rather than the required overtime premium for hours worked over 40 in a workweek.
“These misclassified employees worked long hours—in at least one case, as much as 95 hours in a workweek—without receiving overtime compensation. This is illegal and unacceptable,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “Employee misclassification not only deprives workers of their rightful wages and benefits, it also undercuts honest employers by placing them at a competitive disadvantage for obeying the law. The department is committed to combating this practice to protect workers and ensure a level playing field.”
Following the investigation, Ratech paid all back wages due to the affected employees. The company also agreed to maintain future compliance with the FLSA by ensuring that employees are properly classified and compensated for all hours worked, in accordance with the act.
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. 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. Employee misclassification also generates substantial losses for state Unemployment Insurance and workers’ compensation funds.
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 FLSA requires that covered employees be paid at least the federal 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. Additionally, employers must maintain accurate time and payroll records.
For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Dallas District Office at 817-861-2150. 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.