UNITED STATES DEPARTMENT OF LABOR: Wage and Hour Division
(WHD)
Press Releases: U.S. Department of Labor, Wage and Hour
Division, Release Number: 13-2198-CH
Company signs consent judgment to prevent future labor
violations of the FLSA
BENSENVILLE, Ill. -- Norwood Commercial Contractors Inc. has
agreed to pay 96 workers $395,465 in back wages and liquidated damages
following an investigation by the U.S. Department of Labor’s Wage and Hour
Division. The investigation found that the commercial construction contractor
misclassified 16 workers as independent contractors and denied them and the
remaining employees proper compensation for all hours worked, in violation of
the Fair Labor Standards Act’s overtime and record-keeping provisions.
“The misclassification of employees as independent
contractors denies workers of wages and benefits they are entitled to under the
law. It also leads to unfair competition because businesses that play by the
rules operate at a disadvantage when compared with those that don’t,” said
Thomas Gauza, the division’s district director in Chicago. “We often find
misclassification in the construction industry. This investigation should send
a clear message to other employers to evaluate their pay practices and to
ensure that they are in compliance with federal labor laws.”
The investigation determined that employees—such as
carpenters, electricians, masons, laborers, painters, and drywall hangers and
finishers—were misclassified as independent contractors and were denied proper
compensation, in violation of the FLSA. Many of these employees were not paid
overtime premiums at time and one-half their regular rates of pay for hours
worked beyond 40 in a workweek, and they were not paid for travel time to and
from assignments when employees worked away from home. Additionally, the
company took illegal deductions from employees’ pay in overtime workweeks and
banked some overtime hours to be paid at straight time in future workweeks. The
investigation also alleged that the employer reduced the number of hours worked
when processing payroll, in violation of the FLSA’s record-keeping provisions.
Norwood Commercial Contractors and the company president,
Douglas Hudson, have signed a consent judgment to resolve a lawsuit brought by
the department before the U.S. District Court for the Northern District of
Illinois, Eastern Division, in Chicago.
Under terms of the consent judgment, in addition to paying
the back wages and damages found due, the company has also agreed to a variety
of enhanced compliance provisions. The employer has agreed to designate a
compliance officer to act as a liaison with the Wage and Hour Division, and to
provide employees with specific Wage and Hour compliance information, including
contact information for the division. The employer has also agreed to maintain
accurate payroll records; to provide full access to payroll records during
visits by the Wage and Hour Division; to give a minimum of two presentations on
compliance with the FLSA to contractor’s associations; and to create online
informational tools, including information on FSLA compliance, on the company’s
website. The company will also create a compliance-related question-and-answer
forum on its Facebook page.
The misclassification of employees as something other than
employees, such as independent contractors, presents a serious problem for
affected employees, employers and to the economy. Misclassified employees are
often denied access to critical benefits and protections, such as family and
medical leave, overtime, minimum wage and unemployment insurance, to which they
are entitled. Employee misclassification also 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.
Under the FLSA, an employment relationship must be
distinguished from a strictly contractual one. An employee, as distinguished
from a person who is engaged in a business of his or her 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, 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. Employers are required to
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 visit http://www.dol.gov/whd.
Source: Department
of Labor
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