PHILADELPHIA — Thousands of workers employed by
contractors engaged in natural gas extraction in the Marcellus Shale
region of Pennsylvania and West Virginia are putting in a fair day's work but
not receiving a fair day's pay. An ongoing multiyear enforcement initiative
conducted by the U.S. Department of Labor's Wage and Hour Division offices in Wilkes-Barre
and Pittsburgh from 2012 to 2014 found significant violations of the Fair
Labor Standards Act which resulted in employers agreeing to pay
$4,498,547 in back wages to 5,310 employees. Wage and Hour Division
investigators attribute the labor violations in part to the industry's
structure.
"The Department of Labor is committed to protecting
working families who bear the greatest burden when labor standards are
violated," said U.S. Secretary of Labor Thomas E. Perez. "Recovering
wages for these workers will help them pay the rent, buy food for the table and
clothing for their children. And it will help ensure that employers who play by
the rules and pay their employees the wages they have earned are not undercut
by those who gain advantage by cheating the system and their workers."
"The oil and gas industry is one of the most
fissured industries. Job sites that used to be run by a single company can now
have dozens of smaller contractors performing work, which can create downward
economic pressure on lower level subcontractors," said Dr.
David Weil, administrator of the Wage and Hour Division. "Given
the fissured landscape, this is an industry ripe for noncompliance."
The majority of violations were due to improper payment
of overtime. In some cases, employees' production bonuses were not included in
the regular rate of pay to determine the correct overtime rate of pay. Under
the FLSA, all pay received by employees during the workweek must be factored in
when determining the overtime premium to be paid. Investigators also found that
some salaried employees were misclassified as exempt
from the FLSA overtime provision, and were not paid an overtime premium
regardless of the number of hours they worked.
Large energy providers such as Chesapeake Energy, Citrus
Energy and Anadarko Petroleum are engaged in site exploration and production in
the Marcellus Shale region. These companies own the mineral rights and secure
the technical and specialized workforce needed to identify natural gas well
extraction sites, develop well sites, complete drilling and bring wells on-line
for production. The providers then use subcontractors for the majority of the
work performed on the extraction, or "well" site. The subcontractors
include drilling and geological services, land leasing and acquisition service,
and oilfield support services companies.
Secondary subcontractors are often hired for more
specialized work and ancillary support services like welding, laboratory
services, landscaping, pipeline maintenance, safety and traffic control, and
water treatment. Frequently, this level of services does not take place
directly at the well sites.
"The more fractured an industry is, the more likely
there will be significant labor law violations," said Mark Watson,
regional administrator for the Northeast. "Companies further down the
contracting chain feel pressured to provide services at a competitive and often
cut-rate price point. They are also more likely to cut corners and offer a low
bid to secure a business opportunity."
The ongoing enforcement initiative began in 2012. In
addition to investigations in Pennsylvania and West Virginia, the agency is
examining potential wage and hour violations like these in other parts of the
country.
The FLSA requires that covered employees be paid at least
the federal minimum wage of $7.25 per hour, as well as time and one-half their
regular rates 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 prohibits employers from retaliating
against employees who exercise their rights under the law. The FLSA provides
that employers that violate the law are, as a general rule, liable to employees
for back wages and liquidated damages payable to the workers.
For more information about the FLSA, call the Wage and
Hour Division's Philadelphia Regional Office at 215-861-5800 or call the
division's toll-free helpline at 866-4US-WAGE (487-9243). Information is also
available at http://www.dol.gov/whd/.
Source: Department of
Labor
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