Summary

On Tuesday, December 9, 2014, the U.S. Department of Labor (DOL) announced that it has reached agreement with numerous employers in the oil and natural gas industry in Pennsylvania and West Virginia to provide 5,310 workers with almost $4.5 million in back wages under the Fair Labor Standards Act (FLSA). The DOL press release may be found here.

Dozens of contractors and subcontractors working for major energy companies are alleged to have engaged in thousands of violations whereby workers did not receive proper overtime for hours worked. These violations include failure to pay overtime to nonexempt workers; failure to pay overtime to workers who were improperly classified as exempt; and failure to include production bonuses and other pay in the overtime rate calculations, resulting in incorrect rates of pay. Information about whether civil money penalties were assessed as well as whether criminal prosecutions will ensue was not available; however employers who willfully or repeatedly violate the minimum wage or overtime pay requirements of the FLSA are subject to civil money penalties of up to $1,000 for each violation. In addition, willful (repeat) violations may result in criminal prosecution with fines up to $10,000; a second conviction may result in imprisonment. 

The DOL continues to investigate similar violations in other parts of the country; further, investigations for misclassification of employees as independent contractors have also netted large back pay amounts around the country. While competition has the impact of driving rates and profits down, driving employers to implement various techniques intended to minimize compensation paid to workers, employers must not ignore their legal obligations to compensate their workers correctly. 

All employers, including energy companies, contractors and subcontractors, should make it a priority to assess their pay and worker classification practices, not only under the Fair Labor Standards Act, but also under the wage and hour laws of the states in which they conduct business.