Wage and hour cases often seem piddling—what are a few hours of overtime here and there? But add in other class members (hundreds, thousands?), years (2 or 3?), and damages, and there’s quite a tidy sum you might owe.
Here are several recent cases, each with something to teach about managing wage and hour difficulties.
$1 Million for 154 Hurricane Katrina Recovery Workers
The Suit: The U.S. Department of Labor (DOL) resolved a lawsuit against Houston-based Universal Project Management, Inc. and Irving, Texas-based Fluor Enterprises, Inc. for failing to pay overtime to 154 workers involved in the cleanup after Hurricane Katrina.
An investigation by DOL’s Wage and Hour Division (WHD) found that the companies paid only straight time for all hours worked.
DOL said, “Some employees involved in the inspection of trailers during the hurricane recovery worked up to 84 hours a week without the required overtime compensation for hours worked over 40 in a workweek."
HRDA Comment: There’s not much in HR as basic as knowing you have to pay overtime for work over 40 hours a week. And that overtime does add up when you are working 84 hours a week. With 154 workers, did they think WHD wouldn’t get wind of it?
Mail Hauler Faces Debarment, Pays $1.8 Million
The Suit: MT Transportation & Logistics Services, Inc., a trucking company under contract with the U.S. Postal Service (USPS) to haul mail, will pay more than $1.8 million in back wages to more than 500 employees.
Perhaps more devastating, the company and its principal officers will also be debarred from receiving future government contracts for a 3-year period.
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USPS mail haul contracts are subject to the prevailing wage and fringe benefits provisions of the federal McNamara-O’Hara Service Contract Act. The Act requires contractors and subcontractors performing on federal service contracts in excess of $2,500 to pay service employees no less than the wage rates and fringe benefits found prevailing in the locality for the classification of work that they perform. ("Prevailing wage" is generally taken to mean "local union wage.")
DOL cited the company and its officers for failing to pay their service employees the legally required hourly rates and fringe benefits. MT has agreed to pay a total of $1,830,800 in back wages and interest.
HRDA Comment: Employers may be tempted to flout the rules and consider possible fines and monetary judgments a cost of doing business, but don’t forget that the government has another powerful deterrent for contractors—the threat of debarment.
OSHA and DOL Bring Fines of $1.6 Million Following Teen Worker’s Death
The Suit: DOL’s Occupational Safety and Health Administration (OSHA) and the WHD together have fined Tempel Grain Elevators, LLP, of Wiley, Colorado, more than $1.6 million following the tragic death of a teenage worker at one of the company’s grain storage operations.
The youth suffocated after being engulfed by grain. The company also exposed three other teenage workers to the cited hazards.
OSHA proposed $1,592,500 in fines for 22 alleged willful and 13 alleged serious citations. The willful citations included not providing an emergency action plan before entering grain bins, failing to train workers in safe bin entry, a lack of grain-engulfment protection, failure to shut off and lock out equipment while employees were working inside bins, and a lack of rescue equipment.
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Meanwhile, the WHD conducted a separate investigation that disclosed 77 child labor violations involving 15 minor employees. These include employing underage workers, allowing teenage employees to work hours prohibited by the Fair Labor Standards Act (FLSA), and allowing them to work in jobs prohibited by the Act. The investigation also found 59 workers due a total of $56,285 in back wages for minimum wage and overtime violations.
Employees ranging from 14 to 17 years of age were operating prohibited hazardous equipment, including hoisting apparatus such as skid loaders, front-end loaders, and forklifts, and riding elevator man lifts.
HRDA Comment: The rules for employment of young workers—ages, hours, and types of permissible jobs—are clear. However, managers will violate them if you don’t train and observe. By the way, there’s going to be little sympathy for the company that knowingly endangered young workers.
In tomorrow’s Advisor, two more million-dollar wage cases and an introduction to a unique and comprehensive source for compensation solutions.