DOL: Employer Liable for Staffing Company’s Illegal Pay Scheme

An employer and a staffing agency have agreed to pay $1.4 million in back wages and damages to resolve U.S. Department of Labor (DOL) allegations that the staffing agency created multiple companies in an effort to skirt overtime requirements.

ASI Group, the staffing agency, “developed a scheme under which they created additional company names,” DOL alleged following an investigation. The workers were employed at United Plastics and that employer knew they were not receiving overtime required by the Fair Labor Standards Act (FLSA), DOL announced in a press release. When employees worked more than 40 hours per week, the staffing agency recorded their overtime hours under a shell company and paid them at a straight-time rate, DOL said.

Because United Plastics was a joint employer, it also is liable for the back wages, damages, and a civil penalty, DOL explained.

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