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Investigation Nets $1.6M in Back Pay

Wednesday, August 13, 2014

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A staffing agency for oil field and maritime facilities in the Gulf Coast will pay 1,543 current and former temporary employees more than $1.6 million to make good on back wages, the U.S. Department of Labor has announced.

A federal investigation found that B&D Contracting Inc. had violated the Fair Labor Standards Act by engaging in improper pay and record-keeping practices that resulted in denial of overtime to the employees, according to the DOL.

B&D has offices throughout the Gulf Coast.

Investigators from the Wage and Hour Division's New Orleans District Office said the staffing company mischaracterized some wages as per-diem payments and then excluded those wages when calculating overtime premiums, denying employees earned overtime.

©iStock / nightman1965

Regulators say pay violations to temporary labor are common in the Gulf Coast. Between fiscal years 2011 and 2013, the New Orleans District Office conducted 24 investigations, securing more than $2.5 million in back wages for at least 3,000 workers.

The company assigned employees to client sites throughout Louisiana, Mississippi and Alabama for work as welders, pipe fitters and shipfitters.

B&D Contracting did not respond Tuesday (Aug. 12) to a request for comment.

Preventing Future Violations

After the investigation, B&D Contracting agreed to pay $1,660,438 in back wages and to maintain accurate records showing that employees received bona fide per-diem payments—based either on applicable Internal Revenue Service guidelines or on a reasonable approximation of expenses.

The company also signed a settlement committing to implement specific measures to prevent future violations. These measures include:

  • Setting standards to accurately identify and compensate workers who qualify for bona fide per-diem payments;
  • Paying accurate overtime and ensuring that per-diem payments are not automatically excluded from overtime calculations;
  • Informing employees about their pay and employment conditions; and
  • Obtaining written acknowledgement from employees that they understand the criteria for receiving per-diem payments.

'Evasive Pay Practices'

"Temporary staffing agencies serve valuable and legitimate business needs in today's economy," said Dr. David Weil, administrator for the Wage and Hour Division.

"But employers may not manipulate these arrangements and use evasive pay practices to avoid paying workers their rightful wages."

B&D Contracting

B&D Contracting will pay more than $1.6 million to 1,543 current and former employees.

The case has also been referred to the IRS and the Louisiana Workforce Commission for review under their respective laws.

Temp Fraud Increasing

The investigation was part of an ongoing initiative focused on strengthening compliance by temporary labor providers, such as staffing and support services companies in the Gulf Coast region.

"The labor violations we found in this case are not unique to B&D Contracting Inc.," said Cynthia Watson, regional administrator for the Southwest division.

"We are increasingly finding the use of per-diem schemes as a means of decreasing overtime pay and tax obligations in the staffing and support services industry in this region.

"The resolution of this case demonstrates our continued focus on combating such labor violations in order to improve compliance in this industry."

Between fiscal years 2011 and 2013, the New Orleans District Office conducted 24 investigations in the temporary-help industry, securing more than $2.5 million in back wages for at least 3,000 workers.

   

Tagged categories: Government; Marine; Oil and Gas; Shipyards; Workers

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