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Painters, Others to Get $2M in OT Case

Wednesday, May 8, 2013

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A major industrial services employment agency will pay nearly $2 million in back wages to painters, blasters and other workers after denying them proper overtime, federal officials announced.

Hutco Inc. has agreed to pay $1,916,850 in back wages to 2,267 employees who were assigned to client work sites in Louisiana, Mississippi and Texas, the U.S. Department of Labor announced Monday (May 6).

Hutco is a labor services company that provides skilled and unskilled labor to clients in vessel construction, oil field fabrication, manufacturing, warehousing and distribution, and other industrial sectors.

Hutco Inc.
Photos: Hutco Inc.

Over 2,000 employees from Hutco Inc., including painters and blasters, will receive close to $2 million in overtime back wages from an agreement" with the DOL. The company admitted no wrongdoing.

Employees entitled to back wages worked as painters, blasters, welders, fitters, tackers, electricians, forklift operators and warehouse personnel, authorities said.

Settlement 'Not an Admission'

The DOL’s Wage and Hour Division conducted an investigation at the company’s Lafayette, LA, headquarters and found that the company had improper pay and record-keeping practices that resulted in employees being denied overtime compensation, which violates the Fair Labor Standards Act.

The act requires that covered employees be paid at least the federal minimum wage—currently $7.25 per hour—plus time and a half for anything over 40 hours per week, including commissions, bonuses and incentive pay.

Hutco's management said in a statement Tuesday (May 7) that it had "reached a voluntary agreement" with the government "in connection with an audit of our Fair Labor Standards Act compliance."

"Again, this was a voluntary settlement, and not an admission of any violation on our part," the company said. "[N]evertheless, we are pleased to have this matter behind us, and look forward to moving ahead with the best workforce in our industry."

The investigation found systemic overtime violations throughout six branch establishments. Hutco mischaracterized certain wages as “per diem” payments and impermissibly excluded these wages when calculating overtime, denying employees earned overtime compensation, according to the DOL.

overtime back wages

Hutco provides workers for industries such as vessel construction, oil field fabrication and manufacturing. Improper pay and record-keeping practices denied overtime at sites in three states.

“Employers cannot avoid their legal responsibility to pay overtime by using evasive practices that seek to undermine labor laws and deny workers their rightful wages,” said Seth D. Harris, acting Secretary of Labor.

“As a result of our investigation, not only is nearly $2 million in unpaid wages going into the pockets of the workers who earned it, but today’s agreement will also ensure the company’s future compliance with the FLSA,” Harris said.

Vulnerable Workers

Temporary workers can be vulnerable to pay inaccuracies.

“Temporary employment arrangements can make the worker-employer relationship difficult for workers to understand,” said Mary Beth Maxwell, acting deputy administrator of the Wage and Hour Division.

“As a result, temporary workers face the risk of not being treated as employees in terms of the wages and legal protections guaranteed under federal law. The Wage and Hour Division is committed to protecting them, and continues to reach out to stakeholders and state agencies to help ensure that employers who utilize contingent work arrangements do so in compliance with all applicable laws,” Maxwell said.

Fair Labor Standards Act

Hutco describes its services as "recruiting, placing, and managing qualified workers at reasonable rates."

Preventing Future Violations

In addition to paying the back wages, Hutco agreed to specific measures to prevent future violations, including:

  • Setting standards to accurately identify and compensate workers who qualify for bona fide per-diem payments;
  • Paying accurate overtime and ensuring 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.

Hutco also must maintain accurate records showing which employees received bona fide per-diem payments and showing that the payments are based on applicable Internal Revenue Service guidelines.

Payment of the back wages is ongoing, and the case has also been referred to the Louisiana Workforce Commission, according to the DOL.

A description on the company’s website says, “We are dedicated to recruiting, placing and managing qualified workers at reasonable rates. Our goal is to reduce labor costs, without sacrificing the quality of the work force.”

Hutco has three Louisiana offices, in addition to its headquarters; one office in Mexico; two in Mississippi; and one in Texas.

   

Tagged categories: Enforcement; Government; Labor; Oil and Gas; Painters

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