WHD News Release: [04/02/2015]
Phone Number: (415) 625-2630 or (972) 850-4709
Release Number: 15-0518-NAT
for more than 1,000 construction workers who were wrongly classified
Judgments end misclassification scheme, order workers paid and treated as employees
Consent judgments put an end to an effort by the defendants -- operating collectively as
"Hiding behind deceptive legal partnerships to reduce wages owed to employees is wrong. We will not tolerate denying overtime and other employment rights to workers," said U.S. Secretary of Labor
A misclassified employee -- with independent contractor or other non-employee status -- lacks minimum wage, overtime, workers compensation, unemployment insurance, and other workplace protections. Employers often misclassify workers to reduce labor costs and avoid employment taxes. By not complying with the law, these employers have an unfair advantage over competitors who pay fair wages, taxes due, and ensure wage and other protections for their employees. These illegal practices lower standards for all workers, especially in highly competitive markets and industries where employers try to reduce overhead, often at the expense of their workers.
"Employers who misclassify workers do not pay their fair share of payroll taxes, which cheats critical state and federal programs," Perez added. "The misclassification of workers shortchanges every single taxpayer by forcing them to pick up the slack for those who break the law."
The consent judgments are the result of a combined effort of the
The consent judgments require the defendants to:
Stop using limited liability companies to avoid Fair Labor Standards Act compliance;
Treat themselves as "employers" and their current and future workers as "employees" under the FLSA;
Comply with the FLSA's minimum wage, overtime, recordkeeping, and anti-retaliation provisions;
Pay all applicable federal, state and local taxes; and
Work with the department to identify those workers who were harmed by their misclassification scheme and determine proper individual payment of back wages.
"Legitimate independent contractors are valuable contributors to our economy, but those who deliberately misclassify actual employees as independent contractors -- or partners -- are a serious problem in many industries, especially in construction," said Wage and Hour Division Administrator
"We are pleased that this multi-agency effort has helped so many workers find justice, and produced a change in business practices in the regional construction industry," said
Workers who believe they might be owed back wages by the defendants can contact the Wage and Hour Division's
In a separate but related case, the department obtained a consent judgment against a major client of the
The Wage and Hour Division has aggressively expanded its efforts to combat employee misclassification in sectors where workers are especially vulnerable and violations are rampant. The department currently has 20 Memoranda of Understanding with states, including the
The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of
For more information about the FLSA and other federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd.
The named defendants are:
Civil Action Number: 2:13-cv-253-DS
Civil Action Number: 2:15-cv-00461-JAT