A case involving back pay for unpaid overtime has been settled for $4.5 million according to the U.S. Department of Labor. The case involved more than 140 employers and roughly 5,300 workers in the Marcellus Shale oil and gas industry. The back pay settlement covered multiply violations of the Fair Labor Standards Act. The agreement was reached following an investigation by the Department of Labor Wage and Hour Division.
Wage and hour violations have a two year look back period. That means that the employees who were underpaid can only seek wages going back two years, regardless of how long the employer denied them proper wages. As the $4.5 million settlement shows, unpaid overtime can pile up when a large number of employees are involved. The employers in this case likely benefited from their FLSA violations by denying proper overtime for the period of time before they were finally investigated.
Two specific FLSA violations were acknowledged in this case. The first is common in many industries. Some employers misclassified workers as exempt from overtime, paying them the same salary regardless of how many hours they worked. The second FLSA violation is a problem in certain types of industry. Employees who earn production bonuses were not paid at the correct overtime rate because those bonuses were excluded from the calculation.
It’s not surprising that so many employers in one industry all violated the FLSA. When one company fails to pay proper wages, others may follow suit to remain competitive. Employment law violations may spread like a virus as each company chooses to raise its profits at the expense of employees.
Source: The Times Tribune, “5,300 oil and gas workers to receive $4.5 million in back pay for unpaid overtime,” by Michael Iorfino, 9 December 2014