Contractor Fined $724K for Denying Overtime Pay and Falsifying Records

This month, the U.S. Department of Labor’s (DOL’s) Wage and Hour Division (WHD) recovered $724,082 in back wages and damages from an electrical contractor charged with denying overtime pay and falsifying records. Standards under the Fair Labor Standards Act (FLSA) include a federal minimum wage, mandatory overtime pay, recordkeeping requirements, and protections for tipped workers. However, unscrupulous employers may often falsify records to hide the fact that they are denying overtime pay. This was also the case in an investigation earlier this month, for which an employer paid more than $1.6 million for unpaid overtime.

Investigation Reveals Employer Was Denying Overtime Pay

During its investigation, the WHD found that the contractor falsified timesheet records, denying overtime pay owed to workers. In brief, the contractor capped employees’ overtime at eight hours despite some employees working up to 60 hours in a workweek. What’s more, the contractor told workers to record just 40 hours or less on their timesheets unless their overtime had been pre-approved. However, when the contractor did approve the overtime, they limited it to just eight hours. In reality, the employees had worked 23 hours of overtime in the workweek. In both instances, these hours were still considered hours worked under the FLSA. Therefore, the contractor needed to compensate them.

Wage and Hour Requirements Under the FLSA

The FLSA provides for several federal wage and hour standards and is one of five commonly cited employment laws that all employers should familiarize themselves with. Denying overtime pay is a direct violation of the FLSA and applicable state and local wage and hour laws. Currently, the FLSA entitles covered workers to the following minimum wage and overtime pay requirements:

• The federal minimum wage of not less than $7.25 an hour, effective July 24th, 2009.
• An overtime pay rate of not less than one and one-half times the regular pay rate during hours worked more than 40 a week.

In addition, every covered employer must keep certain records for each non-exempt employee. Records do not have to be in a particular form. However, they must include specific identifying information about the employee. Employers must also record data on hours worked, pay rate, and wages earned. In order to ensure employers succeed in their compliance efforts, WHD investigators enforce several labor laws applicable to businesses.

Penalties for Denying Overtime Pay and Falsifying Records

Specifically, the WHD found that the contractor did not keep accurate records of all hours worked, therefore, denying overtime pay to 255 employees. Falsified records included the omission of pre-shift and post-shift activities, whether or not they were approved by the contractor. Penalties incurred for denying overtime pay included $362,041 in back wages and an equal amount in liquidated damages. Additionally, due to the willful nature of the contractor’s violations, the WHD levied $20,000 in civil monetary penalties.