No Items in Cart 
On November 19, the Department of Labor (DOL) announced that it recovered a significant amount in back wages and damages for employees. Specifically, the DOL’s Wage and Hour Division (WHD) stated that it received more than $1.4 million for 36 Mexican engineers. These workers are employed by a subsidiary of one of the world’s largest defense contractors. Chiefly, the employer paid the workers in Mexican pesos below the federal minimum wage rate. Consequently, this action violates federal laws like the Fair Labor Standards Act. Previously, in July, the DOL announced a $12 million settlement regarding corporate-wide workplace safety compliance.
The Fair Labor Standards Act
As has been noted, the WHD found that the employer violated the Fair Labor Standards Act (FLSA). As the nation’s primary wage law and one of the major employment laws employers must follow, the FLSA establishes minimum wage and overtime protections for non-exempt part-time and full-time employees. However, under section 13(a)(1) of the FLSA, employees paid above the FLSA’s current salary basis are generally exempt from overtime provisions. To qualify for overtime exemption, employees must have been paid on a salary basis at not less than $684 per week. These exempt employees must also perform at least one of the duties of an executive, administrative, or professional employee.
Overview of the Back Wages and Damages Lawsuit
Basically, the WHD found that the employer had used the L-1B visa program to bring the affected workers to San Diego, California. Specifically, the workers were employed by a company subsidiary in Mexicali, Mexico. The positions the workers filled in San Diego involved:
- installing power plants, engines, and machinery;
- completing nautical structures; and
- finishing and furnishing ships’ interiors.
Consent Judgment Specifics
In general, the main issue involved the company paying the engineers in pesos at Mexican pay rates. These pay rates are less than the United States federal minimum wage. The WHD also determined that the workers were employed an average of 42 hours or more weekly and not paid for overtime.
Finally, the agency determined that the employer wrongfully treated the traveling workers’ per diem and lodging costs as wages. The company also did not maintain accurate time records for them. As a result, the DOL found that the business owed the 36 engineers $1,438,270 in back wages and damages. Comparatively, this figure includes $719,135 in unpaid minimum and overtime wages plus an equal amount in liquidated damages.
In addition to paying back wages and damages, the company signed an enhanced compliance agreement. This agreement bars them from future federal labor law violations. It also requires them to train employees who manage and supervise foreign workers with non-immigrant visas. Finally, the company must notify employees of their rights under FLSA and the Walsh-Healey Public Contracts Act (PCA).
Employer Takeaways
In conclusion, as mentioned before, the FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked. Unquestionably, employees must also receive overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 in a workweek.
To help business owners and their managers comply with overtime exemption laws and avoid wage & hour violations, WorkWise Compliance created the Overtime Exemptions Compliance Program eLearning Module. This digital solution helps employers, managers, and human resources representatives understand the DOL’s overtime rule requirements and determine if employees need to be re-classified. Updates to this program regarding a recent district court ruling involving the current overtime salary threshold will be added automatically to the program within the coming weeks.
