Last week, the U.S. Department of Labor’s Wage and Hour Division announced here that its investigation into the bounced payroll checks of 10 construction workers renovating a nursing home found that the employer who issued the bad checks had also denied more than 800 workers overtime wages by misclassifying them as independent contractors.
Initially, the WHD found that a southern construction company missed payroll by distributing bad checks to the affected workers. Paying employees late violates the minimum wage provision of the Fair Labor Standards Act because employees are entitled to receive at least $7.25/hour for all hours worked in a workweek on their regular payment schedule.
To make matters worse, the WHD also determined that the employer misclassified 146 construction workers as independent contractors. Employees are entitled to at least minimum wage and overtime when they work more than 40 hours in a workweek. Independent contractors are not. But calling an employee an independent contractor doesn’t make it so. Instead, courts analyze several factors to determine whether an individual is an employee or an independent contractor.
Compounding the problem, the company paid these individuals straight time for overtime hours worked, leading to additional FLSA violations.
But wait, there’s more.
The WHD expanded the probe and learned that the company’s owner operated two other construction businesses with his brother about a half hour away. WHD concluded that both companies shared responsibilities and related activities, common business purpose, payroll, and workers. That makes them joint employers.
Investigations of the other entities found the employer systemically denied overtime wages to another 653 construction workers by misclassifying them as independent contractors. As employees, the companies should have paid them overtime for hours over 40 in a workweek.
What started as a few bad checks ended up with a recovery of $229,665 in minimum and overtime wages owed to 809 workers.
Yes, you could say it jumped up a notch.