$100,000 in Back Pay For 33 Communications Workers Paid By Joint Employer When Other Employer Bankrupt

Monday, May 9, 2011

Covad Communications, a San Jose-based telecommunications provider, has paid $99,537 in back wages to 33 field technicians employed by a now-defunct San Leandro contractor following an investigation by the U.S. Department of Labor’s Wage and Hour Division. Before filing for bankruptcy on Dec. 27, 2010, Certified Securities Integrators Inc. missed two payrolls, violating the minimum wage and overtime provisions of the Fair Labor Standards Act.

“In these tough economic times, we want workers to know that bankruptcy does not necessarily mean that they will be left uncompensated for their work,” said George Friday Jr., administrator for the Wage and Hour Division’s Western Regional Office. “Workers should know that they can contact the Wage and Hour Division if this happens to them. We are committed to holding employers accountable for unacceptable wage practices.”

Wage and Hour Division investigators found that the majority of CSI’s business opportunities were provided by Covad Communications, leading to the agency’s determination that Covad was a joint employer despite a contract between the two companies stating that CSI was an independent business.

Following the investigation, Covad Communications chose to pay the technicians the full amount of the missed payrolls, even though only $59,246 was owed to meet federal minimum wage and overtime requirements. Covad also agreed to future compliance with the FLSA.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers must also maintain accurate time and payroll records.

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