$430,956 in Back Wages for Overtime and Record-keeping Violations Due to MIsclassification of Employees

Friday, April 20, 2012

Elevations Shoring LLC of Kenner has agreed to pay $430,956 in overtime back wages to 186 current and former employees following an investigation by the U.S. Department of Labor's Wage and Hour Division that found violations of the Fair Labor Standards Act's overtime and record-keeping provisions.

"This employer misclassified employees as independent contractors to avoid paying overtime," said Cynthia Watson, regional administrator of the Wage and Hour Division in the Southwest. "Misclassification of employees is unacceptable, and the Labor Department will ensure that every worker is paid the wages he or she is entitled to receive."

An investigation by the Wage and Hour Division's New Orleans District Office found that the employer misclassified the workers as independent contractors and paid "straight time" for all hours worked rather than time and one-half for hours over 40 in a week. Investigators also determined that the company kept two sets of payroll records: 20 of the workers were classified and paid as regular employees for their first 40 hours worked each week according to one payroll, and for all additional hours, these same employees were listed on a second payroll as independent contractors and issued separate checks for the extra hours.

The remaining 166 employees were treated as independent contractors for all of their hours worked and listed on the payroll for independent contractors. Additionally, the company failed to keep accurate time and payroll records in that it did not record actual hours worked by the misclassified employees and all of their rates of pay, only recording weekly gross wages paid and the employees' most recent hourly rates of pay.

Elevations Shoring employs approximately 40 workers who provide digging, shoring and lifting services in the New Orleans area. In addition to paying the back wages owed, the company has agreed to comply fully with the FLSA in the future.

Under the FLSA, an employment relationship must be distinguished from a strictly contractual one. An employee – as distinguished from a person who is engaged in a business of his or her own – is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves. 

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