$485,107 in Overtime Back Wages Paid by Bio-Electric Power Plant for Misclassification of Employees

Friday, June 1, 2012

Aspen Power LLC in Lufkin has paid $485,107 in overtime back wages to 135 current and former construction and production workers 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 company misclassified employees covered under the Fair Labor Standards Act as independent contractors, thereby denying these workers their rightful wages,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “In this case, employees worked as many as 12 hours a day, seven days a week, without overtime compensation. That practice is illegal and unacceptable.”

The Wage and Hour Division’s Houston District Office found that the employer had misclassified the employees as independent contractors and consequently paid them “straight time” wages for all hours worked, rather than time and one-half their regular rates for hours worked over 40 in a week, as required under the FLSA. The employer also failed to maintain accurate payroll records.

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, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

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. 

Aspen Power, a bio-electric power plant, is owned by Houston-based Aspen Pipeline. The company has paid all back wages due to the affected employees and has agreed to fully comply with the FLSA in the future.

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