$1,916,850 in Overtime Back Wages to be Paid by Labor Services Company for Compensation Violations

Tuesday, May 7, 2013
Hutco Inc., a major industrial services employment agency, has agreed to pay $1,916,850 in back wages to 2,267 employees assigned to client work sites throughout Louisiana, Mississippi and Texas. An investigation conducted by the U.S. Department of Labor's Wage and Hour Division found that the company utilized improper pay and record-keeping practices that resulted in employees being denied overtime compensation in violation of the Fair Labor Standards Act.

An investigation of the company's headquarters in Lafayette disclosed systemic overtime violations throughout six branch establishments. Hutco mischaracterized certain wages as "per diem" payments and impermissibly excluded these wages when calculating overtime premiums, thus denying employees earned overtime compensation. This improper pay practice also resulted in FLSA record-keeping violations involving the accuracy of employees' wages and actual hours worked.

Under the settlement, in addition to paying back wages, Hutco has committed to future compliance with the law. The agreement includes specific measures the company will take to prevent future violations, including setting standards to accurately identify and compensate workers who qualify for bona fide per diem payments, paying accurate overtime and ensuring per diem payments are not automatically excluded from overtime calculations, informing employees about their pay and employment conditions, and obtaining written acknowledgment from employees that they understand the criteria for receipt of per diem payments.

Additionally, Hutco must maintain accurate records demonstrating which employees received bona fide per diem payments and that such payments are based on applicable Internal Revenue Service guidelines, or upon a reasonable approximation of the expenses incurred. The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour 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 must also maintain accurate time and payroll records.

An employee's regular pay rate, upon which overtime must be computed, includes all wages for employment, except certain payments excluded by the FLSA, such as reimbursements for work-related expenses. Payments reasonably approximating travel or other expenses incurred on the employer's behalf may be excluded from the employee's regular rate of pay when computing overtime. However, where an employee receives such payments but actually incurs no such additional expenses, such payments do not constitute bona fide reimbursements and must be included in the employee's regular rate of pay for purposes of computing an overtime premium.

Hutco Inc. is a labor services company that provides skilled and unskilled labor to clients throughout the United States in industries such as vessel construction, oil field fabrication, warehousing and distribution, manufacturing and other industries. The employees entitled to receive overtime back wages as a result of the department's investigation worked as welders, fitters, tackers, electricians, blasters, painters, forklift operators and warehouse personnel.

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