Staffing Agency to Pay $173,460 in Back Wages, Damages and Penalties for FLSA Violations

Tuesday, June 7, 2016

An investigation by the U.S. Department of Labor’s Wage and Hour Division found Allstars Staffing LLC misclassified hundreds of servers, bussers, cooks, dishwashers and banquet staff as independent contractors rather than employees. As a result, the employer failed to pay overtime when these employees worked more than 40 hours in a workweek, in violation of the Fair Labor Standards Act.

The staffing agency paid overtime only when an employee worked at the same hotel for the entire workweek and the hotel client agreed to pay the required time and a half. Many employees worked more than 40 hours but worked at more than one hotel for the staffing agency during the week. In those instances, the employer failed to pay overtime. The affected employees worked at Phoenix-area hotels, including Tempe Mission Palms, Sheraton, and Fairmont Scottsdale Princess.

The Department of Labor found that Allstars Staffing will pay $75,683 in overtime back wages and an equal, additional amount in damages to 275 employees. The employer will also pay a $22,094 civil penalty because of the willful nature of the violations found.

Misclassifying employees as independent contractors or some other nonemployee status often denies them minimum wage, overtime, workers’ compensation, unemployment insurance and other workplace protections. Employers often intentionally misclassify workers to reduce labor costs and avoid employment taxes.

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