Owners of construction companies pay more than $108K in overtime back wages following US Labor Department investigation

NEDERLAND, Texas — Specialty Painting & Wall Covering Inc. and M & S Enterprise have paid 22 painters and sheetrock installers $108,783 in overtime back wages after an investigation by the U.S. Department of Labor's Wage and Hour Division. The investigation revealed violations of the Fair Labor Standards Act's overtime and record-keeping provisions and found that workers at M & S Enterprise were misclassified as independent contractors.

The division's Houston District Office investigated both construction companies that are jointly owned and operated and employ workers who perform painting, sheetrock installation and finishing projects. Workers of Specialty Painting & Wall Covering were paid for up to 40 hours per week with a check from that company. When workers at Specialty worked more than 40 hours in a week, they were paid for the overtime hours with a separate check from M & S Enterprise at their straight-time rate with no taxes withheld. Workers of M & S Enterprise were misclassified as independent contractors and were paid straight time for all hours worked, including overtime hours.

"Misclassification of employees as independent contractors defrauds workers of wages and benefits, hurting the employees and their families, and the economy as well. It allows unfair competition because businesses that operate legally are at a disadvantage to those that don't," said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. "We are aggressively expanding efforts to combat the misclassification of employees as independent contractors and are targeting sectors where we know workers are vulnerable and violations are rampant."

The firms paid all back wages and agreed to classify employees properly, maintain accurate time and payroll records and pay time and one-half for hours worked over 40 in a workweek, as required by the FLSA.

Under the FLSA, employers must distinguish employees from bona fide independent contractors. Whether a worker is an employee under the FLSA is a legal question determined by the actual employment relationship, not by title. An employee, as distinguished from a person who is engaged in a business of his 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 serves. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

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 must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.For more information about federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or its Houston District Office at713-339-5500. Information also is available at http://www.dol.gov/whd/.

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