Oil well service workers receive $1.5M in back wages, damages after US Department of Labor investigations in New Mexico, Texas

HOBBS, N.M. – Nova Mud Inc., Nova Hardbanding LLC and Nova Sand LLC have paid $1.5 million – $750,000 in back wages and an additional, equal amount in liquidated damages – to 241 oil well service workers after an investigation by the U.S. Department of Labor’s Wage and Hour Division. All three commonly owned and operated businesses violated overtime and recordkeeping provisions of the Fair Labor Standards Act.

The companies paid employees fixed semi-monthly salaries; without regard to the number of hours they had actually worked, resulting in overtime violations when they worked more than 40 hours in a workweek. In this case, employees routinely worked well in excess of 40 hours per workweek, without being paid overtime.

“Companies need to understand that failing to pay workers the wages they have rightfully earned will come at high cost to the employer,” said Betty Campbell, Southwest regional administrator for the division. “When employers fail to pay workers legally, it harms workers and their families and puts law-abiding employers at a competitive disadvantage. The liquidated damages paid to workers in this case demonstrate that the Wage and Hour division will continue to use every appropriate enforcement tool to ensure workers are paid what they have earned.”

Nova Mud Inc. and its related companies – Nova Frac Sand LLC and Nova Hardbanding LLC signed an agreement with the department requiring them to take several proactive measures to ensure workers are paid according to the law in the future. Measures include: setting up an anonymous complaint system for employees; posting information about recordkeeping requirements, and providing training to frontline managers and human resources staff about retaliation in the workplace.

The firms specialize in producing mud and chemical products used in multiple facets of oil and gas exploration and provide oil field services for most all major oil and gas producers, including Chesapeake, Concho Resources and Devon Energy. They have approximately 275 employees working in New Mexico, Oklahoma and Texas.

Since 2012, the Wage Hour division has concluded more than 1000 investigations nationally and recovered more than $40 million in back wages for over 29,000 employees in an initiative focused on oil and gas and related industries. As part of its shift toward industry-based enforcement strategies, focusing resources where data show violations are common and business models lend themselves to violations, the division’s ongoing education and enforcement initiative seeks to improve oil and gas industry compliance. This effort also expands to related businesses, such as water and stone haulers, trucking, lodging, and staffing companies. Common violations include considering salaried employees exempt from overtime requirements, and then failing to pay an overtime premium regardless of how many hours they work, as was the case in this investigation.  Failing to include bonus payments workers have received as part of their regular rates of pay when calculating how much overtime is due is another common violation.

The division offers training and education to promote compliance and awareness of FLSA requirements. It encourages industry leaders to serve as models for industrywide compliance. At the same time, the division informs workers and community groups about the initiative, their rights as workers, the division’s services and its availability to review and investigate worker complaints regarding violations. 

Simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime. The FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. On June 30, 2015, the Wage and Hour Division announced a Notice of Proposed Rulemaking to update the regulations defining which white collar workers are eligible to receive pay for hours worked over 40 in a workweek. For more information, please visit www.dol.gov/whd/overtime/NPRM2015.

The FLSA requires that covered, nonexempt 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 maintain accurate time and payroll records.

For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.