Plastering contractor to pay $365K in overtime back wages to employees misclassified as independent contractors

Employer: Brownlow Plastering LLC

Site: 19031 Trippi Road, Hammond, Louisiana 70403

Investigation Findings: A U.S. Department of Labor Wage and Hour Division investigation found that Brownlow Plastering violated the overtime and record-keeping provisions of the Fair Labor Standards Act. An investigation by the division’s New Orleans District Office revealed that the company misclassified employees entitled to protections under the FLSA as independent contractors.

The division found an alleged labor broker used by the firm was an employee working directly for Brownlow Plastering. Workers hired by the “broker” to work for Brownlow were, in fact, direct employees. The alleged broker worked only for Brownlow – as did the workers he hired – providing no services to any other business. Despite the facts that none of these individuals were in business for themselves, that Brownlow bid all the work and supplied all the materials, and that Brownlow paid workers fixed hourly rates determined by the company, the employer claimed they were independent contractors because they were recruited through this “broker.”

This misclassification resulted in Brownlow violating the overtime and recordkeeping provisions of the FLSA when they:

• Paid straight time rates for all hours worked, failing to pay overtime premium for hours worked beyond 40 in a workweek.
• Failed to maintain accurate daily and weekly record of hours worked.

Resolution: Brownlow Plastering will pay $365,291 in overtime back wages to 147 employees. The employer also signed an enhanced compliance agreement in which the employer is required to provide:

• Wage and Hour information about the employment relationship in all future subcontracts.  
• The division’s Fact Sheet on the employment relationship to current and future employees.
• Training to supervisors and managers on FLSA requirements at least once annually. 

Quote: “Employees labelled incorrectly as ‘independent contractors’ do not lose their legal rights to earn overtime wages,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Workers denied these rights suffer, as do their families. Misclassification also hurts law-abiding employers who must compete with employers that game the system to undercut the competition. The Wage and Hour division considers misclassification a top enforcement priority and is working alongside our state, local and federal partners to achieve greater compliance with the law.”

Background:  The investigation in this case is typical of those the division refers to the Internal Revenue Service and the Louisiana Workforce Commission, as per its memoranda of understanding with those agencies to combat worker misclassification.

Under the FLSA, employers must distinguish employees from bona fide independent contractors. 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.

Information: 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 New Orleans District Office at 504-589-6171. Information is also available at http://www.dol.gov/whd/.