U.S. Department of Labor Secures Default Judgment Ordering Puerto Rico Security Companies to Pay $942,127 in Back Wages, Damages, and Penalties

SAN JUAN, PR – After an investigation by the U.S. Department of Labor’s Wage and Hour Division (WHD) and litigation by the Department’s Office of the Solicitor, the U.S. District Court for the District of Puerto Rico has entered a default judgment ordering a group of four interrelated Puerto Rico security guard companies and their principals to pay a total of $715,685 in back wages and damages to 400 employees for their willful violations of the Fair Labor Standards Act (FLSA).

The court found that the defendants – Evolution Quality Guard Inc., E.Q.G. Protection Agency & Order Corp.; Excellent Quality Guard Corp.; Excellent Quality Guard Services Inc.; Orlando Merced Morales; and Joel Velazquez Cruz – were joint employers and erroneously classified security guard employees as independent contractors, resulting in their failure to pay minimum wage and overtime required by the FLSA. In addition, the court ordered E.Q.G. Protection Agency & Order Corp., Orlando Merced Morales and Joel Velazquez Cruz to pay $226,442 in civil money penalties.

The court found that that the employers failed to pay any wages to 51 security guard employees, resulting in minimum wage violations; and paid only straight time without required overtime payment to 394 guards who worked more than 40 hours in a workweek. The court further concluded that the employers created false time records and provided those falsified records to the U.S. Department of Labor’s Wage and Hour Division (WHD) during its investigation, in addition to failing to maintain accurate and complete payroll records. 

This case was WHD’s second investigation of the employers. After the employers refused to comply with the FLSA and refused to pay the back wages due under the law, the Department’s Office of the Solicitor filed a complaint against the defendants. After the defendants failed to comply with the court’s orders, the court entered a judgment and order for the total amount of back wages and liquidated damages owed to the employees. It further ordered the defendants to pay $226,442 in civil money penalties and enjoined the defendants from further FLSA violations.

“The U.S. Department of Labor took this legal action to make certain the employers comply with the Fair Labor Standards Act,” said Solicitor of Labor Kate O’Scannlain. “The Department will continue to ensure that employees are paid all the wages they have rightfully earned.”

“Employers must pay all the wages legally earned by their employees,” said Wage and Hour Division Administrator Cheryl Stanton. “The Department will continue to assist employers in meeting their legal obligations, and ensure that employees are kept whole.”

“Employees must be paid all of the wages they have legally earned,” said Wage and Hour District Director José R. Vázquez in Guaynabo, Puerto Rico. “We provide multiple tools to help employers understand their responsibilities, and offer confidential compliance assistance to anyone with questions about how to comply with the law.”

“This case demonstrates that the U.S. Department of Labor will use all enforcement tools available to ensure employees receive the wages they have earned, and that employers compete on a level playing field,” said the Department’s Regional Solicitor Jeffrey S. Rogoff in New York, New York. “Employers cannot evade the requirements of the law by creating fake records, misclassifying employees and transferring their operations and employees from one company to the next.”

WHD’s Caribbean District Office conducted the investigation. Senior Trial Attorney Amy Tai of the New York regional solicitor's office litigated the case for the Department.

For more information about the FLSA, and other laws enforced by WHD, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Employers who discover overtime or minimum wage violations may self-report and resolve those violations without litigation through the PAID program. Information is also available at https://www.dol.gov/agencies/whd, including a search tool to use if you think you may be owed back wages collected by the Division.

WHD’s mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce. WHD enforces federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the Fair Labor Standards Act. WHD also enforces the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and a number of employment standards and worker protections as provided in several immigration related statutes. Additionally, WHD administers and enforces the prevailing wage requirements of the Davis Bacon Act and the Service Contract Act and other statutes applicable to federal contracts for construction and for the provision of goods and services.

The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

Scalia v. Evolution Quality Guard, Inc., E.Q.G. Protection Agency & Order Corp.; Excellent Quality Guard Corp.; Excellent Quality Guard Services Inc.; Orlando Merced Morales and Joel Velazquez Cruz.

Civil Action Number:  17-1210 (RAM).