US Labor Department finds Guam construction contractor illegally attempted to avoid paying overtime by misclassifying workers as independent contractors

DEDEDO, GUAM – By deliberately misclassifying employees as independent contractors, a Dededo construction company attempted to avoid paying overtime when workers exceeded 40 hours in a workweek until a federal investigation uncovered the scheme.

The U.S. Department of Labor’s Wage and Hour Division determined Konstrak Builders – which provides maintenance and repair services to Mobil gas stations on Guam – intentionally violated the Fair Labor Standards Act when it continued to pay straight-time wages to 23 workers for overtime hours they worked. As a result, Konstrak will pay $51,481 in back overtime wages to those workers. The FLSA requires overtime at time and one-half employees’ regular rates of pay for hours they work beyond 40 in a workweek. The employer also failed to keep accurate payroll records, as required.

In addition to the overtime back wages, WHD assessed Konstrak $10,000 in penalties for the willful nature of the violations.

“When employers misclassify employees as independent contractors for their own gain, they hurt their employees and they even hurt other businesses — the law-abiding employers who don't steal from their employees,” said Wage and Hour Division District Director Terence Trotter, in Honolulu. “This case sends a clear message that the Wage and Hour Division will use every tool available to protect workers and responsible employers and to ensure everyone has the opportunity to succeed.”

The division offers numerous resources to ensure employers have the tools they need to understand their responsibilities and to comply with federal law, such as online videos and confidential calls to local Wage and Hour offices. Learn more about the FLSA. Contact the Wage and Hour Division toll-free at 866-4US-WAGE (487-9243) for more information.