US Department of Labor recovers $98K in back wages, damages for 32 security guards Muskegon Heights’ city government misclassified

MUSKEGON HEIGHTS, MI – A federal investigation has recovered $98,316 in back wages and liquidated damages for 32 security guards who the Muskegon Heights Housing Commission failed to pay overtime wages because the Michigan employer misclassified them as independent contractors.

The U.S. Department of Labor’s Wage and Hour Division found the commission paid the guards at Parkside Manor and Columbia Court straight time rates for all hours worked when, as employees, they should have received overtime wages for hours over 40 in a workweek. The division also learned the commission failed to maintain complete records of hours worked, as required. Its failures violated the Fair Labor Standards Act.

Investigators identified violations during a three-year review of the housing commission’s pay practices from May 21, 2020, to May 20, 2023.

In addition to recovering wages and damages, the department assessed the employer $9,310 in civil money penalties for willful violations of overtime provisions. 

“Misclassification of workers as independent contractors when they are, in fact, employees deprives them of their full wages, benefits and protections, including unemployment insurance,” explained Wage and Hour Division District Director Mary O’Rourke in Grand Rapids, Michigan. “This is a serious national problem that harms workers when jobs are lost, exposes them to larger tax withholdings and denies workers’ compensation needed after work-related injuries.” 

Operated by the city’s mayor and a five-member board, the Muskegon Heights Housing Commission maintains and oversees the city’s low-income housing properties. 

“Misclassification also allows employers to avoid payroll taxes, which harms local economies and increases the burden for taxpayers,” O’Rourke added.

Learn more about the Wage and Hour Division, including a search tool to use if you think you may be owed back wages collected by the division and how to file an online complaint. For confidential compliance assistance, employees and employers can call the agency’s toll-free helpline at 866-4US-WAGE (487-9243), regardless of where they are from. The department can speak with callers in more than 200 languages.

Download the agency’s new Timesheet App for free on iOS and Android devices in English or Spanish to ensure hours and pay are accurate.