US Department of Labor recovers $594K in back wages, damages from Saline employer that misclassified 63 employees as independent contractors

Employer:      Teracom Inc., Saline, Michigan

Investigation Findings: A U.S. Department of Labor Wage and Hour Division investigation found Teracom Inc. misclassified some workers as independent contractors and paid them a day-rate for all hours worked regardless of overtime, failed to pay overtime and denied two employees paychecks for their final workweeks. The employer also did not maintain complete and accurate timekeeping records as required. These actions violated provisions of the Fair Labor Standards Act.

The division found the employer committed similar violations in 2018, leading the division to assess $44,496 in civil money penalties for repeated and willful FLSA violations. 

Back wages/damages recovered:    $297,137 in back wages for 63 employees

$297,137 in liquidated damages for 63 employees. 

Quote: “Employers who misclassify workers as independent contractors deny them their rights as employees to important overtime, benefits and protections. Very specific conditions must be met for a worker to be classified as an independent contractor and if you fail to meet those tests, you are not an independent contractor. The wage recovery and damages right a wrong this employer knew they were committing as they did in 2018,” said Wage and Hour District Director Timolin Mitchell in Detroit.

Background: Headquartered in Saline, Teracom is a construction company that installs underground fiber optics for telephone and internet providers.

Learn more about the definition of an independent contractor. 

Learn more about the Wage and Hour Division, 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.

Download the agency’s new Timesheet App for iOS and Android devices – also available in Spanish –to ensure hours and pay are accurate.