Michigan Contractor Ordered to Pay Back Wages

Michigan court orders lawn and snow contractor to pay a total of $38,000 in back wages and liquidated damages to 11 employees.

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Under terms of a consent judgment entered into U.S. District Court for the Western District of Michigan, Southern Division, H&H Lawn Service and Snowplowing will pay a total of $38,000 in back wages and liquidated damages to 11 employees.

An investigation by the U.S. Department of Labor’s Wage and Hour Division found the company and its owner violated the Fair Labor Standard Act’s overtime and recordkeeping provisions. Specifically, the employer:

  • Misclassified some employees as independent contractors instead of employees, and subsequently failed to pay them overtime when they worked more than 40 hours in a week.
  • Paid some employees a flat salary, without regard to the number of hours they worked, which led to overtime violations when they worked more than 40 hours per week.
  • Banked overtime hours for some employees, to be paid out in future workweeks at straight time, rather than paying overtime in the pay period during which the hours were worked.
  • Failed to keep required payroll records.

“Banking of overtime and misclassifying employees as independent contractors occurs all too often in seasonal businesses such as lawn care and snowplowing,” said Mary O’Rourke, district director for the Wage and Hour Division in Grand Rapids. “These pay practices hurt workers, and give the employer an unfair advantage over businesses that play by the rules. This case demonstrates our commitment to using every tool available to us, including litigation, to ensure that these hard-working employees receive every cent they have earned.”

In addition to paying the back wages, the company has agreed to:

  • Notify employees in writing if they are claiming an overtime exemption for them, and why.
  • Provide Wage and Hour Division facts sheets to all employees, describing the definition of an employee versus an independent contractor, among other topics.
  • Retain a certified public accounting firm to conduct an annual audit of the firm’s payroll practices to determine compliance with the FLSA.

SOURCE:  https://www.dol.gov/newsroom/releases/whd/whd20160517-1