The US Department of Labor has ordered roofing and siding contracting organisation American Classic Construction to pay $310,000 (£231,926.50) for incorrectly classifying its staff as independent contractors and failing to pay 74 employees the right rate of pay for overtime.
The US Department of Labor’s Wage and Hour Division (WHD) found in its investigation that Michigan-based American Classic Construction and its owners, Nathan Thompson, Jacob Thompson and Leon Thompson, had misclassified its employees as independent, self-employed contractors. This meant that the organisation failed to pay staff for overtime worked beyond the agreed 40-hour work week, at the pay rate of time-and-one-half employees’ regular rate of pay.
American Classic Construction also failed to maintain accurate records of the number of hours its employees worked.
The WHD investigation therefore concluded that American Classic Construction and its owners had violated overtime and record keeping requirements under the Fair Labor Standards Act (FLSA).
A federal judge has therefore ruled that American Classic Construction must pay $310,000 (£231,926.50) in back overtime pay and liquidated damages to the 74 affected employees.
In addition, the organisation has agreed to an injunction against violating the FLSA’s overtime and record keeping provisions in the future.
Mary O’Rourke, district director, Grand Rapids at the Wage and Hour Division, said: “Employers must understand their obligations under the law. Simply because a pay practice may appear to be common in a particular industry does not, in any way, mean that it complies with the law. We encourage employers to contact the Wage and Hour Division for assistance, and to make use of the many tools we provide to help them understand the law.”
American Classic Construction is unavailable for comment at time of publication.