Contractor to pay $3.6M to settle unpaid shifts claim

Dive Brief:

Unforgettable Coatings, Inc. (UCI), a Las Vegas-based commercial and residential painting contractor, agreed to pay $3,686,592 to settle a U.S. Department of Labor lawsuit alleging it violated the Fair Labor Standards Act, DOL announced Jan. 30. According to a consent judgment, UCI will pay $1,809,249 in alleged unpaid overtime compensation, an equal amount in damages and more than $18,000 in interest to 592 employees at UCI facilities in Nevada, Arizona, Idaho and Utah. It will also pay $50,000 in civil penalties. (Walsh v. Unforgettable Coatings, Inc., No. 20-00150 (D. Nev. Jan. 18, 2023)).
UCI created a pay rate and bonus system that resulted in employees being paid their regular rate for all hours worked, instead of the overtime rate for hours worked in excess of 40 per week, the complaint alleged. The company also allegedly required some workers to volunteer to work on weekends without pay and intimidated workers it believed were cooperating with a DOL investigation.
The company denied the allegations, arguing that DOL’s evidence “consists of hearsay, double hearsay, an unsigned declaration, an inaccurate and uncertified translation, and a selective extract of payroll records.” A third-party study obtained for the case “showed that all employees are paid above average, and most are well above average,” UCI said in a press release. “We have the best employees our markets have to offer, and we care for them deeply. Any claims that we are conspiring to cause harm to them through clever pay practices is antithetical to who we are,” UCI CEO Cory Summerhays stated.

Dive Insight:

The DOL’s Wage and Hour Division enforces the FLSA. The law sets standards for minimum wage, overtime, recordkeeping and youth employment. However, many states also have minimum wage laws, and employers must pay workers according to which standard is higher.

Over the past few years, the DOL has zeroed in on FLSA issues. The agency announced in 2022 that it would hire significantly more WHD investigators to pursue alleged violations.

At the same time, the DOL announced that it planned “vigorous enforcement” of warehouse and logistics workers’ wage and hour rights. Prompted by pandemic-triggered constraints on the global supply chain, DOL said the increased enforcement would focus on ensuring warehouse and logistics workers are paid proper minimum and overtime wages, given time off as required by the Family and Medical Leave Act and are safe from harassment and retaliation.

DOL has recently targeted other industries, most notably restaurants and home health and residential care facilities. For example, in January, the DOL announced that it recovered $1.6 million in back wages and liquidated damages from a Los Angeles restaurant owner for allegedly denying overtime wages and keeping false pay records. A few months earlier, the DOL said it recovered $1.2 million in overtime back wages for workers at home healthcare agencies in Texas and Louisiana. Both actions grew out of enforcement initiatives directed toward these industries, the DOL said.

Wage and hour laws are fraught with the potential for missteps, an employer-side attorney cautioned last year in a op-ed for HR Dive. When violations are alleged, businesses are exposed to severe financial consequences, he said.

Audits ordered and conducted by the government are particularly worrisome, the attorney explained. Ordinarily, the government doesn’t conduct these audits at random; more likely, an agency like DOL will choose to investigate a company’s wage and hour practices after receiving a tip or when the business had been previously audited, he explained. Most every audit involves a “deep dive” into the employer’s pay and time records and wage and hour practices, the attorney said.