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The U.S. Department of Labor found that H.K. Construction, a fourth-generation residential construction company on the island of Oahu, disregarded the Fair Labor Standards Act by underpaying dozens of their employees. The company also misclassified several workers, making them exempt for overtime pay.
In addition, the company did not record and pay for hours worked by office employees. The DOL recovered over $119,000 in unpaid overtime and back wages and liquidated damages for 43 employees. H.K. Construction was also fined almost $15,000 in civil money penalties for reckless violations. Here’s what to know.
How H.K Construction violated the FLSA
According to the DOL, H.K. Construction didn’t pay overtime rates to employees. Instead, any hours over 40 in a week were “banked” for payment in another pay period when the employee didn’t get 40 hours so that the company avoided the added overtime payment, which is calculated at 1.5 times the workers’ normal rate. H.K. Construction also substituted the cost of tools for employees’ wages.
The company misclassified workers, which usually means that the company paid workers as independent contractors instead of employees, which puts the tax and insurance liabilities on the worker. According to the DOL, misclassification of workers is a serious problem.
Non-exempt employees must earn overtime
The FLSA protects hourly employees against exploitation from employers who are trying to save money by not properly paying earned wages. Under the FLSA, non-exempt employees cannot bank overtime hours for payments on future paychecks. Some sectors and job classifications do allow comp time, but this must be agreed upon in advance and put in writing.
There may be additional regulations from state or local governments that dictate how banked hours can be used. Not paying overtime can be a costly mistake for any business, as H.K. Construction found out.
For more information about federal overtime rules, workers’ rights and the DOL Wage and Hour Division, visit their website.
