Construction Firms to Pay $2.4M for Alleged OT Violations

Irregularities in payment of employees lead to federal charges.

📅   Wed August 03, 2016 - Northeast Edition
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Two Massachusetts construction businesses must pay $2.4 million to nearly 500 employees for allegedly misclassifying them as independent contractors in order to avoid paying them overtime.
Two Massachusetts construction businesses must pay $2.4 million to nearly 500 employees for allegedly misclassifying them as independent contractors in order to avoid paying them overtime.

The Boston News Journal is reporting that two Massachusetts construction businesses must pay $2.4 million to nearly 500 employees for allegedly misclassifying them as independent contractors in order to avoid paying them overtime.

Lunenburg-based Force Corp. and Framingham-based AB Construction must also pay $262,900 in civil penalties for their alleged violations of federal labor law, according to a court order obtained by the U.S. Department of Labor.

AB Construction was allegedly created for the purpose of providing Force with its labor, with Force controlling payroll at both businesses. The firms paid employees for straight time when they should have received overtime, and kept inaccurate time and payroll records, the government said.

“To be cheated out of wages and denied other workplace protections by an employer who deliberately flouts the rules compounds the struggles too many middle-class Americans already face. Workers who play by the rules deserve nothing less than to be paid what they are owed,” U.S. Labor Secretary Thomas Perez said in a statement.

Force said in a statement that it had cooperated with the Labor Department and that it was pleased to have resolved the issue. "Based on our own internal investigation into the issue, it is clear that our systems to oversee and track hours were insufficient," the company said. "We have taken a number of steps to enhance our administrative operations to make sure these errors are not repeated."

The $2.4 million represents the largest wage recovery in Massachusetts under the Fair Labor Standards Act since 2009, according to the Labor Department.

The firms must enlist an independent consultant to create a new payroll system in compliance with federal labor law and review the system thereafter, among other corrective actions, according to the Labor Department.

Source: The Boston News Journal