Are You Making These Mistakes When Paying Your Employees?
The article highlights common Fair Labor Standards Act violations in construction payroll, such as failing to pay for all hours worked including downtime, improperly deducting meal break time when work is performed, and neglecting to compensate for travel time between jobs, emphasizing the legal and financial risks employers face for noncompliance.
The Fair Labor Standards Act (FLSA) protects US workers by ensuring they are paid for all hours worked, including overtime. Complying with the FLSA is a significant part of construction payroll. Failure to comply can result in severe consequences, including fines and even criminal prosecution. According to the Department of Labor, employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,000 for each violation. Willful violations of the FLSA may result in criminal prosecution and fines up to $10,000. A second conviction may result in imprisonment.
Arcoro’s partner, myHRcounsel™, has compiled some of the most common overtime and wage violations in the construction industry to help you avoid these pitfalls.
Work Completed Off the Clock
Some construction companies neglect to record the full amount of time worked by their employees, failing to compensate workers for downtime, rain delays, or time spent working before or after a shift. Any time an employer does not pay employees for all compensable hours worked, workers have a right to bring a claim to recover their unpaid wages.
For example, 11 HVAC contractors in Central Florida paid over $113,000 in compensation for back wages and liquidated damages after denying 169 workers their total wages.
Automatically Deducting Time for Meal Breaks
Companies may automatically deduct time for meal breaks, even when employees are required to complete work tasks during these breaks. All construction workers are entitled to be paid fairly during this time. If the employer denies overtime pay that is owed, they may be held accountable for up to double the amount of wages improperly withheld.
Unpaid Travel Time
Construction companies do not have to pay employees for the time it takes to drive to work in the morning or home at the end of the day. However, they are legally obligated to pay employees for time spent traveling between jobs, from shops to work sites and back, or during mandatory group transport to a job site.
Paying Comp Time or Paid Time Off for Overtime Hours
Some employers try to circumvent overtime laws by compensating employees for extra hours with “comp time” or paid time off (PTO) instead of paying overtime wages. In the United States, it is illegal for any private employer to pay workers anything other than their wage at time-and-a-half for overtime work. If a construction company is not paying an employee actual money for their overtime hours, the employee may be able to file a claim to recover up to double their unpaid wages.
A notable example: The owner of several concrete supply and construction companies was ordered to pay workers $987,591 in overtime back wages and damages after the U.S. Department of Labor found that they withheld overtime pay from 99 employees.
Misclassification as an Independent Contractor
Construction companies that misclassify employees as independent contractors (1099 workers) can be held responsible for denying workers the wages they are owed.
A Houston welding and fabrication company that misclassified employees as independent contractors was required to pay over $178,358 in back wages for 27 employees.
Straight Time for Overtime
Paying the same hourly rate for all hours worked, including hours over 40 per week (straight-time pay for overtime), is a common but illegal form of wage theft in the construction trades. When a construction worker’s hours exceed 40 in a single work week, they are owed at least time and one-half their regular rate for all additional hours under overtime pay laws.
Day Rate Pay with No Overtime
Day-rate employees are paid on a per-day basis rather than hourly or by piece rate. However, the law still requires that they be paid overtime if they work more than 40 hours per week.
The U.S. Department of Labor recovered $283,000 in wages and liquidated damages from a landscaping contractor who denied 19 New Hampshire employees their overtime pay.
The first step in pay compliance is accurate, automated time tracking. Regardless of the time solution used, it’s important to understand the law. Arcoro customers can avoid costly payroll missteps by leveraging the partnership with myHRcounsel™. With this partnership, all Arcoro customers have access to:
- Legal advice from experienced employment attorneys.
For customers needing more help, enhancements are available including:
- Attorney-drafted employee handbook & company policies
- Lien & bond legal consultation
- Commercial collections
- Construction law documents.
Contact Arcoro to learn more about how they and myHRcounsel can help you avoid potential compliance issues in paying and managing your construction workforce.
See a demo of how HR technology can help your construction business.
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