SECURITY GUARD

US Labor Department finds Knoxville, Tenn., misclassfication, security company owes $62,000 in back wages to 34 guards misclassified as independent contractors

Jan. 9, 2012

Custom Security Solutions Inc. has agreed to pay $62,038 in back wages to 34 security guards after an investigation by the U.S. Department of Labor’s Wage and Hour Division found the employees were improperly classified as independent contractors and consequently denied minimum wage and overtime wages due under the Fair Labor Standards Act.

Custom Security Solutions provides guard services for Premium Coal Co. at its mining sites and washing and loadout plants in Anderson, Scott and Campbell counties.

“Increasingly, employers are categorizing their employees as independent contractors to avoid paying them in compliance with the FLSA, as well as other federal, state and local statutes,” said Sandra Sanders, director of the Wage and Hour Division’s Nashville District Office. “Misclassification costs taxpayers millions of dollars each year in uncollected employment taxes, and gives unscrupulous employers an unfair advantage. The Wage and Hour Division is vigorously pursuing corrective action in those situations when workers are, in fact, employees, to ensure that they are paid required wages and level the playing field for employers who play by the rules.”

The division’s investigators determined that the 34 employees were paid a “straight time” rate for all hours worked instead of time and one-half their hourly rates for hours over 40, as required by the FLSA. This practice resulted in the employees being owed $61,937 in overtime back wages. Additionally, one of the employees was not paid the minimum wage of $7.25 per hour for all hours worked, and is also owed $101 in minimum wage payments.

In addition to paying the back wages, the company agreed to maintain future compliance by ensuring employees are properly classified and compensated for all hours worked in accordance with the FLSA.

The misclassification of employees as independent contractors is an alarming trend, particularly in industries that often employ low-wage, vulnerable workers and in which the Wage and Hour Division historically has found significant wage violations. The practice is a serious threat both to employees entitled to good and safe jobs, as well as to employers who obey the law. Misclassified employees often are deprived of overtime and minimum wages, and are forced to pay taxes that their employers are legally obligated to pay. Misclassification also creates a competitive disadvantage for employers who comply with the law.

Under the FLSA, an employment relationship must be distinguished from a strictly contractual one. An employee as distinguished from a person who is engaged in a business of his or her own  is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their hourly rates of pay for hours worked beyond 40 per week. Additionally, accurate records of employees’ wages, hours and other conditions of employment must be maintained.

Our firm will prosecute class  and collective actions on behalf of aggrieved employees. We will undertake any litigation arising from this investigation on a contingent fee basis. If a lawsuit is filed as a result of this investigation, we will only seek payment of any fees from recovery generated by the lawsuit. This means any fee we receive will be paid by the defendant or out of any settlement or judgment recovered.  Likewise, all costs will be advanced by us. If an action is filed and not successful, you would not be responsible for any of our fees or costs. If you wish to discuss this investigation and any potential legal options you may have, or if you have any questions please contact our law office.

You may contact the Law Offices of Rose H. Robbins for a free consultation to see if you have a case for unpaid overtime or minimum wages by calling (954) 946-8130 or by filling out the confidential “contact us” form below which will arrive at our law offices instantly. You may email us too: rose (at) roserobbins.com   If our office decides to accept your case and we enter into a written, signed retainer agreement you will not have to pay anything unless we win your case. Appointments are available at various locations in Palm Beach, Broward and Miami-Dade Counties.