Energy Companies: Among Biggest Offenders of Employee Misclassification

Recently, energy giant Halliburton agreed to pay $18 million in back wages to more than 1,000 employees. This is one of the largest recoveries of overtime wages ever and is a direct result of the Department of Labor launching investigations into oil, gas, and energy companies.
On March 14 2016, the Department of Labor identified four large energy companies in violation of Labor Standards Act’s overtime laws. The four companies identified were Viking Onshore Drilling LLC of Odessa, Jet Specialties Inc. of Boerne, Frank’s International LLC, and Stream-Flo USA. The four companies owe a combined 2,500 employees a total of 1.6 million in back pay and overtime pay.
Betty Campbell is the regional administrator of the Wage and Hour Division in the Southwest, she commented on this employee misclassification issue in an interview with the Reporter Telegram of Midland.

“We continue to find unacceptably high numbers of violations in the oil and gas industry.” Campbell went on to say, “The more layers between the primary corporation and its many subcontractors, the more likely there will be wage and other labor violations as businesses seek to lower labor costs and maximize profit margins,” Campbell continued, “This competitive fissured environment has led to longer shifts and a pressure to produce quickly. Not surprisingly, some of the most frequent violations found by Wage and Hour in the oil and gas industry center on the failure to pay overtime correctly. Examples of these common violations include failing to include bonuses in the regular rate of pay when calculating overtime and paying workers a day rate with no regard to the overtime premium they are due after 40 hours weekly,”

The violations in these cases ranged from considering salaried employees exempt from overtime requirements, failing to pay an overtime premium regardless of how many hours worked, failing to include the bonus payments workers received as part of regular pay rates, and lastly, paying non-exempt workers flat salaries without regard to how many hours they worked.

Energy companies continue to be the biggest offenders of these regulations due to the work environment inherent to energy production. Short timelines and long hours seem to be the status quo and working with a mixture of contractors and subcontractors can get messy but these companies now have the full attention of the DOL. Employee misclassification is still an ongoing issue and only time will tell if the situation can be remedied or if these companies will continue to pay fines and lost wages to misclassified employees.

Written by non-attorney blogger. Nothing in this article constitutes a legal opinion of our staff.

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