Four interrelated security guard companies in Puerto Rico and their principals owe $715,685 in back wages and damages to 400 employees found to have been misclassified as independent contractors, the US Department of Labor’s Wage and Hour Division reported.

After an investigation by WHD and litigation by the Department’s Office of the Solicitor, the US District Court for the District of Puerto Rico found the defendants — Evolution Quality Guard Inc., E.Q.G. Protection Agency & Order Corp., Excellent Quality Guard Corp., Excellent Quality Guard Services Inc., Orlando Merced Morales, and Joel Velazquez Cruz — were joint employers and wrongly classified security guard employees as independent contractors, resulting in their failure to pay minimum wage and overtime required by the Fair Labor Standards Act. In addition, the court ordered E.Q.G. Protection Agency & Order Corp., Orlando Merced Morales and Joel Velazquez Cruz to pay $226,442 in civil penalties.

The employers failed to pay any wages to 51 security guard employees, the court found, and paid only straight time without required overtime payment to 394 guards who worked more than 40 hours in a workweek. The court further concluded that the employers created false time records and provided those falsified records to the Wage and Hour Division during its investigation, in addition to failing to maintain accurate and complete payroll records.

This case was WHD’s second investigation of the employers. After the employers refused to comply with the FLSA and refused to pay the back wages due under the law, the Department’s Office of the Solicitor filed a complaint against the defendants.

After the defendants failed to comply with the court’s orders, the court entered a judgment and order for the total amount of back wages and liquidated damages owed to the employees. It further ordered the defendants to pay $226,442 in civil money penalties and enjoined the defendants from further FLSA violations.