Last week, the US Department of Labor announced $3.45 million in back wages, damages and penalties from two separate wage and hour cases in which companies were found to have misclassified workers as independent contractor misclassifications findings.
Oregon. The US District Court for the District of Oregon entered a consent judgment against Gerald Brazie, Jr., and three Portland, Oregon-based companies he controls, requiring that their courier drivers be paid $3.1 million in wages and liquidated damages and $112,900 in civil money penalties. The DOL filed the case in December 2016 against Brazie and his companies – Senvoy LLC, Driver Resources LLC and ZoAn Management Inc. – alleging the companies required drivers to sign contracts with Driver Resources LLC, a corporate shell entity managed by ZoAn Management Inc. Ultimately, the violations arose from Senvoy LLC’s practice of classifying its couriers as independent contractors, rather than as employees. As a result, Senvoy LLC failed to pay its couriers for all hours worked and charged the couriers a host of expenses, including the cost of gas and other costs attendant to using the drivers’ vehicles for Senvoy LLC’s delivery work.
“The facts here were clear and unequivocal: these drivers, under unambiguous and long-settled federal law, are and were Senvoy LLC employees,” said DOL Regional Solicitor Janet Herold. “It is not just employees here who were cheated of millions of dollars in wages due, but also taxpayers who bore the burden of Senvoy LLC’s unlawful practices as the company used this unlawful practice to avoid payment of federal and state payroll taxes. Employers that do so enjoy an unfair and unlawful advantage over their law-abiding competitors, to the significant detriment of both the employees and taxpayers.”
Louisiana. Following an investigation by the DOL’s Wage and Hour Division, Ernest P. Breaux Electrical LLC – an electrical contractor based in New Iberia, La. – has paid $249,278 in back wages to 117 employees for violating the Fair Labor Standards Act’s overtime and recordkeeping requirements. Investigators found Ernest P. Breaux Electrical LLC violated overtime FLSA provisions when the employer wrongly classified employees as independent contractors, and subsequently failed to pay them overtime when they worked more than 40 hours in a workweek. The employer also failed to keep accurate payroll records as required by federal law.
Investigators also found that an employee recruited additional employees to perform labor at construction sites where the employer had contracts to perform electrical services. Although the employer considered the employee who did the recruiting to be an independent contractor, investigators determined he was, in fact, an Ernest P. Breaux Electrical LLC employee, as were those he recruited. The employer has cooperated with the investigation and agreed to put measures in place to avoid future violations.