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California Company to Pay $4.5 Million in Back Wages

January 24th, 2008 Posted by Amelia

A U.S. district court judge has ordered Gardena, Calif.-based Southern California Maid Services and Carpet Cleaning to pay $3,467,789 in back wages, plus $1,058,973 in liquidated damages, to 385 current and former low-wage domestic workers. This case was reported in the most recent issue of the Labor Advocate, the labor law newsletter published by the U.S. Department of Labor.

This action resolves a lawsuit filed by the U.S. Department of Labor alleging that the workers were misclassified as independent contractors in violation of the Federal Fair Labor Standards Act (FLSA).

The FLSA requires that covered employees be paid at least the federal minimum wage and receive overtime at one and one-half times their regular rates of pay for hours worked beyond 40 per week. Employers must also maintain accurate time and payroll records.

“One of the highest priorities of this department is making sure workers are paid all of the wages they have earned,” said U.S. Secretary of Labor Elaine L. Chao. “In this case, we are recovering more than $4.5 million for nearly 400 workers.”

Investigators from the Labor Department’s Wage and Hour Division found that Southern California Maid Services and Carpet Cleaning misclassified the home and carpet cleaners as independent contractors, resulting in minimum wage and overtime violations. The company also failed to keep accurate records of the employees and the hours that they worked.

The East Los Angeles District Office Wage and Hour Division learned of the employer’s practices through participation in the Employment Education and Outreach (EMPLEO) partnership. EMPLEO is an alliance of organizations and government agencies that assist Spanish-speaking workers and employers with work-related concerns. EMPLEO has a local, toll-free helpline: (877) 55-AYUDA (552-9832). Volunteers help refer callers to the appropriate EMPLEO partner for assistance.

The Mexican Consulate of Los Angeles, a member of EMPLEO, provided assistance in locating Spanish-speaking witnesses to pursue this litigation.

This is just the most recent in a series of minimum wage violations uncovered by the U.S. Department of Labor’s Wage and Hour Division.

In August 2007, five jointly-operated restaurants in Long Island, New York were ordered to pay almost $1 million to 191 low-wage workers. The employees had been forced to work long hours for wages less than the minimum wage, without overtime pay. The court ordered that if the employers did not pay up, their restaurants could be sold and the proceeds used to pay the employees.

Earlier in 2007, under a voluntary agreement to prevent a federal suit, Wal-Mart, Inc. agreed to pay $33 million in unpaid overtime wages to 86,680 employees throughout the nation. An internal audit revealed that the company had incorrectly classified some employees as “salary-exempt” when in fact they were entitled to overtime pay. In other cases, the company admitted that it had based overtime pay on the employee’s base hourly rate, not including incentives and bonuses in the employee’s average rate as required by law.

The Fair Labor Standard Act requires that most U.S. employees be paid at least the federal minimum wage, which is currently $5.85 per hour. The FLSA also mandates that employees must be paid 1.5 times their usual hourly rate for each hour over 40 in a single work week.

Many employers mistakenly believe that any worker paid by salary is exempt from overtime. The FLSA does provide a number of exemptions to the overtime law for bona fide executive, administrative, professional and outside sales jobs. In general, employees must meet job duty and salary tests, to be exempt from overtime.

The U. S. Department of Labor Wage and Hour Division collected more than $171 in back wages for some 246,000 employees in 2006. Thos wages were a result of 31,987 “compliance actions” in 2006.