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Hurricane Katrina Contractor to Pay $1 Million in Back Wages

January 25th, 2008 Posted by Amelia

The new issue of the U.S. Department of Labor’s official publication, the Labor advocate, contains more details on a settlement between a Hurricane Katrina contractor and the Wage and Hour Division. Under the agreement, the company and two subsidiaries have agreed to pay workers almost $1 million in back wages.

L & R Security Inc., headquartered in New Orleans, LA and HKA Enterprises Inc., headquartered in Duncan, SC have agreed to pay a total of $941,537 in back wages to 382 current and former security guards and debris removal workers. An investigation by the U.S. Department of Labor’s Wage and Hour Division found that these workers were not properly paid in the wake of Hurricane Katrina as required by the Fair Labor Standards Act (FLSA), the Service Contract Act (SCA) and the Contract Work Hours Safety Standards Act (CWHSSA). Both companies were subcontractors to the prime contractor, CH2M Hill of Englewood, CO.

“The Department has made a concerted effort to ensure that workers involved in Hurricane Katrina recovery and cleanup know their rights and are paid all the wages they are owed,” said U.S. Secretary of Labor Elaine L. Chao. “In this case, almost $1 million in back wages will be paid to nearly 400 workers.”

L & R Security provided armed security at Federal Emergency Management Agency (FEMA) trailer sites in New Orleans. The Wage and Hour Division determined that the company, from August 2005 to July 2006, paid straight time for overtime hours worked by guards on both federal and non-federal contract jobs in violation of the CWHSSA and the FLSA. The subcontractor also failed to pay the required prevailing wage rate and fringe benefits required by the SCA. L & R Security agreed to pay $185,385 in back wages to 239 workers. Additionally, the Department has assessed a civil money penalty of $37,620 for repeating similar past violations.

The investigation of HKA Enterprises Inc., which provided debris removal monitoring in New Orleans under a separate FEMA contract after Hurricane Katrina, covered the period from Oct. 8, 2005, to Dec. 3, 2005. The Wage and Hour Division determined that the company paid workers straight time for hours worked in excess of 40 per week in violation of the FLSA. HKA Enterprises has agreed to pay $756,152 in back overtime wages to 143 workers.

The FLSA requires that covered employees be paid at least the federal minimum wage of $5.85 per hour for all hours worked, plus time and one-half their regular rates of pay for hours worked over 40 per week. The minimum wage increases to $6.55 per hour on July 24, 2008, and to $7.25 per hour on July 24, 2009. Under the law, employers must also maintain accurate time and payroll records.

The federal minimum wage increased by 70 cents on July 24, 2007 under the Fair Minimum Wage Act of 2007. The rate went from $5.15 to $5.85 per hour. This was the first increase in more than a decade. Two more increases are on the horizon. On July 24, 2008 the federal rate will increase by 70 cents to $6.55 per hour. Finally, on July 24, 2009, the federal rate will increase to $6.55 per hour.

An increase in the federal minimum wage was a major issue during the 2006 mid-term elections. Democrats won a majority in the House and a very slim majority in the Senate, partly because of a promise to pass an increase during their first 100 days in office. While the Democrats technically kept their promise, the original bill was vetoed by President George W. Bush because it was linked to the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007. The act will raise the federal minimum a bill that demanded a reduction in American forces in Iraq. While the Iraq debate continued, the minimum wage increase languished.