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Texas water company to pay $597,000 for FLSA violations

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in Compensation and Benefits,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

A Texas company that provides water transfer services for the natural gas industry has agreed to pay $597,530 for violating the Fair Labor Standards Act (FLSA). An investigation by the U.S. Department of Labor (DOL) found that the Western Company of Texas, Inc., based in Justin, owed back wages to 237 employees. The company had failed to pay them overtime.

The workers delivered parts and performed general cleaning. DOL investigators found that the company misclassified them as independent contractors instead of employees. As a result, Western paid straight time for all hours worked over 40 in a workweek.

The DOL’s Wage and Hour Division found, however, that these employees did not meet the criteria for independent contractor status. Since they were employees, the FLSA required Western to pay them time and a half for the hours worked beyond 40 per week.

According to Cynthia Watson, regional administrator for DOL’s Wage and Hour Division in the Southwest, “Some employees averaged 50 to 55 hours per week without receiving overtime compensation.”

According to DOL spokeswoman Elizabeth Todd, the company cooperated during the investigation and agreed to future FLSA compliance.

Final note: There is a big push nationwide to discourage companies from using independent contractors instead of employees. Employers that have converted employees into independent contractors should expect close scrutiny. There’s a general suspicion among government agencies—ranging from the DOL to the Internal Revenue Service—that such conversions are intended to evade employee-friendly laws like the FLSA and the obligation to pay Social Security and other payroll taxes.

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