Industrial Services Staffing Agency Hutco Pays $2million In Back Wages

Hutco Inc., a major industrial services employment agency, has agreed to pay $1,916,850 in back wages to 2,267 employees at work sites throughout Louisiana, Mississippi and Texas.

Hutco Inc. is a labor services company providing skilled and unskilled labor to companies throughout the nation in industries including ship construction, oil field fabrication, warehousing and distribution, manufacturing and other industries.

The employees entitled to receive overtime back wages as a result of the department’s investigation worked as welders, fitters, tackers, electricians, blasters, painters, forklift operators and warehouse personnel.

Hutco provides workers for oil fileds and ship building.

An investigation conducted by the U.S. Department of Labor’s Wage and Hour Division found Hutco used improper pay and record-keeping practices that denied workers overtime compensation in violation of the Fair Labor Standards Act (FSLA).

“Employers cannot avoid their legal responsibility to pay overtime by using evasive practices that seek to undermine labor laws and deny workers their rightful wages,” said acting Secretary of Labor Seth D. Harris. “As a result of our investigation, not only is nearly $2 million in unpaid wages going into the pockets of the workers who earned it, but today’s agreement will also ensure the company’s future compliance with the FLSA.”

An investigation of Hutco headquarters in Lafayette, La., found systemic overtime violations throughout six company branches.

Hutco mischaracterized certain wages as “per diem” payments  and impermissibly excluded these wages when calculating overtime premiums, denying employees earned overtime pay.

This illegal pay practice also resulted in violations involving the accuracy of employees’ wages and actual hours worked.

“Temporary employment arrangements can make the worker-employer relationship difficult for workers to understand,” said Mary Beth Maxwell, acting deputy administrator of the Wage and Hour Division. “As a result, temporary workers face the risk of not being treated as employees in terms of the wages and legal protections guaranteed under federal law.”

Under the settlement, in addition to paying back wages, Hutco has committed to future compliance with the law.

Hutco Agrees To Follow Rules

Hutco also has agreed to:

• set standards to accurately identify and compensate workers who qualify for bona fide per diem payments;
• paying accurate overtime and ensuring per diem payments are not automatically excluded from overtime calculations;
• inform employees about their pay and employment conditions;
• obtaining written acknowledgment from employees that they understand the criteria for receipt of per diem payments.

Additionally, Hutco must maintain accurate records demonstrating which employees received bona fide per diem payments and that such payments are based on applicable Internal Revenue Service guidelines, or upon a reasonable approximation of the expenses incurred.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week.

Employers must also maintain accurate time and payroll records.

An employee’s regular pay rate, upon which overtime must be computed, includes all wages for employment, except certain payments excluded by the FLSA, such as reimbursements for work-related expenses.

Payments reasonably approximating travel or other expenses incurred on the employer’s behalf may be excluded from the employee’s regular rate of pay when computing overtime.

However, where an employee receives such payments but actually incurs no such additional expenses, such payments do not constitute bona fide reimbursements and must be included in the employee’s regular rate of pay for purposes of computing an overtime premium.

Payment of back wages is ongoing.

The Hutco case also has been referred to the Louisiana Workforce Commission for review.

Accessible and searchable information on enforcement activities by the Labor Department is available at http://ogesdw.dol.gov/search.

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