The Department of Labor’s (DOL’s) Wage and Hour Division (WHD) announced on September 8th, 2023, that a Georgia-based contractor would pay over $693 thousand for unpaid overtime wages and other damages. What’s more, WHD investigators determined that the contractor schemed to deny the overtime wages by deliberately lowering wage rates for its construction workers. Wage and hour standards under the Fair Labor Standards Act (FLSA) include a federal minimum wage, mandatory overtime pay, and recordkeeping requirements. However, some employers falsify records to obscure unpaid overtime wages. Earlier this year, an electrical contractor paid $724,082 in back wages for denying overtime pay and falsifying records.

Background of the Case

The WHD’s investigation revealed the Georgia contractor’s illegal pay practices showed unpaid overtime wages and attempts to evade regulations. According to investigators, the contractor paid workers straight time for all hours worked, including those over 40 in a workweek. In addition, the contractor used a series of illegal payment agreements to avoid paying overtime. The illegal pay schemes resulted in artificially lower wage rates. The resulting unpaid overtime wages affected 110 construction workers across 12 states on various hotel renovation projects between 2019 and 2022.

Overtime and Recordkeeping Under the FLSA

One of the most commonly cited federal employment laws, the FLSA, sets the nation’s federal wage and hour standards. Under the FLSA, employers pay covered employees at least the federal minimum wage of $7.25 an hour and the correct overtime rate of not less than one and one-half times the regular pay rate for hours worked over 40 in a work week. Denying overtime pay is a violation of the FLSA and applicable state and local wage and hour laws. Additionally, every covered employer must keep certain records for each covered employee. Records do not have to be in a particular form. However, they must include the following information:

  • specific identifying information about the employee,
  • data on hours worked,
  • pay rate, and
  • wages earned.

Penalties for the Unpaid Overtime Wages

To recover the unpaid overtime wages, the DOL ordered the contractor to pay $346,550 in back wages and an equal amount in liquidated damages. The total amount of $693,100 comes out to between $1,207 and $28,177 per worker. Additionally, the contractor must pay $40,000 in civil money penalties for repeated and willful FLSA violations. Examining the details of the case, Wage and Hour Division District Director Terence Trotter stated, “Employers can’t establish separate agreements with workers that don’t meet at least the legal standards for wage payments, especially regarding overtime pay for hours worked over 40 in a workweek.”