An Increase in Demand for Pipeliners
For those who work in the midstream oil and gas business, it’s no secret that the development of new pipelines has seriously lagged the pace of new production.
The ever-increasing output of:
- the Eagle Ford in Texas,
- the Marcellous in Pennsylvania,
- West Virginia, New York & Ohio,
- and the Bakken shale play in North Dakota and Montana,
brought on by major advances in hydraulic fracturing and horizontal drilling, are primary drivers of this problem.
A related problem for the pipeline developers is recruiting enough skilled workers to man these projects and controlling the cost of labor for these jobs.
Proper Overtime Pay for Pipeliners
While billions of dollars are being invested in new pipeline construction projects, we continue to see cases in which pipeline workers, including inspectors, welders, field engineers, and others are being denied full and proper pay for their many hours of overtime work.
Oil and gas infrastructure work is hard, dirty, dangerous, and long – and most jobs performing this work are legally entitled to receive overtime pay for all hours worked over 40 per week.
Common Overtime Violation #1: The Day Rate Pay Scheme
The major companies performing these projects, and the many staffing agencies and sub-contractors they employ, are all highly motivated to find ways to reduce labor costs, often resorting to what they consider to be “innovative” solutions to reduce the financial burden of paying overtime wages. This is where most run afoul of both federal and state labor laws on overtime.
The most common pay scheme we see used to try and avoid paying pipeline jobs overtime is the use of a day rate pay system.
What is the Day Rate Pay System?
Workers are told that they will be paid a fixed day rate to compensate them for each day worked (no matter how many hours), and that no extra amount will be paid for overtime hours. At first look some of these day rates appear to be good pay, however, when you do the math using 84 hours per week or more, the pay rate no longer looks so enticing. When you know how to calculate the amount of overtime pay being lost, they are even less so.
Paying Overtime While Using the Day Rate System
While it is not unlawful for employers to pay non-exempt employees using a day rate, it does not relieve the employer from its legal obligation to pay overtime for all hours worked over 40 per week. Where a valid day-rate plan is used, the employer must calculate the overtime owed in a different manner. The overtime rate due an employee will vary each week depending on the exact number of days and overtime hours worked, as well as the amount of any bonuses or other incentives earned. Not always an easy process or calculation, but this is no excuse for nonpayment of legally mandated overtime wages.
Common Overtime Violation #2: Temp Agency Placement
The other common violation we see usually occurs when a worker is employed through a staffing, “temp” or placement agency. Workers are promised an attractive hourly rate but told that they will be paid this rate for all hours worked, including hours over forty per week.
Various excuses and explanations are given when asked why overtime is being paid at straight time-
“The client won’t pay overtime, so we don’t pay overtime.”
“Temporary employees don’t have to be paid overtime.”
The truth is that there are very few exemptions that cover hourly workers, thus, almost all employees paid an hourly wage are legally entitled to receive time and a half their regular hourly rate for any hours over forty per week.
Payment of the same hourly rate for all hours worked, including overtime hours, is a red flag for an overtime pay violation – do not believe what your employer tells you until you have verified your rights through a reliable source.
The Bottom Line for Pipeline Construction Workers
Pipeline construction workers need to be aware of their overtime pay rights under both federal and state labor laws to avoid being cheated out of their hard-earned pay. Do not rely on your boss, supervisor, or HR for critical information regarding the laws on overtime pay and how such apply to your specific job.
Because of the strict time limits imposed by the overtime pay laws, procrastination can be costly. If you have any doubts as to your entitlement to overtime, contact the overtime pay experts at The Lore Law Firm for a free and confidential review.
