With the continued drop in oil prices and drilling activity, an increasing number of energy related employers have been engaging in “cost reduction” efforts, including job cuts and layoffs. The near-term outlook doesn’t look much brighter with new job postings for operators, field technicians, inspectors, pumpers, roustabouts and similar jobs down and top executives noting that the “fourth quarter is going to feature declining customer activity across all operating basins on the continent” and expecting “an oversupplied gas market and concerns about oil demand softness in 2020” to continue.  The next wave will come when consolidation brings layoffs in  corporate support staff, engineers and other technical office employees.

While layoffs are not an uncommon occurrence in the cyclical oil and gas industry, it is important that employees are aware of their rights and protect themselves through the process.

“The oil and gas business is in pretty dire straits right now.”

There are numerous articles giving advice on what employees facing a layoff should do, their legal rights and how to prepare for energy company job cuts, but there is one particular point that most overlook – an employee’s right to recover unpaid overtime wages. Regardless of what they sign, employees need to know that they likely still have the right to recover any unpaid overtime wages that were unlawfully withheld.

Misclassification of workers as “exempt” from overtime pay requirements has been widespread throughout the energy industry for decades, however, it has gone largely ignored until recently. In the last several years there has been a steady stream of claims filed on behalf of oilfield workers seeking to recover back overtime pay. These cases have been largely successful and have recovered millions of dollars for workers who had been paid using the following schemes:

  1. Day Rate Pay with No Overtime
  2. Straight Time Hourly Pay for All Hours
  3. Salary (sometimes plus bonus and/or day-rate) with No Overtime for “field” type jobs that do not qualify for exemption from the overtime pay requirements.

As a result, this issue is very much on the minds of employers, particularly as they face the prospect of laying people off. Not surprisingly, once severed from the company, former workers are much more likely to pursue a claim for the back wages they are owed. This leads many employers to attempt to cut off such claims during the layoff process via the paperwork and severance. Knowing that employees are particularly vulnerable during this process, employers may present them with an offer for some type of severance pay for which they must sign a release of any and all claims they may have against the employer – including claims for unpaid back overtime under the FLSA. Despite the fact that such claims cannot legally be released in this manner, employers know that most workers don’t know this and will just assume they have given up any rights and therefore not look into the issue further.

Here’s the condensed version of what employees should know on this issue:

  • You can’t merely “sign away” your right to overtime pay – there are technical and procedural steps that must be taken before an employee can validly release their rights to receive overtime pay. If these legal steps are not satisfied, any agreement signed by the employee is not likely to be enforceable to prevent them from seeking to recover their back wages.
  • Just because you received a severance payment, it does not necessarily cover any unpaid back overtime owed. You may still be owed more.
  • Time is limited. While there is some variation from state to state, in most cases overtime claims can only seek recovery for a period of 2-3 years prior to filing of the claim. (California and New York have longer statutes of limitations under their state overtime pay laws)

Whether expecting possible layoffs or actually presented with documents relating to a layoff, workers should take the time to understand their rights – seeking the advice of a lawyer if necessary. And, even if you have already signed the paperwork and taken a severance package, know that you likely still have the legal right to pursue a claim for any back overtime you may be owed for the last 2-3 years.

To get more information and/or answers as to your potential entitlement to overtime, contact our firm to get a free and confidential review of your specific situation. Call 1-866-559-0400, email [email protected] or submit your information using our convenient Case Evaluation form.