Employees of a Canadian oil industry company stand to receive $6 million as the result of a tentative settlement in a class-action overtime pay lawsuit brought by American workers who claimed the company failed to properly compensate workers the overtime they worked.
The company, Calfrac Well Services Ltd is based in Alberta, Canada, and is involved in the hydraulic fracturing segment of the energy industry. The case involves 1,039 individuals who worked in several states of the U.S., including Pennsylvania, Colorado, Arkansas, and North Dakota.
If the proposed settlement is approved by the judge, the employees involved in the class action will be notified, and a subsequent hearing will be held to evaluate the fairness of the proposed settlement.
Disagreement with the Calculations
Workers for the company took issue with the way their overtime pay was calculated. Calfrac followed a formula based on the total of each employee’s salary and bonuses. This amount would be divided by total hours worked, and time-and-a-half payments were based on that calculated hourly rate. This is known as the fluctuating workweek (or Chinese Overtime) method. However, the employees argued the hourly rate should have been calculated by dividing their total pay by just 40 hours a week.
Overtime pay violations are a common occurrence in various sectors of the energy industry. This is especially the case in the oil and gas drilling/fracturing segments. Given the boom-and-bust nature of the business, during times of rapid growth in fracturing operations, there are too few qualified workers for too many jobs. As a result, it is not uncommon for these employees to be called to work 100-hour or more workweeks with mandatory overtime.
Clear Guidelines at Federal and State Levels
The guidelines of the federal FLSA are clear in stating that all non-exempt workers will be paid overtime for any hours worked over 40 during one 7-day period (a “workweek”). Many states have some form of regulations governing overtime pay as well. Despite this, many companies seek to skirt the requirements in different ways. The Calfrac approach effectively lowered the hourly rate on which overtime was based, meaning the overtime was paid at a significantly lower rate.
Likewise, many companies use a “day rate” in an attempt to minimize their overtime liabilities. Employers offer their workers a flat daily amount under this concept, regardless of the hours worked, and typically pay no premium for overtime. Over a seven-day period, this can result in workers losing 50 hours or more of overtime pay.
If you work in any sector of the energy industry and have questions about whether or not you have been properly paid for overtime, we can help answer your questions. Call 1-866-559-0400 or use our evaluation form for a FREE and CONFIDENTIAL review of your situation.