Staffing Agencies and Their Clients On the Hook for Overtime Pay
Temporary staffing agencies represent a thriving industry that is in high demand across the country. By tapping “temporary” employees available through staffing agencies, small and large companies alike essentially outsource their Human Resources departments. This helps them sidestep their obligation, whether intentional or not, to adhere to overtime laws and pay their workers properly — or so they thought.
Fortunately, staffing agencies and large corporations do not write the labor laws in this country. That’s the job of the U.S. Department of Labor, and they have sent wake-up calls via major enforcement efforts to employers who would violate the overtime wage rights of workers.
If you suspect that your staffing agency or the employer you’ve been placed with are committing wage theft by sidestepping overtime laws, keep reading to learn how both may be on the hook and how you can reel in your rightful earnings and, further, collect “liquidated damages” (double damages).
Wage Theft: An Institutionalized Problem
Wage theft is an institutionalized problem that affects employees across many industries, including construction, home healthcare, merchandising, energy services, engineering and transportation. The U.S. Department of Labor estimates that as many as 70% of employers do not fully adhere to the wage and hour laws.
Wage theft may be practiced intentionally to save money for the staffing agency, company or both, while short-changing and placing a hardship on the employees that make their businesses possible and profitable. Unintentional wage theft also occurs due to job misclassification (typically independent contractor instead of employee) or a lack of knowledge (neglect) of labor laws by the agency and/or employer.
Case in Point
As mentioned, the U.S. Department of Labor has sent strong messages to companies that would break labor and overtime laws. One case in particular focuses around the common practice of misclassifying employees as contractors or sub-contractors to avoid paying earned overtime.
After an investigation by the Wage and Hour Division of the U.S. Department of Labor, the companies DirecTV and Advance Information Systems were found to have violated minimum wage, overtime wage, and record-keeping provisions of labor and overtime laws. DirecTV and Advance Information Systems participated in a common, yet illegal practice of ignoring total hours worked by employees and, instead, paid employees on a piece-rate basis.
This resulted in employees receiving less than minimum wage and no overtime pay. The consequences imposed on DirecTV for violating their workers’ rights were compelling:
- The workers were found to be employees — not subcontractors — of DirecTV.
- DirecTV paid $395,000 in back wages and liquidation damages to 147 employees.
- DirecTV and its contractors (i.e. staffing agencies) must comply with the Fair Labor Standards Act (FLSA).
- DirecTV must hire a monitor to report on the employees’ working conditions and conduct a nationwide review of all its contractors’ practices to ensure FLSA compliance.
A DOL spokesperson, stated, “Subcontracting labor does not absolve employers from labor compliance. This ruling represents a major victory for workers’ rights…”
Are You a Victim of Wage Theft?
What this means for countless “temporary” employees or subcontractors across the country is that both the staffing agencies and their clients are on the hook for any failure to pay proper overtime wages.
If you are the victim of wage theft because your staffing agency and employer have ignored overtime laws, you are entitled to your rightful earned wages and perhaps an equal amount in liquidated damages. When you have any doubt as to your overtime compensation rights or questions about wage laws, contact The Lore Law Firm for answers and a free confidential review of your concerns.