Employers in the construction industry should not be surprised if the Department of Labor comes knocking at their door in the near future. Recently, the Hartford office of the U.S. Department of Labor’s Wage and Hour Division announced an enforcement initiative to identify and eliminate wage and hour violations through increased compliance with the federal Fair Labor Standards Act (FLSA). The initiative is targeted at Connecticut and Rhode Island employers in the construction industry.
The DOL is developing new strategies to better identify and remedy labor violations in an effort to effect change across the entire construction industry. According to the DOL, some contractors are subcontractors “cut corners with respect to wages, hours and employment conditions” and the initiative is a means to protect workers against exploitation. Of paramount concern for the DOL is that general contractors require and ensure FLSA compliance by all of their subcontractors.
Included in the initiative is the investigation of general contractors and subcontractors on large projects, and aggressive pursuit of corrective action for violations of the law, including payment of back wages, civil money penalties, and liquidated damages. Between 2000 and 2010, the DOL conducted nearly 300 investigations of construction industry employers in Connecticut and Rhode Island, resulting in the payment of $5.6 million in back wages to workers. With this new focus, the DOL seeks to increase the number of investigations and the amount of back pay paid by employers to workers. The DOL’s press release announcing the initiative can be found here.
Some of the major FLSA requirements and pitfalls that employers encounter include:
- Payment of at least the minimum wage. While the federal minimum wage is $7.25 per hour, Connecticut law requires payment of $8.25 per hour and Rhode Island requires payment of $7.40 per hour.
- Payment of one and-one half times (1 ½) an employee’s regular rate of pay for hours worked over 40 per workweek.
- Proper determination of what constitutes an employee’s “regular rate of pay.” Regular rate of pay can include more compensation than the employee’s hourly rate, such as shift differentials or pay incentives for hazardous work.
- Payment for all “hours worked,” as the term is interpreted under the FLSA. Depending on the circumstances, waiting time, on-call time, travel time, and meal periods can all constitute work time for which an employer must compensate an employee.
Compliance with recordkeeping requirements, including maintaining specified information about each employee and his/her hours worked and wages earned. In addition, employers are required to preserve at least 3 years of payroll records, collective bargaining agreements, and sales and purchase records. Records must be open for inspection by a DOL representative.
Given the DOL’s initiative to identify and remedy FLSA violations, Connecticut and Rhode Island employers in the construction industry are well advised to review their current wage and hour practices to ensure compliance with the law. Significantly, in some instances, failure to comply with the FLSA can result in an award of double the amount of back wages for the past 2 or 3 years, plus attorney’s fees and court costs.