The construction industry has had a long history of wage violations, whether of prevailing wage laws or just “ordinary” wage hour laws. Another example of this trend has emerged in New Jersey where an entity (and its subcontractors) have been sued in federal court in a collective action for alleged failure to pay overtime. The case is entitled Romero et al. v. Allstate Interiors Inc. et al., and was filed in federal court in the District of New Jersey.

The plaintiffs claim that they often worked more than forty hours in a week but were not paid overtime, but rather were paid only a flat day rate. The named plaintiffs also charge they were denied compensation for transporting other workers to and from project locations in their own cars. The lawsuit names subcontractors of Allstate as well, on a single employer theory, charging there were common owners, officers and directors. These subcontractors are GYK Drywall Inc. and Ceiba Services LLC.

The Complaint alleges FLSA violations and also violations of the New Jersey Wage Payment Law. There are approximately sixty potential class members, including laborers, laborers’ assistants and drivers. The Complaint sweepingly alleges that the “defendants have engaged in their unlawful conduct pursuant to a corporate policy of minimizing labor costs and denying employees compensation.”

The Plaintiffs claim they were only paid $130-150 per day, regardless of hours worked. They claimed they (and the others) worked more than seventy (70) hours per week. The named plaintiffs also claim they provided transportation to other workers, were promised reimbursement for gasoline and tolls, but did not receive it. The Complaint alleges that the employer did not track the hours of the workers, nor did it instruct the employees to track their time. Significantly, the named plaintiffs allege they know of other workers who were not paid overtime.

The Takeaway

Paying a day rate to non-exempt employees is permissible but those employees nevertheless are entitled to overtime if they work more than forty hours. Paying this day rate, this flat rate, no matter the number of weekly hours, is a common practice in the construction industry. If all of the workers were subject to the same day-rate/no overtime policy, then this case has a decent chance of receiving conditional certification.

Time for the employer to think about an early settlement….

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