To Pay or Not To Pay: Payment of Wages under Federal Wage and Hour Law

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“These violations reflect one of the problems we’ve found in the oil and gas extraction industry—employees are improperly classified as exempt from the FLSA and are not paid the proper wages in accordance with federal law.” - John Dumont,Director, Wage and Hour Division, Pittsburgh Office.U.S. Department of Labor, Wage and Hour Division Press Release, December 19, 2012.

The influx of oil and gas companies, and their workers, to the Marcellus Shale region has given the Department of Labor (“DOL”) a new target for its enforcement efforts under the federal Fair Labor Standards Act (“FLSA”). According to the DOL, 80% of employers are not in compliance with the FLSA and perhaps to reinforce the point, the DOL’s Wage and Hour Division has announced a multiyear enforcement initiative in Pennsylvania and West Virginia focused on oil and gas companies and related businesses such as tree clearing, quarries, road construction, paving, masonry, and water and stone hauling.

At its core, the FLSA requires the payment of a minimum wage (currently $7.25) and overtime (at a rate of at least one and one-half the regular rate of pay for hours worked in excess of 40 in a work week) for covered employees. Caught recently in the DOL’s enforcement initiative was an oil and gas company which paid more than $187,000 to employees after a Wage and Hour investigation found that it had improperly classified those employees as exempt from overtime obligations.

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