August/September 2006 Wage & Hour News

• Portal-To-Portal Act Removed Any Obligation Defendant Might Otherwise Have Under FLSA To Compensate Plaintiffs For Their Travel Time


• Security Firm and Saudi Prince That Workers Were Hired To Protect Were Joint Employers Under FLSA


• Sterling Jewelers to Pay $1.29 Million in Back Wages to 16,820 Workers in 41 States


• Firm to Pay Over $130,000 in Back Wages and Fines for Immigration Law Violations


• Company to Pay Over $574,000 in Back Wages for Almost 200 Employees

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Portal-To-Portal Act Removed Any Obligation Defendant Might Otherwise Have Under FLSA To Compensate Plaintiffs For Their Travel Time (9/12/06) - 10th Cir.

Aztec Well Servicing Company ("Aztec") is a natural gas and oil well drilling company located in Aztec, New Mexico. The plaintiffs are present or former Aztec employees who worked on drilling rigs in the San Juan basin. They brought suit under the Fair Labor Standards Act ("FLSA"), claiming that their employer should be required to pay them for the time they spend traveling from Aztec to the drill sites-some of them in remote locations hours away. A jury found in favor of the plaintiffs on the travel-time claims, but the district court granted Aztec's motion for judgment as a matter of law. The court ruled that the plaintiffs' claims are barred by the Portal-to-Portal Act, which states that the FLSA does not require employers to compensate an employee for time spent "walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform."

On appeal, the 10th Circuit affirmed, holding that, as a matter of law, the Portal-to-Portal Act removed any obligation Aztec might otherwise have under the FLSA to compensate the plaintiffs for their travel time.

Smith v. Aztec Well Servicing

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The 10th Circuit Court of Appeals' jurisdiction includes Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming.

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Security Firm and Saudi Prince That Workers Were Hired To Protect Were Joint Employers Under FLSA (8/28/06) - 4th Cir.

Prince Faisal bin Turki bin Nasser Al-Saud (the Prince) is a diplomat and a member of the Saudi royal family. The Prince, who has a residence in McLean, Virginia, engaged Capital International Security, Inc. (CIS) to provide a personal security detail. Five of the agents who worked on the Prince's detail sued CIS, asserting claims for unpaid overtime under the Fair Labor Standards Act ("FLSA"). After a bench trial the district court entered judgment for CIS, holding that the agents were not entitled to overtime pay because they were independent contractors, not employees.

On appeal, the 4th Circuit vacated the judgment in favor of CIS and remanded the case for further proceedings on the overtime claim. The Circuit Court found that the undisputed facts compelled the legal conclusion that the Prince and CIS were joint employers and that the agents were their employees for purposes of the FLSA: The firm and the prince shared control over the work performed by the security workers; both the firm and the prince were involved in the hiring of the workers; the prince, through his personal secretary, generally handled the workers' schedules, compensation, discipline, and termination; but the firm maintained the authority to discipline the workers and change the terms of their employment.

Schultz v. Capital Intl Security

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The 4th Circuit Court of Appeals' jurisdiction includes Maryland, North Carolina, South Carolina, Virginia and West Virginia.

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Sterling Jewelers to Pay $1.29 Million in Back Wages to 16,820 Workers in 41 States (6/13/06) - DOL

Sterling Jewelers Inc., of Akron, Ohio, has agreed to pay $1,291,077 in back wages to resolve violations of the Fair Labor Standard Act (FLSA) overtime requirements, the Labor Department announced today. Sterling agreed to pay the back wages to 16,820 current and former employees of its retail stores operating at 1,200 locations in 41 states. The company does business under 14 retail names around the country.

"This administration is committed to ensuring that employers honor their obligation to pay their workers all the wages they have earned," said U.S. Secretary of Labor Elaine L. Chao. "In this case, we are recovering nearly $1.3 million dollars for almost 17,000 workers and making certain that they are properly compensated in the future."

A complaint and consent judgment were filed Monday, June 12, with the U.S. District Court for the Northern District of Ohio. The consent judgment also enjoins the company from future violations of the overtime pay provisions of the FLSA. Sterling voluntarily disclosed the violations to the department, and worked cooperatively with the department to ensure that the violations were fully and satisfactorily resolved.

The company failed to include incentive pay in the calculation of overtime and it failed to pay employees for all hours worked, which the employees had entered using the firm's electronic timekeeping system. Each of those violations contributed to workers being paid less than time and one-half their regular pay for hours worked over 40 in a single workweek as required by the FLSA. The back wage payments cover the period from Nov. 2, 2003 to Feb. 25, 2006.

The FLSA requires employers to pay covered employees at least the federal minimum wage for all hours worked and time and one-half their regular rate of pay for hours worked over 40 in a week. Employers must also maintain accurate time and payroll records.

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Firm to Pay Over $130,000 in Back Wages and Fines for Immigration Law Violations (6/14/06) - DOL

Open Access Technology International Inc., a Minneapolis, Minn.-based company, has agreed to pay $109,165 in back wages to 24 computer professionals and a $24,000 fine to settle immigration law violations, the U.S. Labor Department announced today.

An investigation by the department's Wage and Hour Division found that the company brought non-immigrant workers under the H-1B temporary non-immigration program into the U.S., but failed to pay them the minimum required wage rates for the areas where they were employed. The company also failed to provide required documents to the H-1B workers, failed to maintain a public access file, and failed to provide requested documents to the Labor Department in a timely manner.

"The Department of Labor aggressively enforces the law to ensure that temporary foreign workers are compensated fully and fairly," said Jose L. Medina, director of the Wage and Hour Division district office in Minneapolis. "As this case shows, violations of the temporary foreign worker program will be vigorously pursued."

The H-1B visa program allows foreign workers to enter and work temporarily in the United States in professional level jobs such as computer programmers, engineers, medical doctors and teachers. H-1B workers must be paid at least the same wage rates and benefits as those paid to U.S. workers already doing the same job in the same geographic area.

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Company to Pay Over $574,000 in Back Wages for Almost 200 Employees (6/21/06) - DOL

The U.S. Labor Department announced today that Atlanta Erosion Consultants of Norcross, Ga., has agreed to pay $574,486 in overtime back wages to 193 workers after a Wage and Hour Division investigation found they had not been paid in accordance with the provisions of the Fair Labor Standards Act (FLSA).

"The Department is committed to ensuring that employers pay workers all the wages they have earned," said Secretary of Labor Elaine L. Chao. "We are recovering more than a half million dollars in back wages for these workers and have taken steps to ensure that they are properly compensated for overtime in the future."

Wage and Hour investigators found that the company paid installers of temporary fences to control soil erosion straight time after they worked more than 40 hours per workweek. Payments to workers for overtime hours were reportedly disguised as bonuses on the company's payroll records.

The company cooperated with the department and made changes to its payroll system to assure future compliance. The back wages, according to an agreement with the department, will be paid over a 36-month period.

The FLSA requires that covered workers be paid at least the federal minimum wage for all hours worked and time and one-half their regular rate of pay, including commissions, for all hours worked over 40 in a single work week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment.

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