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Two interrelated Massachusetts construction firms have been ordered to pay $2.4 million in back wages and liquidated damages to 478 employees for misclassifying most of them as independent contractors to avoid paying overtime and other benefits, the U.S. Department of Labor said.
Lunenburg, Massachusetts-based Force Corp. and Framingham, Massachusetts-based AB Construction Group Inc., along with Juliano Fernandes and Anderson Dos Santos, used a combination of payroll checks and cash and check payments to pay their employees straight time when overtime pay was required, and kept inadequate and inaccurate time and payroll records, in violation of the Fair Labor Standards Act, the Labor Department said Tuesday in a statement.
According to the complaint, Mr. Dos Santos is owner and president of AB Construction and actively supervises and directs both companies’ employees, while Mr. Fernandes, who is general manager at Force, manages both firms.
The Labor Department said Force Corp. is a year-round construction company, and the department’s wage and hour division determined AB Construction was created to provide Force Corp. with much of its labor. Force prepared and controlled the payroll and payment procedures for both companies.
Under terms of the settlement agreement, which was filed in U.S. District Court in Worcester, Massachusetts, on Monday, in addition to paying the $2.4 million — which reflects $1.2 million in back wages and an equal amount in liquidated damages — the defendants agreed to refrain from evading their responsibilities under the FLSA by misclassifying their employees as independent contractors, and to keep accurate records of employees’ wages. They also agreed to engage independent consultants to create a payroll system to insure they are in compliance with the FLSA.
“To be cheated out of wages and denied other workplace protections by an employer who deliberately flouts the rules compounds the struggles too many middle-class Americans already face,” U.S. Labor Secretary Thomas E. Perez said in a statement. “Workers who play by the rules deserve nothing less than to be paid what they are owed.”
Force and AB did not immediately respond to a request for comment.
More employers can expect litigation comparable to the lawsuit filed by a former restaurant worker, whose lawsuit, where she claimed her employer cut her hours to part-time to avoid Affordable Care Act costs, has successfully survived a motion to dismiss.