By Rick Bell
May. 18, 2021
FIS Holdings LLC, a pipeline inspection company based in Sand Springs, Oklahoma, was fined $3,852,968 after violating overtime requirements of the Fair Labor Standards Act for 1,100 of its employees, a Labor Department investigation discovered.
The oil and gas industry depends on independent inspection companies like FIS Holdings to protect this essential infrastructure. The employees, who work in 40 states ranging from Massachusetts to California and Idaho to Alabama, keep more than 2.6 million miles of pipe in the U.S. secure, the Labor Department said in an April statement.
Investigators discovered that the company, which does business as Frontier Integrity Solutions Operations LLC and operates in the U.S. and Canada, paid workers a fixed amount per day, regardless of the number of hours that they worked. The practice resulted in violations when employees worked more than 40 hours in a workweek, but the employer failed to track those hours or pay workers overtime.
The employees typically worked between 50 and 60 hours per week. The employer’s failure to keep records of the number of hours employees worked also resulted in recordkeeping violations, the Labor Department release stated.
Kate Bischoff, an employment attorney at tHRive Law & Consulting LLC, said that managing employees’ time and attendance across multiple states shouldn’t necessarily complicate the process. The employer wasn’t following federal law for tracking time and paying overtime, she said. And that responsibility cuts across the entire organization, not just a single department like human resources or payroll.
“Everyone needs to play a part in compliance,” Bischoff said. “Frontline managers are important to get accurate time records from each employee. Payroll needs to verify, compile data including deductions, and ensure pay stubs are accurate. And, HR needs to make sure everyone has the tools and knowledge to do their jobs accurately.”
Many employers are looking for ways to make payroll as easy as possible, including paying fixed rates to nonexempt employees, misclassifying workers as independent contractors, and not requiring employees conduct paperwork when their actual work is dangerous, Bischoff said.
Bischoff pointed out that the investigation wasn’t handled by one office and one investigator but was a much bigger effort by multiple field offices to get the outcome for FIS employees.
Bischoff said it’s clear that the Labor Department is focusing on enforcement over guidance.
“The Biden administration’s Department of Labor under Secretary Walsh is going to focus on enforcement as a major motivator for employers to get their wage and hour houses in order,” she said.
Bischoff advised employers to talk with their attorneys and their technology vendors to ensure compliance before a Labor Department investigator comes knocking.
“The Department of Labor’s focus on enforcement is designed to be a deterrent for all employers to motivate them to comply with the law,” she said. “Work with an attorney to really focus on making sure your I’s are dotted and T’s are crossed on wage and hour issues.”
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