Allstars Staffing LLC, a Tempe, Ariz.-based agency providing workers to local resorts and hotels, agreed to pay more than $151,000 after misclassifying staff as independent contractors rather than employees, the US Department of Labor announced. As a result of the misclassification, the employer failed to pay overtime when these employees worked more than 40 hours in a workweek, in violation of the Fair Labor Standards Act

An investigation by the US Department of Labor’s Wage and Hour Division found Allstars Staffing misclassified hundreds of servers, bussers, cooks, dishwashers and banquet staff as independent contractors rather than employees.

Allstars Staffing will pay $75,683 in overtime back wages and an equal, additional amount in damages to 275 employees. The employer will also pay a $22,094 civil penalty because of the willful nature of the violations found, the department announced.

The staffing agency paid overtime only when an employee worked at the same hotel for the entire workweek and the hotel client agreed to pay the required time and a half, according to the Department of Labor. Many employees worked more than 40 hours but worked at more than one hotel for the staffing agency during the week. In those instances, the employer failed to pay overtime. The affected employees worked at Phoenix-area hotels, including Tempe Mission Palms, Sheraton, and Fairmont Scottsdale Princess.

“Staffing agencies and their employer clients share responsibility to ensure that all employees working on their behalf are paid the wages they are entitled to by law,” said Eric Murray, director of the Wage and Hour Division in Phoenix. “These violations are all too common in the hotel industry. Our agency will do everything in its power to end the willful misclassification of employees as independent contractors. This practice deprives workers of basic wage and employment rights and allows an employer to illegally spare the costs of full wages, payroll taxes and other employment related expenses. This cheats not just the workers and their families — it also the undercuts the competition.”