Two Gulf Coast staffing agencies agreed to paid 353 workers nearly $516,000 in back wages to resolve concerns that surfaced during US Department of Labor Wage and Hour Division investigations, the Department of Labor reported. Federal investigators found RBT Welders LLC and Contractor Labor Services LLC owed back wages to welders and pipe fitters who worked on maritime vessels and oil and gas industry projects in Louisiana and Texas.

RBT paid $398,379 to 246 workers and Contractor Labor Services agreed to pay $118,128 to 107 workers for overtime violations under the Fair Labor Standards Act. According to the Department of Labor investigators found they classified employees incorrectly as independent contractors and mislabeled wages as per-diem reimbursement for expenses never incurred.

The investigations were part of an ongoing, multi-year initiative to curb the pervasive practice by staffing agencies to attribute part of an employee’s wages wrongfully as per-diem payments, according to the Department of Labor. Division investigators are monitoring staffing agencies and other employers throughout the 1,600-mile Gulf Coast region for signs of this practice.

“Illegal per diem practices hurt law-abiding employers, defraud local, state and federal governments, and leave taxpayers in the Gulf Coast region and across the nation picking up the tab,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “Employers using this scheme gain an unfair advantage by lowering their labor costs while undercutting their own employees’ wages. They also compromise the benefits their workers would be entitled to receive in the event of a layoff, workplace injury or even at retirement.”

Both staffing agencies signed agreements with the department to resolve concerns that surfaced in the investigations. The agreements require RBT Welders and Contractor Labor Services to:

• Not advertise that workers will receive per-diem payments as a part of their regular rate of pay or otherwise suggest in any way that workers may receive per-diem payments regardless of how close the worker lives to the assigned work site.
• Issue genuine per-diem payments only to employees who incur expenses on behalf of the employer.
• Identify those employees who qualify for real per-diem payments for lodging, meals, mileage or fuel expenses based on their incurring actual, reimbursable expenses on behalf the employer.
• Ensure that employees do not receive per-diem payments that correspond directly with the number of hours worked.
• Communicate, and ensure employees understand and acknowledge what constitutes a legitimately reimbursable expense that is excludable from the regular rate of pay.

The investigation also found that the staffing agencies and the client companies that used the services of the welders, pipe fitters and other craft workers employed them jointly. Had the staffing agencies failed to resolve the violations disclosed by these investigations, the department could have held the client or host companies responsible, the Department of Labor reported.