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Staffing firms to pay $3.5 million for mislabeled per diem payments

June 23, 2015

Six Gulf Coast staffing agencies agreed to pay nearly $3.5 million in back wages to more than 3,000 workers after US Department of Labor’s Wage and Hour Division investigators found part of their wages were mislabeled as “per diem” payments as reimbursement for expenses they never incurred. Per diem pay is intended to reimburse workers for lodging, meals and other travel expenses incurred on behalf of their employer and not for regular wages.

The agencies owed the back wages to welders, electricians, pipe fitters and other craftspeople on maritime vessels and other oil and gas industry projects, according to the Department of Labor.

The recoveries were made as part of an enforcement initiative aimed at ending a trend of employers labeling part of employee wages as per diem payments, often to avoid overtime, payroll taxes and other costs, according to the department. Investigators are also monitoring staffing agencies and other employers in the 1,600-mile Gulf Coast region for signs of this practice.

The initiative has also found trends in the region’s staffing industry in Alabama, Florida, Louisiana, Mississippi and Texas, the department reported. Employers may also be liable if investigations find workers employed jointly by the staffing agency, and the business that contracted them, received illegal per diem payments.

“Workers don’t often complain about receiving per diem pay in place of regular wages because they believe they make more money being paid this way,” said Wage and Hour Division Administrator David Weil. “The truth is these workers are losing out. They are not getting all of the short- and long-term benefits their employer owes them.”

The six companies, the back wages found and the numbers of affected employees are:

  • Permanent Workers: $1,110,103 to 604 employees
  • Masse Contracting: $909,667 to 1,257 employees
  • TREO Staffing: $511,877 to 428 employees
  • Government Support Services Inc.: $474,938 to 289 employees
  • Winston International: $390,361 to 490 employees
  • Flexicrew Staffing: $94,496 to 195 employees