Department of Labor Targeting Oil and Gas Contractors

On December 9, 2014, the U.S. Department of Labor (“DOL”) announced that it had achieved $4.5 million dollars in settlements from private employers as a result of a two year investigation into contractors working in the Marcellus Shale region of Pennsylvania and West Virginia. The DOL press release can be found here.

This investigation highlights the increased scrutiny on employers in the oil and gas industry, and the importance of regular compliance audits of wage and hour practices. With a highly mobile workforce, operating under ever-changing working conditions and schedules, following complicated state and federal overtime regulations can be a nightmare.  The following are some important tips for maintaining compliance in this difficult area.

1. Make sure that any salaried exempt managers or other professionals meet the duties tests under federal law. It is not enough to simply call an employee exempt and pay him or her a salary.
2. If you classify an employee as exempt and pay him or her a salary – remember that the salary cannot change based on quantity or quality of the work performed. Before making any deductions, seek legal advice.
3. For hourly employees, be wary of day rates and other flexible pay arrangements which conflict with the overtime rules. Federal law requires all non-exempt employees to be paid overtime for hours worked in excess of 40 in a work week, with rare exceptions.
4. Federal law requires overtime to be paid at time and one half times the employee’s regular rate of pay for that work week. This rate must include all compensation, including bonuses, piece rates, and any other incentives.
5. When you have employees living at or near the worksite (like in the shale regions) it is important to have clear policies prohibiting “off the clock” work, and trained supervisors to enforce such policies.  Supervisors should know whether and when employees are to be paid for safety training, waiting time, on call time, or other “gray areas” that are common in the industry.

Lastly, ensure you are fully and accurately recording all work time for non-exempt employees. Under federal law, it is the employer’s obligation to maintain accurate pay records, and such records are critical in providing a defense to government investigations or lawsuits.