Feds Target Oil and Gas Industry for Underpaying Workers

Dave Fehling / StateImpact

Exhibit from lawsuit: worker's time sheet showing 90 hours in eight consecutive days

In states with the most oil and gas drilling, including Texas, Oklahoma and North Dakota, the U.S. Department of Labor has won back pay for over 4,000 energy industry workers in just the past year.

It totaled $6.7 million dollars, accounting for a third of all such settlements by all types of industries nationwide.

“We were hearing that workers were being misclassified as independent contractors, that they were being paid straight-time for their hours over 40 in a workweek. And we were hearing this consistently throughout the Southwest Region,” said Cynthia Watson, the U.S. Department of Labor’s Regional Administrator in Dallas.

Watson said companies were shorting their workers, sometimes thousands of dollars each. She cited Department of Labor cases since 2012 that include:

• A Houston company that builds drilling rigs that paid back $687,000 in back wages to 133 roughnecks and crane operators
• A Louisiana company that provides labor services to the industry and paid nearly $2 million in back wages to 2,267 workers
• A New Mexico company that agreed to pay nearly $600,000 to 121 to drilling rig “mud logging technicians”

Galvin Kennedy, a lawyer in Houston who sues energy companies on behalf of workers, said his cases most often involved “mid-tier oil and gas companies” that got “sloppy or greedy” and misclassified their employees as independent contractors and avoided paying overtime and other benefits.

“Anytime you have a boom, you’re going to have some people try to cut corners even when there’s a ton of money flowing around, and the oil and gas industry is no exception,“ said Kennedy.

Greed … or Confusion?

But the oil and gas industry says it’s not so simple. Andrea Johnson, a lawyer with Burleson LLP, a Houston firm specializing in energy, said the Fair Labor Standards Act is complicated and that when it comes to energy workers, many are well paid and might be exempt from overtime.

“It’s a situation where people are highly compensated in many, many, many cases, particularly when we’re talking about the energy industry,” Johnson told StateImpact Texas.

“And yet they want overtime because the rules appear to say they are entitled to overtime. And that may be a yes, it may be a no, it may be a maybe. That’s where lawyers come in. And that’s why we have so many thousands of cases out there about this because if the rules were that clear, the cases would never have existed,” said Johnson.

The issue isn’t unique to the energy industry. In fact, the Obama Administration is proposing changes in labor rules to make it harder for any company to exempt employees from overtime. But Johnson said it’s no wonder the Department of Labor and plaintiffs’ attorneys are targeting the energy industry.

“We have the jobs, we have the work, we are making the money and that’s why we are a target,” she said.