The U.S. Department of Labor (DOL) has announced that it obtained a consent judgment in federal court that requires a Las Vegas, Nevada paint and specialty coatings contractor and its owner to pay more than $3.6 million in back wages, liquidated damages, interest and penalties to 593 employees [DOL News Release, 23-132-NAT, 01/30/23].
Background.
Founded in 2007, Unforgettable Coatings Inc. is a commercial and residential roof coating and painting contractor based in Las Vegas with locations in several states including Nevada, Arizona, Utah and Idaho. Cory Summerhays is the owner of the company that Inc. Magazine included in its 2020 annual list of “Best Workplaces.”
Multiple investigations.
A 2013 DOL investigation recovered $47,393 from the company and its owner whose illegal pay practices denied 21 Utah workers overtime wages. In September 2019, the DOL’s Wage and Hour Division (WHD) expanded conducted a second joint investigation between its offices in Las Vegas and Phoenix that covered the company’s operations from September 2016 until December 2020.
Overtime.
Unless exempt, employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the FLSA on the number of hours employees aged 16 and older may work in any workweek.
Recordkeeping.
Every covered employer must keep certain records for each non-exempt worker. The FLSA requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate.
Retaliation.
Most of the acts enforced by the WHD have regulations that prohibit retaliation, harassment, intimidation or the taking of adverse action against employees for: inquiring about their pay, hours of work or other rights; asserting their worker rights; filing a complaint about their worker rights; and cooperating with a WHD investigation.
Willful violations.
Willful violations of the FLSA may result in criminal prosecution and the violator fined up to $10,000. A second conviction may result in imprisonment.
Investigation findings.
Investigators found Unforgettable Coatings Inc. and Summerhays illegally paid straight time for all hours worked including hours over 40 in a workweek, falsified payroll records by omitting some workers, and required some workers to volunteer their time to work on weekends without pay.
Willful actions.
The WHD also determined Summerhays deliberately hid the company’s theft of overtime by falsifying pay records. The employer hired employees to work between $12 and $25 an hour and created pay stubs showing a lower hourly rate to avoid paying the workers overtime based on their agreed-upon rate. Ultimately, employees were paid straight time for all hours worked.
Threats of retaliation.
Investigators also learned Summerhays threatened workers and stated that talking to the department could involve immigration consequences. He reduced all workers’ wages by 30% and cut employees’ hours if he believed they cooperated with the investigation. Despite the DOL obtaining a federal court order forbidding Summerhays and Unforgettable Coatings from retaliating, intimidating or discriminating against current or former employees who cooperated with investigators, Unforgettable Coatings continued to retaliate against workers and fired an employee for complaining about the company’s pay practices.
What the WHD said.
“The wage theft committed by Cory Summerhays and Unforgettable Coatings Inc. was egregious and willful,” said Principal Deputy Wage and Hour Administrator Jessica Looman. “The employer denied nearly 600 workers in four states their hard-earned overtime pay, attempted to hide their greed and illegal actions, and retaliated against workers who asked why they were being cheated,” she added.
Results of investigations.
The WHD’s investigations determined Unforgettable Coatings Inc. and Summerhays owed the affected workers in four states a total of $1,809,249 in back wages and an equal amount in liquidated damages. The DOL also assessed the employer $50,000 in civil money penalties due to the willful nature of its violations, and an additional $18,092 in interest.
Different company, similar offenses.
Litigation by the DOL revealed Summerhays had established another company (Final Touch Painting in Idaho) where the employer also falsified payroll records by representing hourly wages as bonus pay. Back wages and liquidated damages calculated in this case were included in the consent judgment.
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