The United States Department of Labor announced a consent judgement in which a construction staffing agency agreed to pay $278k in back wages and liquidated damages for misclassifying workers as independent contractors.
SUFFOLK, VA – A Suffolk construction staffing agency and its owner who intentionally misclassified workers as independent contractors – a serious form of wage theft – must pay $278,073, in back wages and liquidated damages to 208 construction workers following an investigation and litigation by the U.S. Department of Labor.
On Sept. 14, 2022, Judge Arenda L. Wright Allen in the U.S. District Court for the Eastern District of Virginia entered a consent judgment that orders Resto Contracting LLC and owner, Bethany B. Resto, to pay $139,036, in back wages and an equal amount in liquidated damages to the affected workers.
The action follows a finding by the department’s Wage and Hour Division that the company and its owner hired workers – as finishers, loaders, operators and carpenters – and then illegally misclassified them as independent contractors. Resto Contracting and Resto then paid them straight time for all hours, including those over 40 in a workweek in violation of the Fair Labor Standards Act. By doing so, Resto Contracting and Resto denied workers the required overtime pay rate. They also failed to maintain accurate records of hours their employees worked.
“Misclassification by employers is a widespread problem that denies workers’ rights to full wages and other protections and benefits,” explained Wage and Hour Division District Director Roberto Melendez in Richmond, Virginia. “In this case, Resto Contracting LLC and its owner blatantly disregarded the law and shortchanged more than 200 workers of the hard-earned wages they and their families depend on. The Wage and Hour Division is determined to combat wage theft, especially in industries – including construction – where violations are all too common.”
Prompted by the division’s investigation, the department’s Office of the Solicitor filed a complaint in federal court to obtain the back wages and damages from the employer. It successfully argued that bankruptcy could not halt enforcement and litigation after the employer filed for bankruptcy as an attempt to stop the case. Months of contested litigation ended when the employer agreed to the consent to judgment and to FLSA compliance.
“The Department of Labor will pursue back wages and liquidated damages aggressively for workers whose employers take advantage of them or who believe they are above the law,” said Regional Solicitor of Labor Oscar L. Hampton III in Philadelphia. “The consent judgment secured in this case demonstrates our commitment to recovering stolen wages and protecting workers’ Fair Labor Standards Act protections.”
In addition to the back wages and damages, the consent judgment permanently enjoins the employer and its owner from future FLSA violations and prohibits them from discharging or taking retaliatory action against employees exercising their FLSA rights.
The division’s Richmond District Office conducted the investigation. Trial Attorney Mohamed Seifeldein in the department’s Solicitor’s branch office in Arlington, Virginia litigated the case.