Houston-based contractor Halliburton is set to pay out millions of dollars to hundreds of employees in one of the largest settlements for unpaid overtime in the history of the Department of Labor. The government has given the contractor credit, however, for working in good faith to resolve the issue in a timely manner as soon as the problem was discovered during an internal audit.
The company will pay $18.3 million to 1,016 employees. Halliburton has 70,000 employees, so this is a relatively small portion of its total workforce.
In a statement issued to the Houston Chronicle, Susie McMichael with Halliburton said the company discovered during a self-audit that the workers had been denied overtime pay when they were actually entitled to it because of their employment status.
Some news reports about this have called it a case of worker misclassification. Worker misclassification generally happens when companies intentionally pay people as subcontractors when those workers in fact meet the IRS definition of an employee, giving them the right to overtime pay and other benefits. Companies that intentionally do it are trying to gain a competitive advantage over ethical contractors that follow the law and compensate their employees appropriately. In this case, it appears Halliburton was mistaken in thinking the employees were not owed overtime because they were working in salaried positions.
Halliburton ran afoul of the Fair Labor Standards Act, the Labor Department said in a news release, pointing out that “simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime.” The DOL also said that workers can only qualify as exempt from overtime pay if they’re paid more than $455 per week, and that “job titles do not determine exempt status.”
“The company re-classified the identified positions, and throughout this process, Halliburton has worked earnestly and cooperatively with the U.S. Department of Labor to equitably resolve this situation,” McMichael said to the Chronicle.
Betty Campbell, a Labor Department official, signaled that the Wage and Hour Division is taking a closer look at many of the changes in the oil and gas industry and the ways in which people are being compensated.
“The Wage and Hour Division offers a great deal of compliance assistance and stands ready to help workers and employers alike. We welcome and appreciate the cooperation of employers, like Halliburton, as we continue our investigations and educate employers about how wage violations hurt their industry and our nation's economy."
Late last year the DOL said several companies involved in natural gas drilling in Pennsylvania and West Virginia, including Chesapeake Energy and Citrus Energy, would collectively pay $4.5 million to more than 5,300 workers had been misclassified.