Michigan company pays $38K in back wages, damages

June 1, 2016 -  By

A U.S. Department of Labor investigation found a Laketon, Mich.-based landscape company and its owner in violation of the Fair Labor Standards Act, M Live reports.

H&H Lawn Service & Snowplowing violated the Fair Labor Standards Act by failing to pay overtime and properly keep records, according to the Department of Labor. A court ruled that the company and its owner, Darrell Hinken, must pay 11 employees $38,000 in back wages and damages.

“H&H Lawn Service & Snowplowing is (a) family-owned business that treats its customers and employees fairly,” said Christopher Trebilcock, the company’s attorney, in an email to the Michigan news outlet. “As a result (of) the investigation prompted by a disgruntled former employee, H&H tried for the last 12 months to fight the incorrect factual findings made by the former wage & hour investigator from the DOL. The DOL announcement is the expected bureaucratic result in this process.”

Hinken said he spent $160,000 fighting and disputing the government’s complaint but ran out of money.

According to the government, Hinken and his company violated the Fair Labor Standards Act’s overtime and record keeping provisions in the following ways:

  • Misclassified some employees as independent contractors, then failed to pay them overtime when they worked more than 40 hours in a week;
  • Paid some employees a flat salary without regard to how many hours they worked. This led to overtime violations when they worked more than 40 hours per week;
  • Banked overtime hours for some employees to be paid out in future work weeks at straight time, rather than paying overtime in the pay period during which the hours were worked; and
  • Failed to keep required payroll records.

In addition to paying $38,000 in back wages and liquidating damages to 11 employees, the company has agreed to notify employees in writing if they’re claiming an overtime exemption for them and why, provide wage and hour division fact sheets to all employees that describe how they’re defined as an employee, and retain a certified public accounting firm to do an annual payroll audit to determine compliance with the law.

“Banking of overtime and misclassifying employees as independent contractors occurs all too often in seasonal businesses such as lawn care and snowplowing,” said Mary O’Rourke, district director for the Wage and Hour Division in Grand Rapids, Mich., in the DOL statement. “These pay practices hurt workers and give the employer an unfair advantage over businesses that play by the rules. This case demonstrates our commitment to using every tool available to us, including litigation, to ensure that these hard-working employees receive every cent they have earned.”

Under the Fair Labor Standards Act, covered, non-exempt employees must be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and a half their regular rates—including commissions, bonuses and incentive pay—for hours worked beyond 40 per week. Employers must also maintain accurate time and payroll records.

LM Staff

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2 Comments on "Michigan company pays $38K in back wages, damages"

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  1. This is a challenge that we are facing with a greater frequency. Many small companies are paying foreman a salary illegally, causing hiring issues for those of us doing it correctly.

  2. Duane Thompson says:

    I don’t believe any government agency , especially after what has been happening with all of them the last 6 years. Examples, IRS, the VA, justice dept. and on and on. A disgruntled FORMER employee is no bellwether for a case like this. I would have to hear all the story behind. I pay overtime for anything over 40 hours.The $160,000 in court costs is the real tragedy.If a small company believes strongly enough to spend that kind of cash it tends to make me think they are fighting for what is right and just. The federal gov’t just does not care about business, especially small business. Politics seem to have entered this case and that is the real tragedy! How many out there have hired someone who works a week and quits because ” I will lose my unemployment” so I don’t want to work? Why doesn’t DOL go after cheater employees also(doing under the table work while collecting)?