Recently, a U.S. District Court judge granted in part a motion filed by oil and gas industry employees in a collective action brought against their employer, Brazos Rock, Inc. The workers are alleging that Brazos failed to provide proper overtime compensation. Their case was filed in the U.S. District Court for the Western District of Texas, Pecos Division. Unfortunately, wage and overtime violations are all too common in this industry.
Overtime Violations and Collective Action Lawsuits
If oil and gas workers have been denied proper overtime compensation, they are entitled to file an overtime collective action lawsuit. To do so, employees must sign a document that affirms they want to take part in the suit. This means that they are “opting in.” In addition, the employees must also show that they are all “similarly situated.” Similarly situated means the employees have been subjected to a common policy that was carried out by their employer.
In the lawsuit brought against Brazos, the employees work or worked as construction services employees on oilfield and pipeline projects. All of the employees were paid hourly and based out of the company’s facility in Kermit, Texas. Allegations made by the employees against Brazos include the following:
- The company had a policy of generally limiting pay to 10 hours per day.
- Despite the policy, the employees worked hours that regularly exceeded 10 hours per day.
- As a result of this policy, the employees were not paid for overtime when they worked more than 40 hours per workweek.
- A large portion of the time that they spent working without compensation was in connection with unpaid drive time to and from their main yard to the pipeline or oilfield construction worksite.
- One plaintiff, who worked as a foreman for the company, reports that he was instructed not to report more than 10 hours per day for any single employee working on his job site. He was threatened with termination if he did so.
- The employees were paid a $100 per day per diem. However, this amount was not counted as regular wages and was therefore not included when calculating their overtime hourly rates of pay. Generally, per diem compensation must be based on out-of-pocket expenses that employees incur on behalf of the employer. The employees allege that their per diem pay did not actually reflect expenses incurred on behalf of the employer. Therefore, the per diem pay must be included in calculating the rate of pay for overtime compensation.
The judge’s ruling with regard to the collective action may be a significant victory for these employees.
Collective Actions and the Fair Labor Standards Act
One law often cited in a wage and overtime lawsuit is the Fair Labor Standards Act. Under this law, employees may be eligible to participate in an overtime collective action lawsuit if they were unlawfully denied overtime wages. By using a collective action procedure instead of filing individual claims, hundreds or even thousands of claims can be aggregated into one collective action, as long as the employees are similarly situated.
It is important to note that a collective action is different from a class action. Employees must opt in to a collective action brought under the Fair Labor Standards Act. This is different from a class action, where employees are automatically presumed to be a part of the class pursuing the legal action. Any employee who does not want to participate in the lawsuit must opt out. Class action suits are not permitted for pursuing wage and hour claims under the Fair Labor Standards Act. Instead, the collective action is permitted, and employees who do not consent in writing to the suit are not bound by the outcome. This means that they can pursue a private action against the employer if they so choose.
The judge’s decision in the Brazos case means that the employees have passed the first phase of the collective action process. Collective actions must be certified. The first phase in this process involves the judge granting a conditional certification. The case is filed by the employees and the court is asked to certify a “class” of employees who are similarly situated. Once the class is conditionally certified, the second phase of the certification process begins. During this phase, the discovery process begins. If the court agrees that a common policy unites the group of similarly situated employees, and that the claims can be resolved using common evidence, the lawsuit may move forward as a collective action.
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