Oil and Gas Industry Employers Violate Wage and Overtime Laws on a Regular Basis

Don J. Foty
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Don Foty is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization.
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Working in the oil and gas industry is unlike any other form of work. The industry has many of its own unique aspects and quirks. Unfortunately, the industry also has a history of not always compensating workers in a fair manner. Oil and gas companies can violate wage and overtime laws in many different ways. It is important for employees to understand how to protect their legal rights when this occurs.

Oil and Gas Companies Violate Wage and Overtime Laws in These Three Ways

How to oil and gas companies violate wage and overtime laws? The following are three common examples:

  1. Using contract labor improperly. Many oil and gas companies use a large number of contractors in order to have a flexible workforce that can be scaled down if need be. Unfortunately, it is this environment that makes it more likely for wage and hour violations to occur. Many employers will classify contractors as employees improperly in an attempt to avoid paying overtime. The U.S. Department of Labor targets companies who operate in this fashion in order to minimize the harm to employees.
  2. Improperly classifying oil and gas employees. Regardless of whether an employee is paid hourly or by salary, all employees are entitled to overtime compensation unless they qualify for an exemption under the law. Employees who fit into one of these exemptions may not be entitled to receive overtime. As a result, some employers try to classify employees as being ineligible for overtime benefits when the facts show that they are clearly entitled. The oil and gas industry sees a great deal of this situation, with some parties arguing that the exemptions should not apply at all in the oil field.
  3. Improperly using day rates. Another way in which oil and gas employers violate wage and overtime laws is to pay employees and contractors on a day rate basis. Day rates are common in the oil and gas industry. Third party oilfield service companies regularly pay employees and contractors using the day rate basis model. While this in and of itself is not illegal, employers can violate the law if they do not pay overtime for non-exempt employees. This means that even day rate employees are entitled to receive overtime compensation.

Day Rate Compensation for Oil and Gas Workers Presents Opportunity for Violation of Overtime Laws

If an employee is paid under a day rate system, federal law requires that he or she receive overtime pay, calculated at one and one-half times their pay for any hours worked in excess of 40 per week. For day rate employees, the regular rate is calculated by totaling the weekly compensation the worker receives and dividing it by the total number of hours worked. Overtime is then calculated by dividing that amount in half, multiplying it by one and one-half times, and then multiplying that figure by the number of overtime hours worked. When employers attempt to avoid their obligations under federal wage and overtime laws by not paying overtime to day rate employees, these individuals may have a legal claim against the employer. Employers may be liable for past due wages, an equal amount of liquidated damages, and attorney’s fees and expenses. In addition, an employee may pursue legal against managers and owners who have significant control over the company’s business.

Whether you receive pay under a day rate system or in some other manner, the risks of being the victim of a wage or overtime law violation are substantial in the oil and gas industry. If you work in the oil and gas industry and do not receive the compensation that you deserve, it is important to act quickly. We are here to help. We encourage you to reach out today for more information at (888) 449-2068.


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