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Thursday, May 30, 2024 | Back issues
Courthouse News Service Courthouse News Service

Firms on Hook for $1.8M in Unpaid Overtime

HOUSTON (CN) - Five oil and gas companies owe workers a combined $1.8 million in overtime, a byproduct of the industry's heavy reliance on subcontractors, federal regulators said.

The Department of Labor announced this week that 2,358 workers from nine states will share the windfall, the result of investigations dating to 2012.

The workers are victims of a shift is U.S. employment practices, according to department spokesman Juan Rodriguez.

"The oil and gas industry is emblematic of the modern, fissured workplace where contracting and subcontracting have obscured the traditional relationship between employer and employee," Rodriguez told Courthouse News.

"The more layers between the primary corporation and its many subcontractors, the more likely there will be wage and other labor violations as businesses seek to lower labor costs and maximize profit margins."

He said the agency also keeps close tabs on employers in the restaurant, hospitality, agriculture and construction industries because like oil and gas their workers are "particularly vulnerable" to wage shorting.

The five wage violators identified by the agency include three that operate in Houston: Oil equipment supplier Frank's International LLC will pay $555,000 to 1,760 workers; Plant Engineering Services LLC, an engineering and project management subsidiary of Fluor Corp. will pay 17 workers $225,000 in wages and damages; and Stream-Flo USA LLC, an oil drill manufacturer, $75,000 to 29 employees.

The other two companies are based in Texas. Equipment maker Jetall Specialties Inc., of Boerne, will pay the biggest settlement: $886,000 to 321 workers. Viking Onshore Drilling LLC in Odessa owes $167,000 to 411 workers.

The penalties come from investigations by the Labor Department's Wage and Hour Division that found the companies shorted overtime by either not including bonus pay in wages, incorrectly deeming salaried workers exempt, or paying workers a day rate regardless of their hours. Some of the five companies committed more than one wage foul.

They are just the latest to be caught: "Since 2012, more than 1,100 investigations have recovered more than $40 million nationally as part of the division's oil and gas initiative," the agency said in a statement.

The Department of Labor began cracking down on oil companies in 2012 when the hydraulic fracturing boom was in full swing in South Texas and North Dakota and the average price of crude was around $100 per barrel, which exerted pressure to produce quickly and led to longer shifts for workers.

The technique brought a renaissance to the U.S. energy industry, raising the country's crude oil production by a record-breaking 780,000 barrels a day in 2012, and sending small startups, some of whom were ignorant about wage laws, flocking to South Texas to make their fortunes on the Eagle Ford Shale.

The formation stretches from northern Mexico to East Texas and the U.S. Energy Information Administration estimated in 2011 it held 3 billion barrels of crude.

The drillers needed service companies: roughnecks, water haulers, valve makers and drilling fluid testers, to name a few, to get at the oil and gas. But when the price of crude dipped under $50 in the fall of 2015 many drillers came to a stark realization: They could not afford to operate at that price.

Forty U.S. oil companies filed for bankruptcy in 2015 and experts predict many more will go bankrupt this year before the price of crude rebounds.

It's trending up, closing at $38.46 on Wednesday up from a low of under $27 in early February.

As of March 11 there were 48 drilling rigs operating in the Eagle Ford Shale, down from 200 in January 2015.

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