Department of Labor Cracks Down on Shale Gas Industry

August 13, 2013

7797110302_260d344a89.jpgWage, hour and overtime lawyers at Pintas & Mullins report that the federal Department of Labor has recently increased scrutiny on employment issues in the shale gas industry. The agency has conducted enforcement initiatives on wage and hour laws in the oil and gas fracking occupations.

Those in the industry affirm that the odds of being subject to a Department of Labor (DOL) audit are much higher now than in previous years, as the government adds more investigators and focuses more on enforcement. Specifically, the agency recently announced that it was increasing enforcement efforts in the Marcellus Shale regions of West Virginia, Pennsylvania, and the Southwest.

The Marcellus Shale is one of the largest shale regions in North America; it is rich in natural gas and runs through much of Pennsylvania, up through New York, Ohio, West Virginia and Maryland. The process of 'fracking' has stirred up much controversy in recent years, as the process requires extensive drilling with pressurized fluids to bring natural gas to the surface, often causing irreparable harm to the environment and animal habitats.

Two DOL investigators are currently looking into overtime payments and employee classifications as independent contractors. Workers classified as independent contractors are legally exempt from receiving overtime pay and benefits, which is why a large amount of companies abuse the classification. The DOL is investigating vendors who provide driller, tree clearing, paving, road construction, and water and stone hauling and masonry services, among others.

In December 2012, a company that collects groundwater samples, GES, agreed to pay nearly 70 employees more than $185,000 in back wages. The company illegally and improperly classified these workers as independent contractors, failing to pay them the overtime wages they deserved under federal law.

In July 2013, the DOL announced that Morco Geological Services, based in New Mexico, was to pay nearly $600,000 in back wages to over 120 current and former employees. The company was found to be in violation of several wage and hour laws, including those pertaining to record-keeping, overtime, and minimum wages. Again, Morco was cited additionally for misclassifying employees as contracted workers.

Both Morco and GES agreed to settle with the DOL outside of court. If a company does not comply with the requests for back wages from the agency, the government may, and often does, file a complaint in federal court regarding the issues. If the company is found guilty in court, it will be forced to pay not only the back wages to its mistreated employees but will have to pay damages as well, which are often equal to the back wages. If the company is a repeat offender, it would likely face an array of civil penalties as well.

Some employees know for certain that they are improperly classified, and instead of waiting for the DOL to investigate and propose a settlement, decide to file private, class-action lawsuits. Should the employees win in court, the company will be forced to pay not only their back wages and damages, but the plaintiff's attorney fees as well.

This being said, companies involved in the shale industry, not only drillers, in the Marcellus and Utica formations will likely come under the DOL's microscope in the ensuing months and years. It is in the best interest of these companies to make sure that their record-keeping, employee classifications and wage issues are cleared up, legal and transparent. Wage and hour laws apply to businesses with annual sales exceeding $500,000.

Wage, hour and overtime lawyers at Pintas & Mullins have decades of experience advocating on behalf of those mistreated and misclassified by their employers. We have won millions of dollars for our clients in these types of cases, and offer free legal consultations to workers in all 50 states.