United States Department of Labor

Wage and Hour Division (WHD)

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ESSINGTON, Pa. -- Parts Distribution Express of Essington has paid $256,340 in back wages to 158 delivery drivers who were denied proper overtime wages as a result of being improperly classified as independent contractors, following an investigation by the U.S. Department of Labor’s Wage and Hour Division. The drivers, who delivered automotive parts throughout northern New Jersey, were hired under a contractual agreement between PDX and Samuels Inc., an automotive parts wholesaler and retailer doing business as Buy Wise.

Investigators determined that although the drivers were jointly employed by Buy Wise and PDX, they were required to sign an “independent contractor” agreement prior to being hired. They were then paid “straight time” for all hours worked instead of time and one-half their hourly rates of pay for hours worked beyond 40 per week, as required by the Fair Labor Standards Act.

“Increasingly, employers are erroneously categorizing their employees as independent contractors to avoid paying them in compliance with federal labor laws, as well as other state and local statutes,” said Joseph Petrecca, director of the Wage and Hour Division’s Northern New Jersey District Office. “The Wage and Hour Division is vigorously examining those situations in which workers are in fact regular company employees, to ensure that they are paid the required minimum and overtime wage rates.”

In addition to paying the back wages, PDX has re-classified all of the drivers on payroll as full-fledged employees and has agreed to comply with the FLSA in the future.

The misclassification of employees as independent contractors is an alarming trend, particularly in industries that often employ low-wage, vulnerable workers and in which the Wage and Hour Division has historically found significant wage violations. The practice is a serious threat both to employees entitled to good and safe jobs, as well as to employers who obey the law. Too often misclassified employees are deprived of overtime and minimum wages, and are forced to pay taxes that their employers are legally obligated to pay. Honest employers have a difficult time competing against scofflaws. The Labor Department is committed to ensuring that employees receive the pay and benefits to which they are legally entitled and to level the playing field for employers that play by the rules.

Under the FLSA, an employment relationship must be distinguished from a strictly contractual one. An employee – as distinguished from a person who is engaged in a business of his or her own – is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their hourly rates of pay for hours worked beyond 40 per week. Additionally, accurate records of employees’ wages, hours and other conditions of employment must be maintained.

For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available online at http://www.dol.gov/whd.

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