Six workers have sued Encana, claiming the oil and gas company improperly classified them as independent contractors rather than employees, depriving them of thousands of hours of overtime pay.
It’s the second such suit by western Coloradan workers against Encana, and it comes amid a push by the U.S. Department of Labor’s Wage and Hour Division to enforce the Fair Labor Standards Act within the industry.
The Encana suit was brought by Glenwood Springs law firm Karp Neu Hanlon on behalf of Michael Collins and Clay Buerger of Rifle, James Buerger of Silt, Kenneth Hildebrandt of Loma, Thomas Blood of Grand Junction and David Wiese of Colorado Springs.
According to the suit, the six worked locally as well flowback hands, delivering water to and from wells, setting up valves and pumps and doing other work connected to hydraulic fracturing of wells.
Most of the men were paid $45 an hour, with Blood and Hildebrandt sometimes receiving a fixed daily rate, the suit says. It says the men regularly were required to work 12 to 14 hours a day for 14 days straight, followed by seven days off, and estimates their unpaid overtime ranges from 4,288 hours for Hildebrandt to 5,121 for Collins.
It says Encana required them to create business entities under which to operate, but prohibited them from hiring additional employees to do Encana work.
“They didn’t have any employees, they didn’t have any offices,” said Sander Karp, an attorney for the plaintiffs. “The only assets they had were their pickup trucks and the fact that they had to go out and get insurance.”
According to the suit, the men did various work related to wells as directed by Encana, which supervised and controlled their work, dictated the general starting time of their workdays, required them to attend training sessions, monitored their performance and disciplined them for violations, required them to get approval for time off and vacations, and provided them with the tools for the job. The suit says the men exercised little independent judgment in their work.
“We believe that these guys were in actuality employees and entitled to overtime,” Karp said.
Encana spokesman Doug Hock said the company doesn’t comment on pending litigation …
… Karp said the use of independent contractors by energy producers “is a very common practice.” Not only do the companies avoid wage and hour laws, but the workers don’t receive unemployment or workers compensation coverage and anti-discrimination statues don’t apply, he said.
“So the companies save a bunch of money by bringing these guys on as independent contractors rather than employees,” he said …
… “There is a misconception in the industry that — because workers typically earn more than the minimum wage — they are being paid legally. That is not always the case,” Cynthia Watson, regional administrator for the Wage and Hour Division’s Southwest Region, said in a news release in March. “You can’t pay a flat day rate with no regard for hours worked, misclassify employees as independent contractors, or make deals with employees that violate labor laws” …
The Labor Department’s concerns about the oil and gas industry go further because of the industry’s extensive reliance on contractor and subcontractor companies to do everything from drilling wells to hauling fluids to and from pads.
“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,” David Weil, administrator for the Wage and Hour Division, said in the March news release. “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.”
Weil’s choice of terminology is notable in that, before taking on his current job a year ago, he authored, “The Fissured Workplace,” which examines the trend of corporations increasingly outsourcing work to smaller companies that heavily compete with each other, a trend Weil says has hurt wages, benefits, and health and safety protections.
In the case of the oil and gas industry, Weil contends that, “given the fissured landscape, this is an industry ripe for noncompliance” with wage and hour laws.
Dr. David Weil is the author of The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It. He blogs about labor issues at the U.S. Department of Labor Blog.