Lawsuits to recover unpaid wages and damages for 89 workers at five hotels filed by US Labor Department

Report: Housekeepers misclassified as independent contractors and paid by the room; in many cases, they didn't even earn minimum wage.
Norwalk Reflector Staff
Apr 17, 2014

 

The U.S. Department of Labor has filed two lawsuits in the federal district court in Columbus against Darpan Management Inc.; five hotels the company owns and manages; and its owners, Darshan Shah, Vibhakar Shah and Prakash Patel.

One of the lawsuits addresses violations of the Fair Labor Standards Act’s minimum wage and overtime provisions for the hotel staff directly working for Darpan Management, and the other addresses similar violations for workers jointly employed by Fantastic Cleaning Ltd., a company that provided hotel staff to Darpan Management. The two lawsuits seek back wages and an equal amount in liquidated damages for 89 workers.

The hotels where the violations occurred, all operated by the Hilliard, Ohio-based Darpan Management, are the Baymont Inn & Suites, the Country Inns & Suites and two Four Points by Sheraton in Columbus, as well as the Holiday Inn Express & Suites in Reynoldsburg, Ohio.

“Darpan Management failed to meet minimum legal wage standards for housekeeping and other staff in these hotels. This practice, as well as failing to pay overtime and maintain accurate records, resulted in a substantial loss of income for these employees,” said George Victory, the Wage and Hour Division’s district director in Columbus. “Housekeepers were misclassified as independent contractors and paid by the room. In many cases, they did not even earn the minimum wage. These lawsuits should remind employers that the Labor Department is committed to ensuring that workers receive pay to which they are legally entitled.”

Investigators from the division’s Columbus District Office found violations of the FLSA’s minimum wage, overtime and record keeping provisions for 61 workers jointly employed by Darpan Management and Fantastic Cleaning. Fantastic Cleaning, which provided housekeepers, attendants and laundry staff for the hotels owned and operated by Darpan Management, misclassified the housekeepers, who were employees, as independent contractors. These employees were paid by the room and frequently did not earn enough to make the federal minimum wage, currently $7.25 per hour. Employees also were not paid legally required overtime at time and one-half the employees’ regular rate when they worked beyond 40 hours in a workweek. Investigators determined that a total of $42,288 in back wages is owed to the 61 workers jointly employed by Darpan Management and Fantastic Cleaning.

A second investigation found that 28 workers directly employed by Darpan Management as hotel staff are due $11,181 in unpaid minimum wage and overtime. The company failed to pay some workers for training time, resulting in minimum wage violations. It also only paid workers overtime after they had worked over 80 hours in a two-week period, as opposed to after 40 hours in a work week required by law. Hours worked were not computed accurately by the employer, resulting in uncompensated overtime. The investigation also found some employees were wrongly classified as exempt from overtime. Additionally, Darpan Management failed to maintain accurate and complete payroll records.

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 regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, “hours worked” includes all time an employee must be: on duty, on the employer’s premises or at any other prescribed place of work from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees’ wages, hours and other conditions of employment be maintained. The law also prohibits employers from discharging or discriminating against an employee for filing a complaint or for cooperating with an investigation.

The misclassification of workers as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers and to the entire economy. Memoranda of understanding with the IRS and state government agencies arose as part of the department’s Misclassification Initiative, with the goals of preventing, detecting and remedying employee misclassification. These memoranda will enable the department to share information and to coordinate enforcement efforts with participating agencies in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. More information is available on the department’s misclassification Web page at http://www.dol.gov/misclassifica....

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