The Fair Labor Standards Act (FLSA) protects US workers by ensuring they are paid for all hours worked, including overtime. Complying with the FLSA is a big part of construction payroll. Failure to comply can result in severe consequences in terms of fines and even criminal prosecution. According to the Department of Labor, employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,000 for each such violation. Willful violations of the FLSA may result in criminal prosecution and the violator fined up to $10,000. A second conviction may result in imprisonment.


Arcoro’s partner, myHRcounsel™, has compiled some of the most common overtime and wage violations in the construction industry to help you avoid the pitfalls. 

Work Completed Off the Clock 

As a money-saving tactic, some construction companies will neglect to record the full amount of time worked by their employees. They may fail to compensate workers for downtime, rain delays or time spent working before or after a shift which results in shortchanging their workers. Any time an employer does not pay their employees for all compensable hours worked the workers have a right to bring a claim to recover their unpaid wages. 

For example, 11 heating, ventilation and air conditioning (HVAC) contractors in Central Florida paid over $113,000 in compensation for back wages and liquidated damages after denying 169 workers their total wages.  

Automatically Deducting Time for Meal Breaks 

Sometimes companies will automatically deduct time for meal breaks, even though they require their employees to complete work tasks during these breaks. All construction workers are entitled to be paid fairly during this time, and if the employer denies overtime pay that is owed, they may be held accountable for up to double the amount of wages improperly withheld. 


Unpaid Travel Time 

Although construction companies do not have to pay their employees for the time it takes them to drive to work in the morning or home again at the end of the day, some employers do not think they need to pay their workers for travel required by the job. However, construction companies are legally obligated to pay their employees for time spent traveling between jobs and from shops to work sites and back or during mandatory group transport to a job site.  

Paying Comp Time or Paid Time Off for Overtime Hours 

Rather than pay construction workers via payroll, some employers will try to circumvent overtime laws by compensating employees for the extra hours they work with “comp time” or paid time off (PTO). In the United States, it is illegal for any private employer to pay workers anything other than their wage at time-and-a-half for overtime work. If a construction company is not paying an employee actual money for their overtime hours, they may be able to file a claim to recover up to double their unpaid wages. 

Here’s a particularly egregious example. The owner of several concrete supply and construction companies must pay workers $987,591 in overtime back wages and damages after the U.S. Department of Labor found that they plotted to withhold overtime pay from 99 employees.  

Misclassification as an Independent Contractor 

Construction companies that misclassify their employees as independent contractors (1099 workers) can be held responsible for exploiting vulnerable workers by denying them the wages they are owed.  

A Houston welding and fabrication company that was misclassifying employees as independent contractors, thus denying them their total wages and benefits, must now pay over $178,358 in back wages for 27 employees. 

Straight Time for Overtime 

Paying the same hourly rate for all hours worked, including hours over 40 per week, is referred to as paying straight-time pay for overtime. This is a common, yet blatant, form of wage theft in the construction trades, and it is almost always illegal. When a construction worker’s hours exceed 40 in a single work week, they are owed at least time and one-half their regular rate for all additional hours under the overtime pay laws. 

Day Rate Pay with No Overtime 

As the name implies, day-rate employees are paid on a per-day basis rather than being paid an hourly or piece rate. Nevertheless, while day-rate employees are paid a flat rate for the entire day, the law still requires that they be paid overtime if they work more than 40 hours per week. 

The U.S. Department of Labor recovered $283,000 in wages and liquidated damages from a landscaping contractor who denied 19 New Hampshire employees their overtime pay. 


The first step in pay compliance is accurate, automated time tracking like ExakTime by Arcoro.   

Regardless of the time solution you use, it’s important to understand the law. Arcoro customers can avoid costly payroll missteps by leveraging the power of our partnership myHRcounsel™. With this partnership all Arcoro customers have access to: 

  • legal advice from experienced employment attorneys.   

For customers needing more help, enhancements are available including:  

  • Attorney drafted employee handbook & company policies 
  • Lien & bond legal consultation 
  • Commercial collections 
  • Construction law documents.  

Contact us to learn more about Arcoro and myHRcounsel and how we can help you avoid potential compliance issues in paying and managing your construction workforce.  

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