The oilfield industry is known for its demanding work schedules and unique compensation structures. Unfortunately, these factors often lead to common mistakes in calculating overtime pay, which can result in costly litigation for employers. In this blog post, we will explore some of the most frequent errors made by oilfield employers and how these mistakes can impact workers.

Independent Contractor Misclassification

One of the most prevalent mistakes in the oilfield industry is misclassifying workers as independent contractors instead of employees. This misclassification can have serious implications for overtime calculations, as independent contractors are not entitled to overtime pay under the Fair Labor Standards Act (FLSA). However, if a worker is improperly classified and should be considered an employee, they are entitled to overtime pay for hours worked over 40 in a workweek. A worker is not an independent contractor merely because the company he works for calls him one.  Instead, courts use a multi-factor test to determine whether a worker is an independent contractor or an employee.  

Key Indicators of Misclassification:

• The employer controls the worker’s schedule and tasks.
• The employment relationship is continuous and of indefinite duration (the longer the employment relationship, the more likely the worker will be found to be an employee).
• The worker is economically dependent on the employer.
• The work performed is integral to the employer’s business.

Exempt Status Misclassification

Another common mistake is misclassifying employees as exempt from overtime pay. To be exempt, employees must meet specific criteria under the FLSA, including earning a minimum salary and performing certain types of job duties. Many oilfield workers do not meet these criteria, yet employers often mistakenly classify them as exempt, thereby avoiding overtime payments.

Common Misclassified Positions:

• Field engineers
• Foremen
• Supervisors
• Field managers and assistant managers

Day Rate Payments

Paying workers a day rate is a common practice in the oilfield industry, but it often leads to overtime pay errors. Employers may assume that paying a fixed amount per day exempts them from paying overtime. However, the FLSA requires that day rate employees still receive overtime pay for hours worked over 40 in a workweek.

Paying Salaries to Field Workers

Some employers pay their field workers a salary and incorrectly assume this exempts them from overtime. However, salary alone does not determine exemption. Unless the employee meets the duties test for exemption under the FLSA, salaried field workers are entitled to overtime pay.

Straight Time Pay Systems

Straight time pay systems, where employees are paid the same hourly rate for all hours worked, regardless of overtime, are another common mistake. The FLSA mandates that employees receive one and a half times their regular rate for overtime hours.

Not Paying for Travel Time

Oilfield workers often travel between job sites, and employers frequently overlook compensating for this travel time. Under the FLSA, travel time that occurs during normal working hours must be compensated. Additionally, if travel is a principal activity of the job, it should be included in the calculation of hours worked.

Travel Time Guidelines:

• Compensate for travel during the workday.
• Include travel time in overtime calculations when applicable.

Conclusion

Avoiding these common mistakes is crucial for oilfield employers to ensure compliance with the FLSA and prevent costly litigation. If you believe you have been denied rightful overtime pay, contact us at Borsellino PC to discuss your case. Our experienced team is dedicated to fighting for the rights of oilfield workers. We have represented hundreds of oilfield workers and are not afraid to sue large companies.  For a free consultation, call Josh Borsellino today at 817.908.9861, email him here, or fill out this contact form.  Borsellino PC handles unpaid overtime claims on a contingency fee basis, meaning our firm charges you nothing to file your case and will only be paid if we successfully recover money for you.