Labor Department investigating home builders for FLSA violations

The United States Labor Department is undertaking an investigation of some of the country’s top home builders. The top companies in home building are being investigated for violations under the Fair Labor Standards Act. The Fair Labor Standards Act governs issues like overtime pay, minimum wage and employing workers under the age of 18.

The Labor Department is investigating the pay practices of companies like Lennar Corp., D.R. Horton Inc., PulteGroup Inc. and KB Home and has served the companies with a wide request of information. The investigation has riled the feathers of some in the industry and some home building companies believe the Labor Department is overreaching.

While the Labor Department has not alleged any specific violations, the Department has asked the home builders to provide the names, addresses, pay rates, hours worked and Social Security numbers for all employees over the last two years. The Labor Department also asked for the names of all workers classified as contractors who worked for the companies over the last year.

Unions have complained for years about the pay and working conditions in the home building industry, and unions claim building companies pay below minimum wage and do not pay overtime consistently. Many large home builders use contracting companies to find carpenters and electricians to build their homes. Contractors usually do not have a unionized workforce.

Over the years, unions have pressured big home builders to ensure their contractors follow applicable labor laws. To determine whether general contractors may be liable courts may look at factors like authority to hire or fire, maintenance of employee records or control over work schedules.

Source: The Wall Street Journal, “U.S. hits builders with pay probe,” Melanie Trottman and Robbie Whelan, Sept. 8, 2011

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