Opinion ID: 198264
Heading Depth: 2
Heading Rank: 2

Heading: The DOL Investigations

Text: 7 In 1989 William Pickett, Jr., an investigator from the Wage and Hour Division of the Department of Labor, initiated an investigation of Able Temps. Pickett first met with James Walsh, Able Temps' attorney, at Walsh's office on December 5, 1989. At this meeting, Walsh provided Pickett with the payroll records for Able Temps' in-house employees--that is, individuals who were employed by Able Temps as clerks, telemarketers, or in other in-house capacities. Able Temps acknowledged these in-house employees were its employees, within the meaning of the FLSA. Pickett examined the in-house employees' payroll records and determined that they were being paid in compliance with the FLSA. 8 Pickett informed Walsh that he also needed the payroll records of the temporary workers. Walsh stated that he had been unaware that Pickett would need the temporary workers' records, and that he did not have the information available at that time. In the absence of the temporary workers' payroll records, Pickett and Walsh proceeded to discuss in general terms whether the temporary workers were Able Temps' employees, within the meaning of the FLSA. Pickett gave Walsh a copy of the Wage and Hour Division's publication entitled Employment Relationship Under the Fair Labor Standards Act, which set forth a six-factor test used to distinguish between independent contractors and employees. 5 9 After discussing the general criteria used by the Wage and Hour Division to determine whether an employment relationship exists between a worker and an alleged employer, Pickett told Walsh that he suspected that Able Temps' temporary workers were its employees, within the meaning of the FLSA. Walsh disagreed with Pickett's position, and stated his belief that the temporary workers were not Able Temps' employees. As the meeting concluded, Walsh stated that he would contact Able Temps to try to obtain the temporary workers' payroll records. 10 After calling Walsh's office several times to inquire about the temporary workers' payroll records, Pickett received in early February 1990 a list of names and addresses for 109 temporary workers and a computer disk containing some of the requested payroll information. 6 Because the payroll records were incomplete, Pickett determined that Able Temps' record keeping practices were not in compliance with the FLSA. In April 1990, Pickett informed Walsh that although Pickett suspected that Able Temps had violated the FLSA's overtime provisions, the incomplete state of the payroll records did not allow him to confirm his suspicions. Pickett told Walsh that the Wage and Hour Division would like [Able Temps] to enter into a stipulation so that we cannot have this problem in the future. 11 On April 30, 1990, Able Temps and the DOL executed a stipulation which stated, inter alia, that Able Temps would maintain an accurate record of daily and weekly hours worked for all employees, and that it would henceforth comply with the Recordkeeping provisions of Section 11(c), the minimum wage provisions of Section 6, and the overtime provisions of Section 7 of the [FLSA]. The stipulation also stated that [n]either the execution of this Stipulation nor the performance by the Company of any of its obligations above shall constitute or be construed as an admission by the Company that it has violated any provisions of the Act and such execution and performance shall be without prejudice to the Company's position in this respect. Walsh testified that he believed the stipulation did not prejudice the position of Able Temps that the temporary workers were independent contractors, and that he communicated this opinion to his client.
12 In 1992 Pickett initiated a second investigation of the Woodses' temporary employment business, whose activities were now being conducted through an entity called Alternative Staffing, Inc. Pickett met on several occasions with John Bresnahan, Alternative Staffing's accountant. Pickett gave Bresnahan a copy of the DOL's pamphlet Employment Relationship Under the Fair Labor Standards Act, the same pamphlet he had given to Walsh in 1989, and informed Bresnahan that his determination had been and would probably be this time that [the temporary workers] were still employees of [Alternative Staffing]. Bresnahan disagreed with Pickett, asserting that Alternative Staffing did not exercise sufficient control over the temporary workers to be their employer. Bresnahan informed William Woods and James Walsh of Pickett's position, and of his (Bresnahan's) opinion that the temporary workers were not Alternative Staffing's employees. 13 In December 1992, Pickett began a protracted effort to obtain the payroll records of the temporary workers from Alternative Staffing. After having little success in obtaining the records, Pickett served Harold Woods with a subpoena duces tecum in March 1993. Woods failed to comply with the subpoena, and Pickett obtained an order from the district court in July 1993 mandating compliance. In September 1993, Pickett was promoted and Patricia Colarossi was assigned to continue the Alternative Staffing investigation. Colarossi continued to experience difficulty obtaining all the records requested in the subpoena. Based on the information that had been provided to her, however, Colarossi determined that Alternative Staffing had failed to pay 619 temporary workers overtime compensation during the period from September 1991 to July 1994. Colarossi also recommended, with her supervisor's concurrence, that Baystate and four members of the Woods family--William, Harold, Marlene, and Ann--be assessed civil monetary penalties for willful violations, pursuant to § 16(e) of the FLSA.