Companies & Sectors
For Oil & Gas Companies, Rigging Seems to Involve Wages, Too

US Department of Labor investigations have uncovered hundreds of cases in which oil and gas workers, many involved in dangerous jobs, are being cheated of earnings


A ProPublica review of U.S. Department of Labor investigations shows that oil and gas workers – men and women often performing high-risk jobs – are routinely being underpaid, and the companies hiring them often are using accounting techniques to deny workers benefits such as medical leave or unemployment insurance.

The DOL investigations have centered on what is known as worker "misclassification," an accounting gambit whereby companies treat full time employees as independent contractors paid hourly wages, and then fail to make good on their obligations. The technique, investigators and experts say, has become ever more common as small companies seek to gain contracts in an intensely competitive market by holding labor costs down.

In the complex, rapidly expanding oil and gas industry, much of the day to day work done on oil rigs and gas wells is sub-contracted out to smaller companies. For instance, on one gas rig alone, the operator might hire one company to construct the well pad, another to drill the well, a third company to provide hydraulic fracking services and yet another to truck water and chemicals for disposal.

But for the thousands of workers in the hundreds of different companies, a single standard is supposed to apply: by law, they must be paid more than minimum wage and they must be fairly compensated for any overtime accrued.

In 2012, the DOL began a special enforcement initiative in its Northeast and Southwest regional offices targeting the fracking industry and its supporting industries. As of August this year, the agency has conducted 435 investigations resulting in over $13 million in back wages found due for more than 9,100 workers. ProPublica obtained data for 350 of those cases from the agency. In over a fifth of the investigations, companies in violation paid more than $10,000 in back wages.

One of those companies was Morco Geological Services, a company providing mud logging services for other oil and gas drilling companies. In 2013, the DOL found that Morco was paying some workers $75 daily for working virtually round-the-clock shifts. The company eventually agreed to pay $595,737 in back wages to 121 workers following the DOL's investigation. In another significant case, Hutco, a company providing labor services to the oil and gas industry, ended up paying $1.9 million to 2,267 employees assigned to work in Louisiana, Mississippi and Texas.

"The problem of misclassification has become pervasive," said Dr. David Weil, a former economics professor at Boston University who today heads the DOL's Wage and Hour Division. "Employers are looking for opportunities in a changing business landscape at the employee's expenses to cut corners as much as possible, leaving room for wage and hour violations."

Over the last decade, the oil and gas industry has seen tremendous growth. Between 2007 and 2012, when average employment in all U.S. industries fell by 2.7 percent, employment in the oil and gas industry increased by over 30 percent. According to research conducted by Annette Bernhardt, a scholar on low-wage work, 84 percent of workers in the oil, gas and mining industry were employed by contractors in 2012.

At the same time, the industry has also seen an increase in fatalities and injuries on the job. There is, so far, no evidence to suggest that these accidents are a result of inadequate training or overworked laborers. But accounts from other industries that heavily outsource work suggest those risks could be present.

For example, a 2012 investigation by ProPublica and PBS Frontline showed that cell phone carriers often contract out the dangerous job of climbing towers to smaller firms, which don't provide the necessary training and equipment to climbers. As a result, the death rate was 10 times higher among cell tower climbers than other construction workers.

Between December 2009 and November 2011, Troy Bearden worked on gas rigs in Pennsylvania and Colorado for Precision Air Drilling Services, a company that provides labor services for oil and gas exploration around the country. During that time period, Bearden worked an average of 12 hours a day, seven days a week, unloading and hooking up drilling equipment and maintaining it during operation.

Bearden was a full time employee of Precision Air Drilling, but the company classified him as exempt from the federal overtime statute, the Fair Labor Standards Act, and did not pay him time and a half for his overtime hours.

In 2011, Bearden and other workers filed a class action lawsuit against the company. Precision Air Drilling settled for $500,000.

"We know that the oil and gas industry has a reputation of paying high wages, but the economic reality often is they receive large paychecks because of the number of hours they're putting in," said Betty Campbell, the Deputy Regional Administrator for the Wage and Hour Division’s Southwest Region.

Labor lawyers specializing in wage disputes say the governing law – the Fair Labor Standards Act – is not easy to understand, interpret and comply with. As a result, they say employers can be unintentionally violating wage laws. But several investigations by the DOL show there are companies willfully dodging their responsibilities. The violations – accidental or intentional – are being committed by companies large and small, lawyers and labor officials say.

"You would think that some of the larger companies would be better in terms of compliance, what we're seeing is these violations are really rampant in this industry and affect all sizes of companies," said Shanon Carson, a lawyer with Philadelphia-based Berger & Montague, who has represented several oil and gas workers, including Bearden, in class action lawsuits.

The oil and gas industry is hardly the only industry to be afflicted with wage abuses. A recent investigation by McClatchy found that misclassification of workers was especially rampant in the construction industry, where companies flouted labor laws to evade taxes.

In the last few years the DOL has been cracking down on companies in several industries including construction, healthcare and hospitality. In recent years the Wage and Hour Division has had its funding increased by millions of dollars and upped its number of investigators by 300.

Federal wage and hour lawsuits have also seen an increase. Last year alone the number of Fair Labor Standards Act cases increased by 10 percent to 7,764.

"Anecdotally, I think the trend is similar if not more in the oil and gas industry simply because since the downturn in 2008 they've continued to grow and continued to expand and hire," said Steve Shardonofsky, a lawyer with Seyfarth and Shaw, a Chicago law firm that typically represents the industry.

Yet, worker rights groups and some lawyers believe there are likely thousands of mistreated workers unaware of protections under wage laws, partly because oil and gas activity primarily takes place in rural areas.

"Oil field workers are traditionally non-union. They're isolated in man camps and on their sites and it's hard [for union organizers] to get to them," said Alex Lotorto, union delegate for Industrial Workers of the World.

If you're an oil and gas worker and your employer pays you a day rate, classifies you as an "independent contractor" or violates wage laws in other ways, help our reporting by writing in with your story to [email protected].




Narendra Modi in US: Huge crowd waits for the Indian PM with excitement

The excitement among Modi fans as well as critics is unprecedented. A ticket to the speech has become a status symbol and those who have not acquired one plan to gather at Times Square to hear the Indian PM


(Image: Panorama Times Square by Kripa Chettiar)


There is never a dull day in New York City (NYC). Enthusiastic tourists, unperturbed residents going about their daily routine, crowded subways, the serenity of parks sitting in the middle of this hustle-bustle --  the astounding diversity of it all makes NYC one of the most interesting places to live in.
Few people know that George Washington, First President of the US, had his inauguration in New York City and not Washington DC. NYC has seen its fair share of history and it will bear witness to a historic event once again when Narendra Modi addresses the largest public meeting by an Indian Prime Minister outside India.
Madison Square Garden has a capacity of 20,000 people; the organizers expect 80,000-100,000 Indians from all over the US to gather in NYC to attend listen to Mr Modi. The event is ticketed out of security considerations and a few free admission tickets are also being drawn through a lottery.


(Image: Madison Square Garden  (outside view at night) by Kiran  Gavalli)

Over 400 Indo-American organizations like Overseas Friends of BJP, the Indian Students Association at Columbia and others have come together under the banner of “Indian American Community Foundation” (IACF) to organize the show. I learn that Mr Modi’s speech will be broadcast to live crowds in 20 prominent US cities including Washington DC, Houston, Chicago, Boston, Tampa Bay, Silicon Valley and Los Angeles. With three screens rented at the world-famous Times Square, surely the IACF is not leaving any stone unturned in making this a grand-grand affair.

BJP leaders Ram Madhav & OFBJP Convener Vijay Jolly were on a US tour last month to assess preparations. Miss America 2014, Nina Davuluri and PBS Newshour Weekend Anchor Hari Sreenivasan are expected to emcee the program.
A large number of US lawmakers and CEOs of top American companies are also expected to attend. Pranav Mistry, head of research at Samsung tweeted that he will be flying in from South Korea to attend. The excitement among Modi fans as well as critics is unprecedented. A ticket to the speech has become a status symbol and those who have not acquired one plan to gather at Times Square to hear the Indian PM.

Indian Americans are the third largest Asian American ethnic group after the Chinese Americans and Latin Americans, but tend to outpace others in terms of their socio-economic status. Indian Americans had the highest household income of all ethnic groups in the US. The three-million-strong Indian community in the US is a force to reckon with and Mr Modi’s approach to trade, administration and foreign policy has raised the expectations of NRIs and PIOs across the world.

The Indian diaspora is hopeful that this visit would infuse a breath of fresh air in Indo-US relations. Media reports in the US indicate that the Indian PM is expected to raise a jaw-dropping, eye-popping $1 trillion dollar investment from US in his upcoming visit. This would most certainly be a favourable development for the Indian-American community, who are hoping to invest more in the growing Indian economy, but have been unable to, so far, due to restrictions on foreign direct investment.

When the National Democratic Alliance (NDA) was in power in 1999, it had eased up the citizenship and visa norms for the overseas Indians. The Indian Constitution does not allow dual citizenship in any form but by introducing the OCI and PIO cards, the Vajpayee Government had made investing and doing business in India easier for the non-resident Indians. However, there are still several hurdles that prevent overseas Indians from investing freely. The Indian-American community is hoping that PM Modi will follow the footsteps of his mentor Vajpayee and help with the problems of the Indian diaspora with respect to investing in India.

Mr Modi’s use of technology to reach different segments of people in India has led to the expectation that Mr Modi may talk about leveraging the same technology to elicit greater participation of the overseas Indians in contributing to India’s development. With Mr Modi’s visit just a few days ahead, the growing excitement and anticipation is adding to the spice of living in Manhattan. Whether the Prime Minister lives up to the high expectations, remains to be seen.

(Neha Srivastava holds a Masters in Computer Science from Columbia University and currently resides in Manhattan. She actively writes on Indian politics, technology and social issues.)


BJP, Shiv Sena ends 25-year-old alliance in Maharashtra

While parting ways, the BJP has blamed Shiv Sena for the breakup. Now all eyes are on Congress and NCP alliance


The Bharatiya Janata Party (BJP) and its oldest ally Shiv Sena have finally decided to part ways ahead of the Maharashtra Assembly elections. This would make the elections in the state more interesting, as there are reports of a possible split between the ruling Congress and Nationalist Congress Party (NCP) headed by Sharad Pawar. However, both the parties have not taken any decision on whether to contest elections on their own or remain as partners.


Addressing a press conference in Mumbai, Devendra Fadnavis, state president of BJP blamed Shiv Sena for not showing any flexibility in seat sharing. There are 288 seats in Maharashtra Assembly and Shiv Sena had proposed to retain 150 seats for itself, 120 for BJP and rest for their alliance partners.


This follows the failure of talks between the two parties after Shiv Sena refused to accept BJP’s demand for contesting seats more than the last Assembly elections.


The development also comes just two days ahead of the last date for filing of nominations in the elections to the 288-member Assembly.




3 years ago

BJP ne kamalki dandi Se sena ki dhulai ki. Jo khud ke sathi yo ke nahuye woh auro ke KESHE honge.jaise EVM me cheat KI baat sunai ja rahi hai agar sahi hai to sena wale buri tarah pitenge

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