Oil and gas companies stiff 29,000 workers out of $40 million
Like beacons in the night, the flares burning over America's oil and gas fields drew tens of thousands of workers over the past decade, promising big paydays and new pickup trucks, even for those who had just graduated high school.
But in an industry sector recently plagued by plunging oil prices that have forced thousands of rigs to go idle, many of those workers have been feeling even more financial pain, having been forced to wait for their full paychecks.
More than 29,000 oil and gas employees have been stiffed over $40 million in back wages, according to findings from more than 1,100 investigations launched since 2012 by the Labor Department.
Despite booming industry profits and record oil and gas output – which together rejuvenated the country's economy and transformed the U.S. into the world's top oil and gas producer in 2014 and 2015 – companies misclassified their workers and failed to pay them required overtime, even as they put in long workdays in often dangerous conditions.
"We continue to find unacceptably high numbers of violations in the oil and gas industry," Betty Campbell, regional administrator for the Labor Department's Wage and Hour Division in the Southwest, said in a statement.
The most recent violations were announced last month, when more than 2,500 employees for four companies – Jet Specialties, Frank's International, Viking Onshore Drilling and Stream-Flo USA – were found to be owed $1.6 million in back wages.
Violations ranged from failing to pay production bonuses to wrongly considering employees as "exempt" from overtime requirements, paying them flat salaries regardless of how many hours they worked. The specific investigations of Frank's International and Stream-Flo USA began in the Northeast, and ultimately encompassed employees from Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, Utah and Wyoming, the Labor Department said.
"Employers who violate the law in their pay practices harm workers, their families and law-abiding industry employers," Campbell said.
The Wage and Hour Division's inquiries into the energy industry began in the agency's Northeast regional offices in Pennsylvania. The state, sitting atop the Marcellus Shale formation, was one of the country's biggest fracking hubs, and jobs nationwide eventually surged past 191,000 on the extraction side alone by the end of 2012, not including service companies and other related sectors. By comparison, there were around 179,000 such employees last month.
Investigators soon discovered the sector was rife with wage problems.
"Investigations in the [Northeast] region in 2012 revealed that the violations were widespread," says Robin Mallett, a Wage and Hour Division district director in Houston, whose office led two of the most recent investigations in March. The initiative rapidly spread west, involving offices in Chicago and Texas.
Mallett stopped short of saying whether the violations were systemic. But jobs were often not nearly as lucratively as they seemed, she says.
"Even though they have a reputation, the industry, for paying high wages," Mallett says, "sometimes the economic reality of it is the workers are receiving these hefty paychecks simply because of the sheer number of hours that they're working – really it was not that high a rate of pay."