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Per Diem Payments and Overtime

By   |  Day Rate Workers  |  No Comments  |  Posted on May 19, 2015  


While it may seem as if cases in which wage theft occurs are isolated, the fact of the matter is, if you’re one of those who lost money, it does matter to you, a lot. According to a recent report released by the U.S. Department of Labor, in 2014 alone they were able to recover nearly $241 million in back wages for American workers, thanks to a crackdown on pay abuses in a number of industries, including the oil and gas industry. Companies use per diem payments as a way to avoid paying overtime.

Unfortunately, that’s not everything workers lost; that’s just the amount of back wages that employers either agreed to pay or were ordered to pay after government investigations. Some studies have shown that the wage theft problem is far worse than that. Federal and state government agencies have been cracking down on this problem in recent years.

Oilfield workers are very important to the country and the economy; they work hard and put in long hours, and no one should be allowed to deny them their hard-earned wages. Yet, it’s remarkable how many methods companies can come up with to avoid paying overtime to their employees. Among the most common methods seem to be telling workers they are “salaried” and they’re not entitled to overtime, or purposely misclassifying workers as independent contractors to get them to work off the clock.

Per Diem Payments as Wage Theft

Another way companies have been trying to get away with not paying overtime, which requires payment of 1½ times an employee’s regular rate of pay for every hour they work over 40 in a week, is by using “per diems” to substitute for regular pay. This method has become increasingly popular, but it shouldn’t be.

A per diem rate is itself not illegal. Companies have traditionally used it as a way to pay for lodging, meals, and other travel expenses. It is not supposed to be used as a substitute for an employee’s full compensation.

According to a recent report, more and more Texas companies are using per diems to attract workers to their companies while trying to control costs. They offer regular wages, and then add the per diem as an enticement. Workers get it every day, and it’s basically part of their regular pay. For example, in high demand jobs, such as those in the oil and gas and construction industries, a company will offer the same wages as another employer, but offer a higher per diem to bring them aboard.

Workers like the idea at first, because the money is essentially “tax-free,” but they actually could end up losing a lot of money, since employers usually don’t include the per diem to calculate overtime. That practice is illegal, and the Department of Labor is cracking down. The fact of the matter is that employees are entitled to overtime pay on all of their wages, including the per diem portion. Given that some per diem amounts in some parts of Texas can be as much as $150.00 per day, that can amount to a lot of wage theft. For example, if a worker makes $20.00 per hour and gets a $150.00 per diem for a 50-hour workweek, they are actually losing as much as $75.00 per week in overtime pay, which is great for the company, but not for that employee.

Contact a Lawyer For Per Diem Payments Lawsuits Today

If you suspect that you may have been denied some wages to which you are legally entitled, please contact the attorneys of Josephson Dunlap LLP today. We have helped hundreds of oilfield employees throughout Texas seek compensation from even the most intimidating companies, and we will stand up for your rights at a hard-working employee.

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