Puerto Rico Security Guard Company to Pay $166K For Misclassification of Employees as Independent Contractors

A San Juan, Puerto Rico company that provides security guard and patrol services throughout Puerto Rico misclassified employees as independent contractors and violated the Fair Labor Standards Act by not paying legally required overtime to 243 security guards. Optimus Investigations Corp. was under investigation by the U.S. Department of Labor’s Wage and Hour Division who then took the case to federal court.

The court ordered the security guard company to pay the employees a total of $166,764 — $83,382 in back wages and an equal amount in liquidated damages; refrain from future FLSA violations and retaliation against employees; and provide employees written and oral notice of their FLSA rights in Spanish and English. If Optimus fails to make the payments, the court can appoint a receiver, who can liquidate the company’s assets and take other action to ensure payment.

A Department of Labor representative said, “These employees, who are responsible for guarding the safety and security of others, work long hours for low pay and are vulnerable to exploitation.” The misclassification of employees as independent contractors often cheats workers out of wages and benefits to which they are entitled under the law, subsequently hurting our economy. Misclassified employees — considered by the employer to be independent contractors or some other nonemployee status — are often denied minimum wage, overtime, workers’ compensation, unemployment insurance and other workplace protections. Employers often intentionally misclassify workers to reduce labor costs and avoid employment taxes. By not complying with the law, these employers derive an unfair advantage over competitors who pay fair wages, taxes due and ensure wage and other protections for their employees. These practices lower standards for all workers, especially in highly competitive markets and industries where employers try to reduce overhead — often at the expense of their workers.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages.



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