Feds Sue Kinder Morgan for $1 Million in Unpaid Overtime

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The Department of Labor has filed a lawsuit against Houston's Kinder Morgan that seeks more than $1 million in what it says is unpaid overtime owed to "4,500 current and former operators, technicians, maintenance workers, laborers and administrative nonexempt employees."

Kinder Morgan provides services to the oilfield industry and the feds say they have been working their employers overtime without paying.

"There is no excuse for denying workers their rightful wages, and this lawsuit demonstrates that the department will use all available enforcement tools, including litigation and penalties, to ensure accountability and compliance with the law," Secretary of Labor Hilda L. Solis said in announcing the move.

The suit was filed against Kinder Morgan and Kinder Morgan Energy partners, the Labor Department said, "after an investigation by the Labor Department's Wage and Hour Division found systemic violations nationwide resulting from the employers' failure to include certain bonuses in overtime pay calculations for these employees."

The suit is filed in federal district court here in Houston.

Federal law requires that "covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week," the department said. "Employers must also maintain accurate time and payroll records."

We've asked the company for a reaction; we'll update if we get one.

Update: Kinder Morgan calls the lawsuit "disappointing and unnecessary."

The United States Department of Labor ("DOL") filed a lawsuit against Kinder Morgan on Friday, Feb. 4. The dispute is narrow and somewhat complicated, but it comes down to whether Kinder Morgan's annual incentive plan is discretionary. The answer to that question in turn determines whether bonuses should be considered part of an hourly employee's "regular pay" when calculating the time-and-a-half overtime pay rate. We maintain that the incentive plan is discretionary, because whether bonuses are paid, and the level of such payments, are within the discretion of management and the boards of directors. In short, bonuses are not part of regular hourly pay. DOL maintains that the bonus program is not discretionary and therefore bonuses should have been taken into account in establishing the wage rate used for calculating overtime pay for hourly employees. We believe that the company followed the law and that overtime pay has been properly calculated. While we believe that we complied with the law, beginning in February 2010 we began calculating in accordance with the current DOL interpretation.

We found the lawsuit both disappointing and unnecessary, as we have cooperated with the DOL throughout its investigation and did all that we could reasonably do to resolve this matter amicably. We remain ready to cooperate with the DOL and hope to be able to resolve this matter in a reasonable manner. If we are unable to do so, we plan to vigorously defend our position in court.

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