Bankrupt Contractor on Hook for $475,000 to Settle Overtime Claims

San Francisco, CAA bankrupt contractor cannot escape violations to California overtime laws. California overtime pay is a requirement protected by California overtime laws, with an effective ombudsman that ensures violators are brought to justice.

According to a recent story from the Associated Press (AP), Building Materials Holding Corp. (BMHC) will be required to fork over nearly half a million dollars to settle an overtime dispute involving 85 workers who, in a lawsuit filed last year, accused the firm, together with several subsidiaries, of withholding overtime pay and other wage payments.

BMHC, which is based in Idaho, filed for Chapter 11 bankruptcy protection in June. A judge overseeing the Chapter 11 proceedings approved the settlement for the workers, many of whom were from California.

The AP report said that the lawsuit accused the company and its various subsidiaries, San Francisco-based SelectBuild Construction among them, of dropping the ball on state and federal laws by failing to pay laborers higher rates of pay for additional hours worked.

The lawsuit also claimed that the defendants withheld payment for time spent in transit between job sites and forced workers to understate actual hours worked on time sheets.

A little more than half of the settlement—$244,000—will be shared amongst the 85 employees in three states. Another $231,000 will be used to pay legal fees involved.

California Employee Overtime a Basic Right

At the time the settlement was approved by Chief US Bankruptcy Judge Kevin Carey at his court in Delaware last month, 11 additional workers decided to opt out of the settlement, pursuing instead individual claims in bankruptcy court.

It was reported that debtors in the case with claims against the bankrupt firm were disputing the workers' allegations and feared that litigation could disrupt the company's reorganization. There are hopes that the company will emerge from bankruptcy protection and continue to build homes.

That said, legal professionals representing the disgruntled workers stated the hope that the firm would pay more attention to its legal obligations and compensate its workers fairly in the future.

BMHC was one of the largest homebuilding subcontractors in the US before it filed for Chapter 11 early in the summer.

While overtime is a basic right for employees, overtime is one of the hardest costs to forecast, let alone control. Many employers will do anything to avoid paying overtime, including allowing employees time off in lieu. However, union contracts may require monetary overtime—and the laws of the State require that employees be duly compensated for additional time worked.