Employees weren’t paid for 7 months because contractor couldn’t make payroll, feds say

Dozens of employees went without paychecks for more than seven months in North Carolina because a contractor couldn’t make payroll, federal officials said.

Utility Resource Services LLC, a storm response contractor in Wilmington, didn’t pay 51 employees for work they completed, according to a U.S. Department of Labor investigation.

Now, those workers are owed $168,796 in back wages that were recovered by the department, officials announced in a Jan. 23 news release.

Utility Resource Services misclassified its employees as independent contractors and didn’t keep up with payroll records, an investigation by the department’s Wage and Hour Division found.

McClatchy News was unable to reach the business for comment on Jan. 24.

The business is accused of placing responsibility on another company when the employer explained why it couldn’t make payroll, according to the Department of Labor.

The employer said it couldn’t afford to pay employees because “another company holding the contract for those services failed to pay them,” officials said.

Not paying the employees violated the Fair Labor Standards Act, according to officials.

“The law does not allow employers to pass along their financial hardships to their employees,” Wage and Hour Division District Director Richard Blaylock in Raleigh said in a statement.

“A customer’s failure to pay an employer for services does not affect their obligation to pay its employees’ lawfully earned wages on their regular pay dates,” Blaylock added.

Now that the DOL has recovered thousands in back wages for the 51 workers, the employees can claim the money.

When back wages are recovered, the Department of Labor keeps the money for three years, McClatchy News reported.

After three years, all unclaimed wages must go to the Treasury Department, according to the department.

In North Carolina, more than $2.5 million in wages are owed to 3,200 employees, the Department of Labor said in the news release.

The department recovered these wages from employers in the state, according to the agency.

People can check if they’re owed back wages here.

This story was originally published January 24, 2024 at 10:08 AM with the headline "Employees weren’t paid for 7 months because contractor couldn’t make payroll, feds say."

Julia Marnin

McClatchy DC

Julia Marnin covers courts for McClatchy News, writing about criminal and civil affairs, including cases involving policing, corrections, civil liberties, fraud, and abuses of power. As a reporter on McClatchy’s National Real-Time Team, she’s also covered the COVID-19 pandemic and a variety of other topics since joining in 2021, following a fellowship with Newsweek. Born in Biloxi, Mississippi, she was raised in South Jersey and is now based in New York State.