Oil field company fights back after federal government says it misclassified employees

Sept. 2, 2011 at 4:02 a.m.

A Victoria federal judge has granted an unprecedented legal move for a private business to sue the U.S. Department of Labor.

Although governmental entities such as the Department of Labor usually have immunity, which stops people from suing the government or its employees, U.S. District Judge John Rainey in July granted Gate Guard Services' request to sue the department, allowing the oil service company to make the first legal punch.

"Typically, it's the other way around, the Department of Labor suing to assert that a company owes back wages or is not properly classifying workers, but in this case, the Department of Labor made a terrible mistake," said attorney Annette Idalski. "Our client believes they correctly classified their employees as contract workers."

Idalski and Daniel Pipitone, of the Chamberlain Hrdlicka law firm, are representing Gate Guard Services.

Elizabeth Todd, regional director for the Office of Public Affairs for the U.S. Department of Labor, declined to comment about the case.

The judge's decision comes during a lengthy legal battle between the federal government and the Corpus Christi-based company.

In November 2010, the department claimed Gate Guard, which has contractors in the Victoria area, was in violation of the Fair Labor Standards Act of 1938. The department ordered the company to compensate about 400 contractors at the federal minimum wage for 24 hours each day they are assigned to an oil field operation with no deductions for sleep time, meal time or the time the contractors spend doing personal activities.

Additionally, the department ordered the company to pay $6.19 million in owed back wages, which includes overtime payments, accumulated from July 2008.

But company lawyers said the workers are contractors not employees; therefore they are not in violation of any laws.

Gate Guard Services, which contracts with people and/or entities to log vehicles that enter and depart oil fields during drilling and production operations, denied that about 400 workers could be identified as employees under FLSA standards based on the nature of their jobs, according to the lawsuit, which was filed in November.

Each worker provides his own tools, equipment and camper or recreational vehicle to sleep in, is allowed to sleep at least five to eight hours per 24-hour period, is paid between $100 and $175 a day, has three uninterrupted meals a day and is allowed to pursue personal activities when no vehicles are present, according to a declaratory judgement action filed by Gate Guard in November.

The judgment action also contends Gate Guard provides no instruction to the contractors regarding the manner in which their work is performed and otherwise has no contact with the contractors other than interacting with them while servicing the provided septic tank every week or every other week.

Typically, if an employer does not settle with the Department of Labor after violations have been found, the department sues the company.

Instead of waiting for the federal agency to file a lawsuit against them, Gate Guard Services filed the declaratory judgment action in November to seek a court's ruling of whether findings made by the U.S. Department of Labor regarding the company were justified.

A declaratory judgment action determines the rights of parties involved without ordering anything to be done or awarding damages.

Their offensive strategy seemingly paid off.

Between February and March, the Department of Labor filed a separate lawsuit against the oil field services company in federal court in Corpus Christi and requested the court dismiss Gate Guard's declaratory judgment action in Victoria, claiming the court lacked subject matter jurisdiction because the department's decision was not final.

Also in March, the Victoria court granted Gate Guard's motion to consolidate the two lawsuits in Victoria based on the first to file rule, with Gate Guard named as the plaintiff and the Department of Labor, the defendant.

Nearly four months later, the Corpus Christi court denied the department's motion to dismiss.

Currently, lawyers on both sides are gathering evidence before the lawsuit proceeds.

The trial is scheduled to begin in Victoria in March.

The plaintiff's attorneys remain optimistic about the outcome of the case.

"We would not have brought the lawsuit against the Department of Labor if we didn't think we were right and if we didn't think we should win," said Pipitone. "But how the lawsuit is eventually resolved is in the hands of Judge Rainey and the jury."



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