Basalt cleaning company sued by department of labor for payroll issues

by Nelson Harvey, Aspen Daily News Staff Writer

Alpine Valley Services now combating suit from feds, as well as by former workers
 
Just three months after a group of former employees sued the Basalt-based cleaning and maintenance company Alpine Valley Services (AVS) for alleged violations of state and federal labor laws, the firm is facing another lawsuit on some of the same legal grounds — the latest one filed by the U.S. Department of Labor.
 
The most recent lawsuit, filed in U.S. District Court in Denver on Monday, alleges that AVS failed to pay overtime wages to at least 20 employees who worked over 40 hours per week, as required under the federal Fair Labor Standards Act of 1938. The suit also claims that the company didn’t factor in things like time spent driving between jobs into overtime pay calculations, and didn’t maintain accurate time and payroll records.
 
The division’s suit against AVS claims that the company paid employees “piece rate” wages when they worked more than 40 hours per week, but failed to pay an overtime bonus. 
 
Piece rate wages typically compensate workers for the units of work they complete (rooms cleaned, articles of clothing produced, etc.) rather than for the hours they work. But under federal law, employees earning piece rate wages are entitled to the equivalent of the federal minimum wage — $7.25 per hour — and also have the right to be paid overtime if they work more than 40 hours per week.
 
“It is not illegal to pay a piece rate,” said Juan Rodriguez, the deputy regional director of public affairs in the Dallas office of the U.S. Department of Labor. “However, if an employee is paid a piece rate, he or she is still entitled to overtime premium.”
 
AVS president Tim Riggins said he had been expecting the lawsuit, which follows a two-year audit of AVS by the Denver district office of the department of labor’s wage and hour division.
 
The division has been conducting a wide ranging probe of Aspen’s hospitality sector, and on Monday announced that it had settled with 39 other local businesses over back payment of overtime wages, as well as filing a lawsuit against Aspen restaurateur Craig Cordts-Pearce (see related story).
 
Rodriguez said Cordts-Pearce said he is disputing the back wages and liquidated damages owed to his employees. AVS is likely taking the same position.
 
Riggins’ attorney, Shannon Henderson of the Denver-based employment law firm Friesen Lamb LLC, said AVS hadn’t yet decided whether to challenge the lawsuit or negotiate a financial settlement with the federal government. The suit seeks an unspecified amount of back pay and damages for the 20 named employees.
 
Since the audit of AVS began, Riggins said, his company has modified the way it pays piece rate wages to employees.
 
“The amount that we paid before was [a flat fee] based on a presumed amount of hours, but we subsequently created a process to measure exactly how much each employee is working, and we are now paying employees for each hour worked,” Riggins said.
 
A separate lawsuit filed last November by seven former AVS employees also seeks damages for non-payment of overtime wages, referencing a system that AVS allegedly used to pay workers an hourly wage during day shifts and a piece rate wage during night shifts, without ever paying overtime.
 
That suit, whose plaintiffs are separate from those named in the department of labor’s complaint, also accuses AVS of withholding tips and “drive time” compensation to punish employees, refusing to pay workers for a part of their work day, and firing five of the seven plaintiffs after they complained.
 
Attorneys for AVS have formally denied all those claims in court filings, and Riggins has alleged that many of the plaintiffs in the lawsuit were fired because they refused to comply with AVS company policies, such as turning in tips to a supervisor after one cleaning job at the request of a client.
 
Riggins also said that some of the former employees now suing AVS may have been motivated by anger they felt after the company was forced by the department of labor audit to change its piece rate payment method.
 
Before the audit, Riggins explained, AVS could afford to accommodate employees who wished to work more than 40 hours per week during Aspen’s high season by using the piece rate system to avoid paying too much expensive overtime.
 
Some workers, he explained, preferred to work as much as 70 or 80 hours per week during the summer and winter to make up for slow periods during the spring and fall. By only requiring AVS to pay straight time and not expensive overtime, the company’s old piece rate system allowed AVS to accommodate that in an affordable manner.

 
After the audit, however, when AVS was forced to pay overtime to any employee who worked more than 40 hours per week, the company responded by cutting the hours of employees who were working 70 and 80 hours per week, to save money.
 
“That resulted in a reallocation of work amongst the employees, which gave rise to the lawsuit that was filed by a subset of the employees,” Riggins said.
 
By cracking down on the piece rate system at AVS, Riggins suggested, the department of labor may have interfered with a policy that was well suited to Aspen’s resort economy.
 
“The backdrop here is a very seasonal business model; we are in the service sector, and we want policy to allow us to provide employees opportunities to take advantage of the seasonality,” Riggins said.
 
Yet Ted Hess, the Glenwood Springs immigration attorney who filed the lawsuit on behalf of the seven former AVS employees, said he was glad to see AVS forced to pay overtime for piece rate work.
 
“We’ve settled on the 40-hour work week in this country, and if the same firm is going to work people more than 40 hours, they have to pay them overtime,” Hess said. “That worker, if he or she wants to work more, can go out and get a second job.”

nelson@nelsonharvey.com