U.S. Labor Department wins back pay for bakery staff

Sep 12, 2012

DETROIT (AP) - The U.S. Labor Department says a Detroit-based bakery chain has agreed to pay $63,000 in back wages to 21 employees whom it wrongly classified as independent contractors.

The agency said Wednesday that its investigation found that Sheila's Bakery LLC committed violations of the Fair Labor Standards Act at its three locations.

The agency says the misclassification of the workers deprived them of federally mandated overtime pay at time-and-a-half when they worked more than 40 hours in a week. Instead, they got a flat hourly rate or a flat weekly salary of $340 to $400.

The government says it loses substantial amounts of income, Social Security and Medicare tax payments because of the misclassification of employees as contractors.