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Labor Officials: Hundreds Of West Texas Oil Workers Underpaid

ALBUQUERQUE — Violations of fair labor standards have resulted in hundreds of oilfield workers in West Texas and New Mexico being underpaid by more than $1.3 million, according to a review by federal officials.

Most of the violations involved improper payments of overtime. In some cases, employees didn’t receive an overtime premium because they were misclassified as independent contractors, according to the U.S. Labor Department's Wage and Hour Division.

There were also instances of employers not paying for time spent working off-the-clock.

The findings stem from an enforcement initiative launched by the division last year in the Southwest. It was similar to a two-year effort that reviewed companies operating in the Marcellus Shale in Pennsylvania and West Virginia. In that case, the division recovered nearly $4.5 million for 5,310 workers.

“There is a misconception in the industry that because workers typically earn more than the minimum wage, they are being paid legally. That is not always the case,” Cynthia Watson, an administrator for the division’s Southwest region said in a statement Monday.

The U.S. has drastically cut imports and transformed itself into the world's biggest producer of oil and natural gas in recent years. In 2014, domestic production increased to nearly 9 million barrels per day, marking the largest increase in volume since record-keeping began more than a century ago, the U.S. Energy Information Administration said Monday.

Federal energy officials say most of the increase came from plays in North Dakota, Texas and New Mexico, where hydraulic fracturing and horizontal drilling have been used to tap shale formations.

In New Mexico, the boom has resulted in consistently lower unemployment rates in those areas that include the oil-rich Permian Basin.

The structure of the oil and gas industry is partly to blame for the wage violations, federal officials said.

David Weil, administrator of the Wage and Hour Division, said contracting and subcontracting in the industry has obscured the traditional relationship between employers and employees.

“The more layers between the primary corporation and its many subcontractors, the more likely there will be wage and other labor violations as businesses seek to lower labor costs and maximize profit margins,” he said.

According to the division, investigators found more than $317,000 in back wages were owed to 449 employees of Texas-based Desta Drilling due to overtime miscalculations. The company did not immediately return a phone message seeking comment.

Federal officials said they will continue reaching out to workers and employers — from drilling companies to trucking and other support businesses — to ensure the Fair Labor Standards Act is upheld. (AP)