Permian Basin Oil Boom Raises Overtime Pay Issues

In West Texas, oilfield jobs are aplenty thanks to a boom in oil and gas drilling in the Permian Basin. Today, the Permian Basin accounts for approximately fourteen percent of the nation’s oil production. That is far more than the combined output of other Texas fields, including the Barnett or Eagle Ford Shale, and more than the Bakken Shale in North Dakota, another area that is booming for oilfield workers.  Many West Texas towns, most notably Midland and Odessa, have grown dramatically in this most recent oil boom. Amid the resurgent drilling, Midland officials estimate that the city’s population has grown by almost ten percent in the last couple of years, to about 120,000. The oil fields offer relatively high pay, starting at around $15 an hour.

However, this oil boom in the Permian Basin has a dark side. Oilfield workers are often required to work long hours under stressful and dangerous conditions. Oilfield contractors often face tight drilling deadlines, and rather than hire more employees, these companies choose to mandate long workdays for their oilfield workers. While oil and gas companies may require their employees to work long hours, they are also required to pay them overtime pay under federal law. Under the Fair Labor Standards Act, non-exempt employees (more on this term below) must be paid one-and-a-half times their “regular rate” for each hour worked in any week in excess of forty. The “regular rate” must include bonuses, shift differentials and other types of compensation received by the oilfield worker.

Often, oil and gas companies misclassify their employees to make them believe they are not entitled to overtime pay. Other employers tell their oilfield workers that they are not due overtime because they are paid a salary, rather than hourly. Whether an oilfield worker is exempt from overtime pay does not depend on how he or she is paid. Instead, eligibility for overtime pay is determined by the worker’s job duties and responsibilities. If you work in an oilfield job, you should not assume you are exempt from overtime pay based on your job title or because you are paid a salary. Indeed, most oilfield workers are not exempt from overtime pay.

Oilfield workers in the Permian Basin also face unpaid overtime issues involving their method of payment. Regardless of how an employees is paid (i.e. a “day rate,” straight time,” or a salary), the company must still pay its non-exempt oilfield employees one-and-a-half times the employee’s regular rate of pay for each hour worked above forty in a week.  If the oil and gas company does not pay one-and-a-half times the employee’s hourly rate and the employee is not exempt under the FLSA, a lawsuit may be filed to recover unpaid overtime.

Another issue facing oilfield workers in West Texas is travel time. When an oilfield employee is required to report to a specific place to receive instructions or to pick up tools and equipment, the travel from the designated meeting place to the job site should be counted as hours worked. Thus, a field inspector whose central office is in Midland but who travels from that office each morning and returns to the Midland office that evening to log his reports should be compensated for all such travel time. In this scenario, the only travel time that would not be counted would be the time the field inspector travels to and from the Midland office to his home.

An oilfield employee must be compensated for time spent traveling from the place of performance of one principal employment activity to the place of performance of another principal employment activity.  Thus, a maintenance technician who travels from a drill site in Garden City to another drill site in Stanton should be compensated for this time. If the worker performs more than forty hours of work in a week, he is entitled to be paid one-and-a-half times his regular rate of pay for any hours over forty. Oilfield workers are often incorrectly told that such drive time does not count for the purposes of overtime.

This blog post outlines only a few common overtime pay issues facing oilfield workers in the Permian Basin.  For more information on overtime pay issues, click here and here.

There is no question that many oilfield workers working for oil and gas companies in the Permian Basin, Barnett, Eagle Ford and Haynesville shale, and across Texas, are being shorted on overtime pay. If you work in the oil and gas industry in Midland, Odessa, Abilene, Garden City, Stanton, Big Spring, Andrews, Lamesa, Pecos, Fort Stockton, or Monahans, or anywhere in West Texas, and you have questions regarding unpaid overtime, call Josh Borsellino at 817.908.9861 or complete our online form. There is no cost for a free evaluation of your unpaid overtime questions.