Two Iowa companies accused of labor law violations

The U.S. Department of Labor is taking two Iowa companies to court over allegations that they either failed to pay workers overtime or spent their workers’ retirement contributions.

The first of the two cases, filed this week in U.S. District Court for the Southern District of Iowa, alleges that Seth Woods, along with Woods Construction & Development of Riverdale, also known as Woods Estates, violated the federal Fair Labor Standards Act of 1938.

Woods Construction is primarily engaged in the business of residential construction and converts bare, unimproved building lots to completed housing that's ready for occupancy, in and around Des Moines.

The lawsuit claims that at least from April 2020 through April 2022, Seth Woods and the company misclassified employees as independent contractors and then repeatedly paid those workers their regular rate of pay for all hours worked, including time worked in excess of 40 hours per week.

Seth Woods is alleged to have actively managed and supervised the employees, handling the hiring and firing of employees, establishing work schedules, setting rates of pay, and dictating the pace and progress of all on-site construction.

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Although the workers were treated as independent contractors, the department alleges, they were all economically dependent upon the company for their employment, with some of the individuals having worked for Woods Construction for 12 years.

"These relationships were, and are, permanent, unless and until the workers voluntarily resign or are terminated," the department alleges, and none of the workers had the ability to work for any other companies. Woods Construction, the lawsuit claims, provided the workers with air compressors, pneumatic nail guns, nails, screws, air hoses, job trailers, saws, lumber, skid loaders and other equipment, which would conflict with their treatment as independent contractors.

The lawsuit does not state how many workers were affected by the defendants’ alleged conduct or how much money the company saved, at workers’ expense, through the alleged actions. However, it does list 15 workers who, during the two years leading up to April 2022, earned a total of $128,430 in unpaid wages.

According to the department, Seth Woods and the company either knew of, or showed reckless disregard for, federal laws that prohibit their conduct, and they have also refused to turn over payroll records sought by the government.

The Department of Labor is now seeking a court order forcing Woods and the company to pay the workers any back wages and damages to which they’re entitled, as well as an order compelling the defendants to produce the payroll records that have been requested by the government.

The defendants have yet to file a response to the lawsuit and could not be reached for comment.

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The second case, filed this week in U.S. District Court for the Northern District of Iowa, alleges T&W Services of Cedar Rapids and owner Timothy Wallander violated the federal Employment Retirement Income Security Act of 1974. T&W Services appears to be operating in Iowa as Tim's Heavy Duty Repair, according to court records.

The Department of Labor alleges that T&W Services allowed employees to make voluntary salary-deferral contributions to a retirement plan through payroll deductions. From at least May 2016 through December 2019, T&W workers participated in the plan, with Wallander acting as the retirement plan's fiduciary.

The department claims T&W and Wallander funneled employee retirement contributions into the company's general operating account and never routed the payments to the workers’ retirement plan. The money was then used to pay the company's expenses, the department alleges.

At least $9,291 was improperly used by the company and Wallander, according to the lawsuit. The failure to place that money into the retirement plan allegedly caused the company's workers to lose any potential earnings on their retirement-fund contributions.

Wallander and T&W have since "failed to restore the lost earnings" to the retirement plan, the Department of Labor claims. The lawsuit alleges that Wallander and the company are now "personally liable" for their "ill-gotten gains" and it seeks to have T&W Services and Wallander compensate the retirement plan for all of the potential losses.

The lawsuit also seeks an order barring Wallander and T&W from acting as a fiduciary for any ERISA-covered benefit plan.

The defendants have yet to file a response to the lawsuit. Iowa Capital Dispatch was unable to reach them for comment.

Find this story atIowa Capital Dispatch, which is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions:[email protected].