A Guide to Combating Wage & Hour Liability
-
Upload
kendal-peterson -
Category
Documents
-
view
229 -
download
4
description
Transcript of A Guide to Combating Wage & Hour Liability
March 24, 2011
A Guide to Combating Wage & Hour Liability
Reid Bowman, Esq.
• General Counsel of ELT.
• Over 25 years of HR and labor employment law experience, primarily working with multi-state employers.
• Designs strategic ethics, wage & hour, discrimination prevention, and employment law compliance programs.
Garry Mathiason, Esq.• Chairman of the Board, Littler Mendelson.
• Mr. Mathiason has personally supervised the Firm's attorneys on over 1,000 employment and labor litigation matters and currently defends employers in complex wage & hour and discrimination class action cases
• Mr. Mathiason oversees Littler’s Corporate Compliance and Ethics Practice Group and originated the Contingent Workforce Practice Group. He serves as Chair of the Open Compliance and Ethics Group's (OCEG's) Employment and Labor Law Domain writing legal requirements and guidelines for business.
• Mr. Mathiason has been identified by the National Law Journal on its list of the 100 most influential attorneys in the nation.
Agenda The Numbers Tell the Story
Greater Enforcement by the DOL
Key Risk Areas
Practical Compliance SolutionsTraining Solutions that Tangibly Reduce Risk and Deliver a ROI.
The Numbers Tell the Story
A Question For You
Do you consider wage and hour issues to be the number one employment law risk facing your organization?
Yes
No
Of the 4,152 employment class action lawsuits filed in federal or state court in 2010, 3,785(or approx. 91%) were wage and hour related complaints!
Wage & Hour Class/Collective Actions:
The Flood Continues
• Non-government wage and hour settlements in 2010 remained high. For the top 10 settlements in 2010: Total: $241MAverage: $22MMedian: $14.8M
Wage & Hour Lawsuits Becoming Stronger Focus for the Plaintiff’s
Bar
The Beat Goes On
What does this all mean? More class/collective action players for the future.
*http://www.uscourts.gov/Statistics/JudicialBusiness/JudicialBusiness2010.aspx
The Department of
Labor
New Challenges and Old Problems
Changes at the DOL
• New Secretary of Labor, Hilda Solis: “Make no mistakethe DOL is back in
the enforcement business.”
• Added 250 new investigators in FY ’10, increasing the total number of Investigators by 1/3
• Expected to add 90 more in ‘11 with a $20M increase in enforcement budget.
And More Enforcement to Come
DOL’s FY 2012 Budget Request:“To support the Department’s theme of expanding efforts to deter and detect worker misclassification WHD proposes an increase of 107 FTE and $15,223,000 as part of an initiative to detect and deter the inappropriate misclassification of employees as independent contractors and strengthen and coordinate Federal and State efforts to enforce labor violations arising from misclassification….
The requested funding level will allow WHD to employ approximately 1,200 investigator FTE - approximately 15 percent more than employed at the FY 2010 level.”
http://www.dol.gov/dol/budget/2012/PDF/CBJ-2012-V2-03.pdf
DOL’s Enforcement Approach
– From 4-26-2010 DOL Regulatory Agenda
“Plan, Prevent, and Protect”
• Encourages employers to “find and fix” violations before the DOL Investigators arrive.• Employers are expected to design and implement plans to avoid violations of workplace laws.•According to the DOL: "[a]ny employers that seek to exclude workers from the FLSA's coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it.”Bottom line: DOL making obligation to “find and fix” an affirmative duty; absence of those action viewed as a compliance failure.
DOL Wage Settlement Database Now Available
Online!• DOL now publishing, on a quarterly basis, an
updated database regarding closed investigations.
• Includes, for example:Name of employerNumber of FLSA violations /employerAmount of “agreed to” back wagesType of violation.
http://ogesdw.dol.gov/search.php
DOL’s Policy and Enforcement Initiatives
• Targeting certain industries, such as healthcare, for missed and interrupted meal periods and failure to aggregate hours worked.
• Directed recidivism audits for past violators.
• Targeting “mis-designated” independent contractors.
Upcoming DOL Record Keeping Rule
• In April 2011, DOL is expected to issue its Record Keeping Rule. Would require explanation of exempt vs. non-
exempt classification decision.May also include some Independent Contractor
notifications.
DOL’s Expanded Use of All Available Remedies
• Liquidated damages for repeat or willful violations.
• Limited use of DOL Release (Form 58) to “full investigations.”
• Aggressive use of civil money penalties for repeat and willful violations.
• 3-year back wage period for repeat and willful violations.
A Question For You
In the past 12 months, has your organization been faced with a wage & hour claim from current or former employees?
Yes
No
I don’t know
Key Risk Areas
Employee Classification
• Employee vs. Independent contractors?
• Paid employee vs. unpaid interns? See DOL’s guidelines on interns:
http://www.dol.gov/whd/regs/compliance/whdfs71.pdf
• Exempt vs. Non-Exempt (from overtime pay requirements).
Pay Practices
1. Auto Deductions for Meal Periods.2. Deductions for Short Meal/Rest
Breaks.3. Exception Time Reporting.4. Rounding.5. Early Arrivers and Long Punching.
Pay Practices (con’t)
6. Pre- and Post-shift Computer Logging and Other Activities.
7. Discrepancies Between Time Records and Other Electronic Records.
8. Remote Work.
9. Garbage In, Garbage Out.
10. Failure to Include Bonuses, Incentives, and Commissions in Overtime Calculation.
11. Editing Time Records.
Editing Time Records
• Missed punches can be a source of potential risk if employees are not asked to supply actually start or end times.
• Managers should be trained regarding the limited circumstances in which time records can be edited.
• When time records are edited, employers should record the reason and, if possible, the employee's consent to the edits.
• Payroll personnel should be provided with training regarding how to handle missing time records including missed punches.
Practical Compliance Solutions
A Question For You
In 2011, my organization is spending more on wage and hour compliance and risk management:
Yes
No
I don’t know
What is aFaragher/Ellerth Defense?
• In certain areas of the law, courts historically have recognized something called the “doctrine of avoidable consequences,” which prevents a party from recovering damages where the injured party could have avoided harm through reasonable efforts.
What is aFaragher/Ellerth Defense?
• Used for 10+ years in Title VII matters, following US Supreme Court decisions in Faragher and Kolstad.
• Courts have now started to recognize the validity of this defense in wage and hour actions.
Timekeeping policies should appear in handbooks, ethics policies, and collective bargaining agreements.
Require signed receipt to demonstrate knowledge of policies and procedures.
Element 1:Adopt and Publicize Clear
Timekeeping Policies and Procedures
Adopt and Publicize Clear Timekeeping Policies and
Procedures• Recommend policies should: Define working time with examples
that target most common misconceptions.
Address meal periods, and instruct employees on what to do if a meal period is interrupted or missed.
Prohibit off-the-clock work but advise that in the event work is performed, employees will be paid.
Require immediate reporting of off-the-clock work within 72 hours of occurrence.
Element 1: (cont’d)
• Recommend policies should:Provide a mechanism for employees to report off-
the-clock work.Require advance authorization for overtime
except in the event of an emergency.Advise employees that no one is authorized to
require off-the-clock work.Require employees to report violations of
timekeeping policies within 72 hours of occurrence and require employees to pursue alternative complaint mechanism by calling 1-800 number if no response received from initial complaint within 5 business days.
Element 1: (cont’d)Adopt and Publicize Clear Timekeeping
Policies and Procedures
A Question For You
Regarding wage and hour training, in the next 12 months, my organization is:
Already conducting training
Planning to implement training
Considering training
I don’t know
• Train both managers and employees regarding FLSA and state law wage and hour requirements and Company timekeeping policies and procedures.
• Training should involve interactive learning model with examples targeted toward common violations (i.e., missed meal periods, improper supervisory instructions, and volunteers).
Element 2:Training
When To Train
• Should be integrated into employment relationship.
• Should be done regularly to reinforce policies and understanding:– Employee orientation.– New manager training.– When there are new legal
developments or policy changes.– Every 2 years.– More often for highly specialized
compensation jobs.
Who Should Be Trained
• Employee training should focus on the basics, such as:
– Review of key policies.– Define hours worked.– No off-the-clock work.– Meals and rest periods.– Rules relating to OT.– Reporting errors and misconduct.
Who Should Be Trained
• Manager training should focus on employee topics, plus:
– Compliance responsibilities.– Handling employee complaints.– Manager misconduct.– Prohibition against retaliation.– Good record keeping practices.
Training Solutions
• Live Training:– Instructor led and tailored to audience (i.e., senior leaders).– When highly customized materials required.
• E-learning: • 40%+ (and growing) of employers today chose e-learning solutions.
– Interactive and engaging – hands on experience.– Creates electronic records and employee acknowledgments. – Significant cost savings– Easy to reach bulk of managers and employees – repeatedly.– Content can be duplicated for evidentiary purposes.
– Ensures exposure to policies and procedures. – View a demo: www.elt-inc.com.
Online Training Advantage
• Online training is consistent and repeatable.• As a result, can be presented to a jury or
mediator exactly the way learner saw it. Clearly demonstrates that if after training
employee violated policies, it was NOT because of lack of understanding, but deliberate attempt to circumvent employer’s pay rules.
ELT’s Wage and Hour Course
• Wage & Hour educates your workforce about the basics of the law---translates critical messages into real-life stories that your employees will understand and remember.
• Smart Logic automatically configures the course to federal and state law where the learner works
• Developed by , and its nationally recognized team of wage and hour experts.
• Specifically designed to help establish powerful affirmative defenses.
• Endorsed by
ELT’s Wage & Hour Course
Employees must certify that they
Have completed the course; Have reviewed your
organization’s wage & hour and payroll policies and procedures, and will abide by them; and
Know who to call with any questions or concerns.
Training ROI
• Prevent inadvertent federal and state law violations.
• Prevent claims:• Policies are clear and irrefutable.• Plaintiff credibility?• More difficult to certify a class.
• Reduce damage awards and potentially build a good faith defense.
• Build a culture of compliance.
• Require non-exempt employees to review time records.
• Daily review is ideal but something less frequent can be used provided employees have the opportunity to review actual records.
• Provided records are correct, require employee certification as to accuracy.
Element 3:Certification of Time
Records
Certification of Time Records• If records are not correct, require
employee to identify any inaccuracies to permit immediate correction.
• Require employees to review accuracy of paycheck and, if systems permit, certify secondary review. On-line tools make this level of review more available.
• Certification should cover off-the-
clock work and meal periods.
Element 3:
• Most employers already have some type of complaint mechanism in place…..but
• Existing complaint mechanisms often do not specifically reference wage and hour issues.
• Revise existing complaint mechanism to ensure it specifically addresses wage and hour issues.
• Publicize complaint mechanism in handbooks, open door policies, collective bargaining agreements, ethics handbooks, and other employee communication channels.
Element 4:Adopt a Robust Complaint
Mechanism
• Train managers and payroll personnel to be alert to payroll concerns and treat any complaints with same level of attention as other employee relations complaints (i.e., sexual harassment.)
• Promptly investigate payroll concerns using same techniques and controls as other types of internal complaints.
• If determined to be appropriate, take prompt and effective remedial steps.
• Effective remediation may require payment of back wages.
Element 4: (cont’d)Adopt a Robust Complaint
Mechanism
• Adopt an audit protocol to ensure employees and managers are following policies and procedures.
• Audit protocol should be designed to be discoverable in the event of future litigation as part of Company's good faith defense.
• Promptly investigate and remediate any discovered violations.
• Implement appropriate discipline for managers and employees in the event of violations.
Element 5:Audit Time Records for
Compliance
• In some reported cases, employers have been criticized for quickly disciplining employees for timekeeping violations but not doing so for manager violations.
• Manager misconduct is increasingly being characterized as “wage theft”.
• Promptly address Manager misconduct. Where confirmed, consider it a serious violation of the Company's most important policies.
Element 6:Impose Appropriate Discipline for Policy
Violations by Employees and Managers
• Timekeeping policies and procedures should be reinforced through available communication means.
• Annual letter to all employees. • Newsletters. • Postings. • Refresher training.
Element 7:Periodic Reminders
The Case that Proves the Point
Kuebel v. Black & Decker (U.S.) Inc.*• Court dismissed hourly employee’s claim of unpaid wages and overtime (and
potential class claims), premised on an allegation that he was discouraged from reporting all his time worked.
• In dismissing claims, Court cited with favor Black & Decker’s compliance efforts including written wage and hour and work time reporting policies (including wage-related polices in its code of ethics), an anti-retaliation policy for wage-related complaints, and an anonymous hotline for reporting wage violations.
“Live the Code” program which included written directives to employees to keep accurate business records, like time cards, and to report any instructions to the contrary.
*2010 U.S. Dist LEXIS 46533 (WDNY 5/12/10) {NOTE: case now on appeal to Second Circuit.)
A Question for You…
If your organization may be interested in purchasing ELT’s online training solutions, and you would like an ELT Sales Executive to follow up with you, type "YES" in the box below.
Interested in our solutions?
[email protected] │ 877.358.4621
Additional substantive questions?
[email protected]@elt-inc.com
Subtitle