Wage & Hour Update: Priorities, Common Violations, And More

Paul J. SiegelLong Island Regional Office

November 6, 2008

Presentation At PLUS

Annual Conference

Overview

Topics for today:

• USDOL Enforcement priorities

• Common employer mistakes and how

to avoid them

• Avoiding civil money penalties and

liabilities

Insider’s Look At DOL

The Wage and Hour Division has a very

broad enforcement mission:

•Enforcing and interpreting federal labor

standards

•Prevailing wages on federal contracts

•Labor provisions of some non-immigrant

visa programs (e.g., H-1B, H-2A)

•Child labor

•Migrant agricultural labor

Enforcement Priorities

2008 USDOL Enforcement Priorities:

• Gulf Coast

• Hazardous Occupation Order 12 (power-

driven paper products machines)

• Misclassification of employees as

independent contractors

• DWHaT (Disclosures, Wages, Housing,

and Transportation)

• Recidivism

Common Employer Mistakes

And How To Avoid Them

Common Employer Mistakes

Mistake #10:

Failing to compensate employees for

travel time during the workday

How to avoid this mistake:

• Pay close attention to events that start

and conclude the workday

• If an employee must report to a

particular location before engaging in

travel to a work site, or following travel

at the end of a shift, that travel time

may be compensable

Common Employer Mistakes

Mistake #9:

Failing to combine hours an employee works at all

of an employer’s work sites

How to avoid this mistake:

• Have a centralized payroll system that captures

and aggregates time at all sites (including site

to site travel)

• Have a system: Do not rely on supervisors or

employees to remember to follow timekeeping

rules

• Corporate separateness does not necessarily

preclude a finding of joint employer or

integrated enterprise

Common Employer Mistakes

Mistake #8:

Failing to pay prevailing wages on

contracts with the federal government

How to avoid this mistake:

• Ask up front whether service or

construction work fulfills a federal

contract

• Federal contractor rules are different

than the FLSA

Common Employer Mistakes

Mistake #7:

Child labor laws must be followed!

How to avoid this mistake:

• If a workplace has a baler, compactor or

hazardous equipment and it employs

workers under 18, workers and

supervisors must be trained regarding

what tasks the minors can and cannot

perform

• Post child labor notices and check them

periodically

Common Employer Mistakes

Mistake #7 (continued):

Violating the child labor hours of work

standards

How to avoid this mistake:

• Training for workers and supervisors

• Have names of 14 and 15-year-olds

appear in different font or color on

schedule, and consider automating the

scheduling to prevent inadvertent

scheduling errors

Common Employer Mistakes

Mistake #6:

Failing to pay non-exempt workers for pre-

shift and post-shift work activities

How to avoid this mistake:

• Require workers to report all time they work

• Be aware of time spent on meetings,

training, and donning and doffing protective

gear

• Avoid at-home work on computers,

Blackberries, etc.

• Determine whether workers have the

opportunity or incentive to perform work

away from the workplace

Common Employer Mistakes

Mistake #5:

Failing to pay overtime properly to salaried non-

exempt workers

How to avoid this mistake:

• Keep contemporaneous records of all time

worked by salaried non-exempt personnel

• Do not rely solely on exception reporting

• If you use the fluctuating workweek method (a

premium of one-half of the regular hour rate,

all compensation divided by all hours of work),

be sure that employees understand that their

salary covers all hours worked, and do not

deduct for short weeks

Common Employer Mistakes

Mistake #4:

Failing to include all required compensation

in a non-exempt worker’s regular rate

How to avoid this mistake:

• All compensation must be included unless

excluded by law

• Non-discretionary payments based on a

set formula, such as commissions,

production bonuses, and shift

differentials, must be included

• Recalculation is required, even if an

administrative burden

Common Employer Mistakes

Mistake #3:

Overextending the administrative exemption

and misusing white collar exemptions

How to avoid this mistake:

• Is judgment and discretion truly being

exercised as to matters of significance?

• Is the position a problem-solving role?

• Does the job description reflect essential,

exempt duties (and are they the primary

duty)?

• For specific positions, seek guidance in the

examples provided in the regulations, WHD’s

opinion letters, and the case law

Common Employer Mistakes

Mistake #3 (continued):

• Salaries cannot be reduced due to

quantity or quality of work (only as

permitted in the regulations)

• A supervisor’s primary duty must be

managing, not doing what his or her

subordinates do

• State wage-hour laws (especially

exemptions) often differ from federal

law!

Common Employer Mistakes

Mistake #2:

Exposing your organization to class actions

• Ensure that policies prohibit off-the-clock

work and mandate accurate

recordkeeping

• Control the process for modification of

time records to “correct” errors

• Budgets and time-records are separate

concepts

• Adopt a “safe harbor” policy, with a

problem resolution procedure

Common Employer Mistakes

Mistake #1:

Misdesignating employees as independent

contractors

How to identify risks

• Are ICs performing same work as

employees?

• Are ICs doing work for which other

businesses in the industry use employees?

• Are ICs performing essential production

work?

• Do ICs lack the freedom to select own

personnel?

• Do Ics work for others?

Civil Money Penalties

Civil Money Penalties

Two most common scenarios for CMPs:

• Minimum wage / overtime violations

Repeated or willful violations

Up to $1,100 per violation

• Child labor

Up to $11,000 per employee

Up to $50,000 per violation causing

death or serious injury to a minor (2008

change)

Up to $100,000 per repeated or willful

violation causing death or serious injury

to a minor (2008 change)

Thank you!

Thank you!

Paul J. SiegelJackson Lewis LLP

58 South Service Rd., Ste. 410Melville, New York 11747

(631) 247-4605siegelp@jacksonlewis.com