how to avoid costly wage and hour pitfalls for staffing and security employers

How to Avoid Costly Wage & Hour Pitfalls for Staffing and Security

Employers

Featuring Seyfarth Shaw LLP

©2012 Seyfarth Shaw LLP

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Welcome

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, [email protected]

Today’s Host


EPAY Systems -- designed to meet the needs of your complex,

distributed workforce

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• Reduce your labor costs by 5% or more

• Keep you in control and in compliance

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Today’s Discussion

Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000.

Are you at risk?

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Our Speakers

Alexander J. PassantinoSenior Counsel, Seyfarth Shaw LLPLabor & [email protected](202) 463-2400

Arthur J. RooneyPartner, Seyfarth Shaw LLPLabor & [email protected](312) 460 - 5000

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Ask Your Questions

To ask a question, simply type your question in the “Question”

box on the right side of your screen.

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Overview: Trends for 2013

• Litigation trendso Continued aggressive plaintiffs’ bar and agency

• Increased agency enforcement

• Compliance Risks – Surprise!!!

• “Riskiest” times of day.

o Pre & Post Shifto Meal Times

• Simple Safeguards


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Trends

• Aggressive plaintiffs’ law firms have created consortiums, jointly filing class/collective suits

• In recent years, plaintiffs’ firms have employed an industry-specific approach when it comes to wage & hour litigationo One firm successfully targets an industry and is

quickly followed by other plaintiffs’ firms who target other employers in that industry


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Trends Continued

• Aggressive outreach efforts to identify potential plaintiffso Outside companies sending email blasts to employees of

target companieso Ads on Facebook, Twitter

• 7064 lawsuits filed under the Fair Labor Standards Act (“FLSA”) in 2012 o Record high numbero State wage-and-hour actions raise this number significantlyo Of all state and federal class or collective actions filed in the

U.S., vast majority are wage and hour claims

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Top 10 Private W&HSettlements in 2012

1. $99 Million – Novartis (misclassification of pharma sales reps)

2. $40 Million – Merrill Lynch (wage claims related to merger)

3. $35 Million – H&R Block (timeliness of payments)

4. $21 Million – Rite Aid (misclassification of ass’t store mgs)

5. $20 Million – City of New York (misclassification of police sergeants)

6. $19 Million – Robert Half (misclassification of recruiters)

7. $15.6 Million – HSBC Bank (misclassification of bankers, managers, & specialists)

8. $15.5 Million –Conoco Phillips (failure to provide meal breaks)

9. $14 Million – Family Dollar (misclassification of store managers)

10. $12.9 Million – Spearmint Rhino Cos. Worldwide, Inc. (independent contractor misclassification)


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FLSA Cases in Federal Court1993-2012


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WHD Continues To Be Aggressive

• Increase in targeted investigations in low-wage/high risk industries

• Increase in corporate-wide investigations

• Assessment of liquidated damages, penalties, and other sanctions

• Grass Roots Campaign:o Continued push of “Bridge to Justice” and “We Can Help”

Partnering with community and worker organizations to increase employee awareness

Referring certain cases to private attorneys to initiate litigation


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Increased WHD Enforcement Capabilities

Number of Wage and Hour Division Investigators, 1987 to 2011

951 952

970

938

835

804 800809

942 942 938949 945

898

850

788773

751

732

865

781

731

893

950

1,006

600

650

700

750

800

850

900

950

1,000

1,050

1,100

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Applied Econom ic Strategies , us ing U.S. Departm ent of Labor, Wage and Hour Divis ion data.


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Compliance With The FLSA Is Not Easy

• The Fair Labor Standards Act was enacted in 1938o Minimum Wageo Overtimeo Child Labor

• Amended 44 Times

• Well Over 50 Statutory Exemptions

• Over 700 Pages of Regulatory Text

• 14-15 Public Chapters of Field Operations Handbook

• 350+ Opinion Letters Since 2000

• Does Not Preempt State Law

• Generally Cannot Be Overruled by CBA©2012 Seyfarth Shaw LLP

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Mistake #1

• Employees have to pay for their own uniforms no matter what.

• Key issues:o Are the uniforms generic or elaborate?o Do employees authorize the

deduction?o Does the deduction make their pay fall

below minimum wage?o Are they responsible for cleaning the

uniform?


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A Few Simple Safeguards

• Receive authorization for the deduction (if required by state law).

• Do not count a uniform as a credit against wages.

• Make sure that the cost of uniform deductions does not reduce pay below minimum wage.


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Mistake #2

• Requiring individuals to show up at work and wait to clock-in.

• Key Issues:o How long in advance of the shift are they

required to arrive at the job site or central location?

o Are employees free to use this time for their own purposes?

o Are they disciplined or prevented from working if they do not show up at the required time?

o Waiting to work- you don’t have to exert yourself to be working.


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• Only require people to be at work by their scheduled start time.

• If employees are required to be at work by a certain time and employees are there by that time, pay the employees starting at that time.

• Only discipline individuals who are tardy for their scheduled start time, not the early arrival requirement.


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Mistake #3

• Not including all required time in the calculation of hours worked

• Key issues:o Pay for pre- and post-shift activities (donning &

doffing; etc.)o Is the activity “integral and indispensable” to

employees’ principal work activities (and therefore compensable)?

o Do the employer’s rules or the nature of the work require it?

o If an employee continues to work voluntarily after the end of his shift and the employer knows or has reason to know, that time is considered working time


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• Do not let hourly employees start working until they are on the clock (but don’t require them to be there before they are allowed to clock in).

• Pay attention and make sure that people are not working after they clock out.

• Have employees verify each pay period that they have been paid for all time worked.


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Mistake #4

• We don’t pay employees for training.

• Key issues:o Do you require employees to attend company-

sponsored trainings? Or is it voluntary?o Does the training provide employees with skills that are

transferrable? Or is the training specific to your company?

o If you don’t pay it, how do we track the time? Could be a recordkeeping issue if a lawsuit is filed.


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• If the company-sponsored training is mandatory, pay for it.

• Otherwise, make sure that both managers and employees understand that the training is voluntary.o Policies should clearly state that the

training is voluntary


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Polling Question

• Do you use an automatic meal period deduction?

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Mistake #5

• Automatically deducting for meal periods, even if not taken.

• Key issues:o Do they actually take a break?o Completely relieved from duty?o If they get interrupted during their

meal period, are they paid for the interruption?


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• Implement a policy that only uninterrupted meal periods are unpaid.

• Implement a system to allow employees to document if they did not take or did not get their full meal period.

• Keep records.

• Have employees verify that any time deducted each pay period is accurate.


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Mistake #6

• Failure to take a strong stand against off-the-clock work

• Key issues:o Failure to properly compensate for all hours worked

= most frequently cited violation by WHD (in terms of numbers of employees affected) in the course of its investigations

o A number of states have recently enacted anti-wage theft laws


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• Implement strong policies and set expectations.

• Train managers to look out for and report off the clock work.

• Train employees on your policies.


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Polling Question

• True/False: All managers are exempt and do not need to be paid overtime.

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Mistake #7

• We call them “manager” or “supervisor,” so they don’t get overtime.

• Key Issues:o Recommendations for hiring/firing given

particular weight?o Too much work like those who are

supervised?o Sufficient pay distinction between hourly

employees and manager or supervisor?

Easy case to certify as a collective/class action.


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Mistake #8

• The employee didn’t work any overtime for a single employer, so no overtime pay is due.

• Key Issues:o All hours worked on behalf of staffing

company must be included in determining hours worked, even if worked by different employers

o Employees likely to be jointly employed by staffing company and client

o Reimbursement/charge rates and practices have no impact on overtime obligations


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Polling Question

• True/False: Employers can avoid all of these overtime problems simply by using independent contractors.

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Mistake #9

• Labeling everyone an independent contractor.

• Key issues:o How much control is there over their work?o How long have they been working with

you?o Are they providing a special service or

skill?o Does the worker invest in their own

equipment and materials? Provide their own employees?

o Is the work an integral part of your business?


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• Auditing pay practices & exempt status at direction of counsel.

• Review pay practices.

• Review exempt status classifications.

• Know state laws where you operate.


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Mistake #10

• Not paying separated employees all of their earned “wages.”

• Key issues:o Did the employee use all of his or her

earned vacation time?o Did the employee earn a bonus or

commission, or even a portion of one?o How are vacation days, commissions,

and bonuses “earned” under your policy?


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• Your benefit plans should clearly describe how employees earn vacation, commissions, and bonuses.

• In many states, you need to ensure that employees do not forfeit any earned vacation, bonuses, or commissions upon separation.

• Make sure you know the requirements of each state where you have employees, because there are differences.


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EPAY Systems

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, Inc.

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EPAY -- In Time with You

Uniquely flexible

Mobile workforce,

union contracts,

multiple job assignments?

Complex pay rules?

No problem!

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Reduce your labor costs

Eliminate erroneous pay calculations, time rounding, and management inconsistencies

Eliminate buddy punching

Biometric time clocks with camera and finger print reader

Reduce costs associated with paper checks. Save an average of $2.87 per pay period/per employee.

or more!

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• Audit Trails• Overtime• Meal Breaks• Pay Differentials• Privacy and Security• Reduce Workers

Comp Claims• Did you have an

accident free day?

Minimize Compliance Risk

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Upcoming Education

Compliance Webinar Series with Seyfarth Shaw LLP

• Preparing for the Affordable Care Act (ObamaCare). May 22: 12:00 cst

• Reduce Costs with Pay Cards. June 19: 10:00cst

• California Wage & Hour Labor Law--Avoiding Common Pitfalls with a Distributed Workforce. June 26: 12:00 cst

• How to Avoid Costly Wage & Hour Pitfalls for Healthcare Employers with a Distributed Workforce. Sept 25: 12:00 cst

• How to Avoid Costly Wage & Hour Pitfalls for Employers in the Hospitality Industry. Nov 6: 12:00 cst

Register at www.EPAYsystems.com

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Thank You!


Alexander J. PassantinoSenior Counsel, Seyfarth Shaw LLPLabor & [email protected](202) 463-2400

Arthur J. RooneyPartner, Seyfarth Shaw LLPLabor & [email protected](312) 460 - 5000

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Connect with us

Connect with EPAY on:o LinkedIn – follow our company page at EPAY Systemso Twitter -- @EPAYsystemso Sign up for our e- newsletter at EPAYsystems.com

Connect with Seyfarth Shaw LLP:o Wage & Hour Litigation Blog

http://www.wagehourlitigation.com/o Twitter - @SeyfarthShawLLP


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Thank You!


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