Wage & Hour Update: Priorities, Common Violations, And More Paul J. Siegel Long 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

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! Paul J. Siegel Jackson Lewis LLP 58 South Service Rd., Ste. 410 Melville, New York (631)