1. Community Webinar www.insurancecommunitycenter.com Wage and Hour The class will begin at the top of the hour. There is no sound at this time. This class is being recorded. The recording can be found in the Community at Webinars Archive You can ask questions at anytime, type them into the chat box. Check your chat box for links to upcoming classes. This class is not approved for CE credit. Some things you should know: 1

2.  Presents Monthly Webinars Free to Community Members.  Community webinars are archived on the Community homepage under the right hand tab titled: Webinar Archive 2

3.  In addition the community has unique business networking opportunities.  Enjoy the Weekly Newsletter on a specific topic with a tip of the week; claim; quiz flash and articles 3

4.  One Flat Fee per Office includes  Monthly webinars approved for CE many states  Test and Learn  Audio Presentations on insurance topics  Checklists  Power point presentations for client and/or peer training 4

5. Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. The instructional materials provided by The Insurance Community Center and its authors is intended as a general guideline and any interpretations provided by The Community do not modify or revise insurance policy language. Information which is copyrighted and proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. The Insurance Community Center assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Insight Insurance Consulting laurie@insurancecommunitycenter.com marjorie@insuranceacommunitycenter.com www.insuranceacommunitycenter.com Copyright 2012© 5

6. Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR Insurance Community Center, LLC Director of Education 6

7.  Wage and Hour defined  Statutory issues and concerns  Litigation trends  Reduction of risk exposures  Insurance coverage marketplace 7

8. Wage and Hour Defined 8

9. The FSLA was enacted to regulate minimum standards Hours allowed per week / per month Minimum wage payment Applicability of overtime 9

10. Tipped employees $2.13 per hour if they claim a tip credit Under age 20 $4.25/hour first 90 days of employment Minimum wage $7.25 /hour 10

11. Note that state laws can increase these minimums, but cannot be lower than federal statutes Example: California is $8.00/hour minimum 11

12. FSLA does not limit either daily or weekly hours worked Except employees under age 16 A workweek is determined using 168 hours – not necessarily a calendar week 12

13. Hours is excess of 40/week must be paid at 1 ½ times pay rate Certain employees can be exempt Overtime is not automatically required for Saturdays, Sundays, holidays or regular rest days Overtime is not limited Paying a fixed salary does not discharge overtime obligations 13

14. On-Call Time Required to remain on call at employer premises is working An employee on call while at home is not working 14

15. Rest and Meal Periods Rest periods of short duration, usually 20 minutes or less, must be counted as hours worked. Lunch breaks are not counted as hours worked Must be completely relieved from duties 15

16. Sleeping Time and Certain Other Activities If required to be on duty for 24 hours or more may agree with employer to exclude 8 hours of sleeping periods 16

17. Lectures, Meetings and Training Programs Attendance need not be counted if 4 criteria are met Outside normal hours Voluntary, not required Not job related No other work is concurrently performed 17

18. Travel Time Determined based upon kind of travel To and from specific job location is not work time Additional time to travel to another town to work for one day is work time To and from job site is work time Travel away from home is work time (not including air, train, boat, bus, auto) 18

19. Executive, administrative, professional, outside sales and certain computer jobs Exempt if certain tests are met Salary must be at least $455/week Job titles do not determine exempt status It is the duties that determine exempt or non- exempt status Apply to “white collar” employees 19

20. Executive Exemption Salaried Management of the enterprise or a specific department or subdivision Direct two or more full-time employees Must have authority to hire or fire or provide suggestions for hiring, firing, advancement, promotion of other employees 20

21. Administrative Exemptions Salaried Office or non- manual work Management or general operations of employer or customers Exercise independent discretion or judgment 21

22. Professional Exemption Work must involve advanced knowledge and include work requiring exercise of discretion and judgment Must be in a field or science or learning Advanced knowledge must be acquired by prolonged, specialized, intellectual instruction Sub-category or creative professional must involve invention, imagination, originality or talent 22

23.  Computer Employee Exemption  Salaried or at least $27.63 /hour  Systems analyst, programmer, software engineer or similar skilled worker in computer field ▪ Application of systems analysis techniques and procedures ▪ Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications or a combination of above 23

24. Outside Sales Exemption Primary duty must be making sales or obtaining contracts Regularly engaged away from employers place of business 24

25. Highly Compensated Employees Performing office or non-manual work Compensation of $100,000 or more Must perform one or more duties as outlined in executive, administrative, professional categories 25

26. Blue Collar Workers The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy Rate of pay or salary status is irrelevant 26

27. From 2001 to 2006, federal court wage and hour class action filings doubled and the pace has continued to accelerate. 2010 – 6,825 federal wage and hour cases 90% of all state and federal class action suits in the US are wage and hour Average settlement $34,000,000 27

28. Lawyers tend to employ industry-specific approach One successfully sues – others follow Increase largely due to plaintiff attorney’s DOL encourages the filing of claims on claimant’s behalf and is highly engaged in labor code enforcement Data suggests that up to 70% of all employers are not in compliance 28

29. Two main claims Unpaid work time Not accounting for all of the time worked Misclassification Categorizing an employee as exempt 29

30. Five main subsets for unpaid work time litigation Deductions for meal periods Rounding Remote work Off-the-clock work Regular rate issues 30

31. Some companies automatically deduct meal periods without a method to verify whether employee worked all or part of the meal break This is not illegal, but can be very difficult to monitor Stop this practice Implement timekeeping software and monitor 31

32. New automation software has largely removed this situation DOL established a rounding regulation originally because of employees standing in line to clock in Employee time was always rounded down, not up Lawyers often use this to argue that rounding is more about saving the employer money 32

33. Work performed outside the visual observation of the employer Logging onto computers from home Using Ipads, telephones to access email at all hours Driving for work-related purposes Reviewing work or files at home Taking phone calls after hours 33

34. Employee works on premises but does not clock in Exposures include arriving early, skipping lunch, working late Enforcement of written policy Require employees to submit accurate, complete and signed time records Prohibit off-the-clock work (train managers to not even suggest this is acceptable) 34

35. Errors in factoring the value of bonuses and commissions for hourly employees who work overtime Non-discretionary bonuses must be calculated retroactively and include overtime in that calculation Use flat percentage of payUse software specific for this purpose 35

36.  Insurers have excluded FSLA claims since the beginning of EPLI coverage in the 1990’s  Some policies issued in the past 10 years have also excluded unfair business practices  In the past several years, those exclusions were augmented with a specific wage and hour exclusion 36

37.  Virtually all EPL coverage forms exclude wage and hour claims today  Sample exclusion:  This insurance does not apply to… any loss alleging violation of responsibilities, duties or obligations imposed under any Wage and Hour statute or regulation or any alleged unfair business practices act. 37

38.  Since the policies include defense costs within the definition of “loss”, the policy responds for neither defense nor indemnity of these claims  Many insurers will not extend coverage for either defense or indemnity  Endorsement may be “automatically” included 38

39. Coverage may be included as a sub- limit Defense only Defense and damages 25,000, $50,000, $100,000, $150,000, or $250,000 sublimit Separate deductible may apply 39

40. The policy will also apply restrictive language that will remove coverage for any claims of which management is aware prior to the inception of the policy 40

41.  Train employees and managers regarding hours worked  HR should create written procedures and implement protocols to review and audit employee practices  Create specific employee reporting process about timekeeping or payroll inaccuracy  Require employee certification of their records and payroll checks 41

42.  Three distinct means of identifying concerns  Employee complaint  Manager’s report  Audit results  Watch and correct employee habits such as taking work home, working during lunch breaks or arriving early to work 42

43.  The agent must search ALL available markets for this coverage  If none offer – advise in writing and obtain dated signature  If coverage is available, even if the premium for the policy is higher than the competition, offer all, describe coverage, obtain dated signature 43

44.  Implementation of wage and hour compliance program can reduce exposure to suits  Ongoing audits, enforcement and training is required  Supplement these risk reduction techniques with available insurance 44

45.  Laurie Infantino  laurie@insurancecommunitycenter.com laurie@insurancecommunitycenter.com  714 803 5830  Marjorie Segale  marjorie@insurancecommunitycenter.com marjorie@insurancecommunitycenter.com  714 206 9583 45

46. 46 Upcoming CE Classes FREE Community Class 10/10Directors & Officers Liability 10/18Homeowners 10/11 Sales Opportunities in Life & Annuities – Intro to Quick Life 10/17 Moving & Storage Join the Community TODAY at: www.insurancecommunitycenter.com