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How to Avoid Costly Wage & Hour Pitfalls for Construction, Engineering & Landscaping Employers Featuring Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP

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Seyfarth Shaw attorneys Rebecca Bromet and Kyle Petersen discuss: ◾Litigation trends and recent settlements in the construction industry, and what they mean to you ◾Your greatest compliance risks (you may be surprised) and how to avoid them ◾The ‘riskiest’ times of day for construction, engineering & landscaping employers ◾Simple safeguards that can keep you out of court For more than 60 years, Seyfarth Shaw has been recognized as one of the “go-to” labor and employment firms for business by providing extraordinary, cost-effective results. EPAY Systems, Inc. has joined forces with Seyfarth Shaw to educate employers of distributed labor environments on how compliance risk can be minimized

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Page 1: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

How to Avoid Costly Wage & Hour Pitfalls for Construction,

Engineering & Landscaping Employers

Featuring Seyfarth Shaw LLP

©2012 Seyfarth Shaw LLP

Page 2: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Welcome

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, [email protected]

Today’s Host

©2012 Seyfarth Shaw LLP

Page 3: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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

distributed workforce

3

• Reduce your labor costs by 5% or more

• Keep you in control and in compliance

©2012 Seyfarth Shaw LLP

Page 4: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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?

©2012 Seyfarth Shaw LLP

Page 5: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Our Speakers

Kyle A. PetersenAssociate, Seyfarth Shaw LLPLabor & [email protected](312) 460 -5000

Rebecca P. BrometPartner, Seyfarth Shaw LLPLabor & [email protected](312) 460 - 5000

©2012 Seyfarth Shaw LLP

Page 6: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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.

©2012 Seyfarth Shaw LLP

Page 7: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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 Timeso Travel time

• Simple Safeguards

©2012 Seyfarth Shaw LLP

Page 8: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

©2012 Seyfarth Shaw LLP

Page 9: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

Page 10: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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)

©2012 Seyfarth Shaw LLP

Page 11: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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FLSA Cases in Federal Court1993-2012

©2012 Seyfarth Shaw LLP

Page 12: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

©2012 Seyfarth Shaw LLP

Page 13: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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.

©2012 Seyfarth Shaw LLP

Page 14: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

Page 15: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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?

©2012 Seyfarth Shaw LLP

Page 16: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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.

©2012 Seyfarth Shaw LLP

Page 17: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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.

©2012 Seyfarth Shaw LLP

Page 18: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• 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.

©2012 Seyfarth Shaw LLP

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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

(loading/unloading; 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

©2012 Seyfarth Shaw LLP

Page 20: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• 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.

©2012 Seyfarth Shaw LLP

Page 21: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Mistake #4

• We don’t pay employees to ride in a truck.

• Key issues:o Home to work, or vice versa, typically is not

compensableo Between job sites is part of the “continuous workday”

and must be paido If you don’t pay it, how do we track the time? Could be

a recordkeeping issue if a lawsuit is filed.

©2012 Seyfarth Shaw LLP

Page 22: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• Keep track of the job sites employees are working at each day.

• Do not stop the clock for travel between sites, unless there is a bona fide meal period taken during the travel time.

©2012 Seyfarth Shaw LLP

Page 23: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Polling Question

• Do you use an automatic meal period deduction?

Page 24: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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?

©2012 Seyfarth Shaw LLP

Page 25: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• 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.

©2012 Seyfarth Shaw LLP

Page 26: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

©2012 Seyfarth Shaw LLP

Page 27: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• Implement strong policies and set expectations.

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

• Train employees on your policies.

©2012 Seyfarth Shaw LLP

Page 28: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Polling Question

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

Page 29: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Mistake #7

• We call them “manager” or “foreman,” 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 foreman?

Easy case to certify as a collective/class action.

©2012 Seyfarth Shaw LLP

Page 30: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Mistake #8

• They are “engineers,” so they don’t qualify for overtime, either.

• Key Issues:o Performing work requiring advanced knowledge

in science or learning customarily acquired by prolonged course of study?

o Is the work intellectual? Do they have independent judgment and discretion?

o Do they have an advanced degree? Apprenticeships or on the job training doesn’t cut it.

©2012 Seyfarth Shaw LLP

Page 31: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Polling Question

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

Page 32: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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?

©2012 Seyfarth Shaw LLP

Page 33: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

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

• Review pay practices.

• Review exempt status classifications.

• Know state laws where you operate.

©2012 Seyfarth Shaw LLP

Page 34: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Mistake #10

• Paying undocumented workers in cash and off the books.

• Key issues:o Under the table payments run afoul of state and

federal recordkeeping and reporting requirements.o Minimum wage applies.o All hours worked must be paid, including overtime

pay.

©2012 Seyfarth Shaw LLP

Page 35: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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A Few Simple Safeguards

• Always pay hourly, non-exempt employees at least minimum wage for all hours worked and time and a half for overtime.

• Report and keep records of all hours worked and all wages paid.

• Ensure compliance with all employment-eligibility laws.

©2012 Seyfarth Shaw LLP

Page 36: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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EPAY Systems

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, Inc.

©2012 Seyfarth Shaw LLP

Page 37: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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EPAY -- In Time with You

Uniquely flexible

Mobile workforce,

union contracts,

multiple job assignments?

Complex pay rules?

No problem!

©2012 Seyfarth Shaw LLP

Page 38: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Reduce your labor costs

Reduce administration time in preparing payroll

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!

©2012 Seyfarth Shaw LLP

Page 39: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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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

©2012 Seyfarth Shaw LLP

Page 41: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Blueforce adapts to how YOU do business

Easy, Anywhere Time Tracking

©2012 Seyfarth Shaw LLP

Page 42: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Upcoming Education

• Public Demonstration: Time & Labor Management for the Distributed Workforce  o March 14: 10:00 cst 

Register at www.EPAYsystems.com

©2012 Seyfarth Shaw LLP

Page 43: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Upcoming Education

Compliance Webinar Series with Seyfarth Shaw LLP

• How to Avoid Costly Wage & Hour Pitfalls Employers in the Staffing and Security Industries. May 8: 12:00 cst

• 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

©2012 Seyfarth Shaw LLP

Page 44: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Thank You!

Kyle A. PetersenAssociate, Seyfarth Shaw LLPLabor & [email protected](312) 460-5000

Rebecca P. BrometPartner, Seyfarth Shaw LLPLabor & [email protected](312) 460-5000

©2012 Seyfarth Shaw LLP

Page 45: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Connect with us

Bonus!

Receive Seyfarth Shaw’s newly published report,

Trend Watch: The Savvy Employers’ Guide to Wage & Hour Lawsuits.

Connect with EPAY on:o LinkedIn – follow our company page at

EPAY Systemso Twitter -- @EPAYsystemso Sign up for our e- newsletter at

EPAYsystems.com

©2012 Seyfarth Shaw LLP

Page 46: How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

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Thank You!

©2012 Seyfarth Shaw LLP