American Conference Institute’s 17th National Forum on
Wage & Hour Claims and Class Actions
January 24, 2013 — Miami, Flor...
Leadership Changes at DOL
• Secretary of Labor Hilda L. Solis resigned in early
January 2013. President Obama has not yet ...
Semi-Annual Regulatory Agenda
• The Fall 2012 agenda, issued December 24, 2012,
contains five items involving WHD:
– Amend...
Regulatory Agenda (cont’d)
– FLSA Right to Know: Agenda for first time
acknowledges that this rulemaking contemplates
addr...
Regulatory Agenda (cont’d)
– FLSA Child Labor Hazardous Occupation
Order No. 7: WHD seeks information regarding its
non-en...
New Guidance From DOL
• Two new (Deputy) Administrator’s Interpretations:
– AI 2013-1 (Jan. 14, 2013): Addresses several i...
DOL Amicus Briefs
• DOL’s web site lists nine amicus briefs filed in
wage and hour cases since January 1, 2012
(through mi...
DOL Amicus Briefs (cont’d)
– In treating tips beyond the tip credit as “earnings”
subject to garnishment, the employer vio...
DOL Amicus Briefs (cont’d)
– Undocumented workers may sue for FLSA
minimum wage and overtime for hours worked, and
immigra...
Enforcement Priorities
• Independent contractor misclassification:
– Memoranda of Understanding with 13 states and the
IRS...
Targeted Industries
•
•
•
•
•
•

Restaurants
Health care
Car washes
Janitorial (especially in hotels and motels)
Construct...
Issuance of WH-58 Forms
• Form WH-58 both a receipt and release of future claims.
• Prior to 2008, DOL routinely provided ...
Liquidated Damages &

rd
3

Year

• Historically, DOL focused on obtaining 2-years of
back wages during investigations.
• ...
Beware of Civil Money Penalties
• CMPs are the DOL’s new secret weapon.
• They’re not just for child labor violations anym...
Beware of Civil Money Penalties
• Relevant Factors: See 29 CFR § 578.4
– Size of employer;
– Existence of good faith effor...
Amount of Civil Money Penalties
• CMPs up to $1,100 per violation.
• CMPs up to $5,000 for failure to cooperate.
• Higher ...
DOL’s CMP Procedures
• Timing: DOL generally waits to address CMPs
until after agreement is reached on payment of
back wag...
DOL’s CMP Procedures
• Pleadings: DOL’s notice acts as complaint and
employer’s objection serves as the answer.
• Decision...
Individual Defendants
• DOL naming owners and senior managers as defendants.
• Employer: “Any person acting directly or in...
Frequency and Types of Claims Brought
by DOL*
• FLSA: Minimum Wage and Overtime – 2,696
• FMLA – 261
• Migrant Seasonal Ag...
Types of Employers
(NAICS Coding)*
•
•
•
•
•
•

Full Service Restaurants – 493
Hotels and Motels – 248
Limited Service Res...
Enforcement Data 2.5
• Online data base – public access to workplacerelated information.
• Multiple agencies report to the...
Enforcement Data 2.5:
Wage and Hour Compliance Data
• Contains all concluded WHD compliance actions
since 2007.
• Includes...
Enforcement Data 2.5
Search & Share

http://ogesdw.dol.gov/
http://ogesdw.dol.gov/data_catalogs.php
24
Enforcement in 2013:
Increased Budget Request
• WHD asked for an additional $10 million from
2012
• Purpose: “[A] continue...
Wage and Hour Case Settlements, 2007 - 2011
120
107

Number of Cases

100

91

92

2009

2010

80
60
40
20

34
20

0
2007
...
Mean Settlement Values by Year, 2007 - 2011
$25,000,000

Settlement Amount

$20,000,000

$15,000,000

Overall Mean:
$8,508...
Settled Wage and Hour Cases by
Settlement Amount, 2007-2011
70

Number of Cases

60

50

40

30

20

10

0
Settled Wage and Hour Cases by Average
Settlement Amount Per Employee, 2007-2011
160
140

Number of Cases

120
100
80
60
4...
Drivers of Variability in
Wage and Hour Settlements
 Duration of Violation Period

 Number of Employees in Settlement
 ...
Settled Wage and Hour Cases by
Number of Employees, 2007-2011
70

66

Number of Cases

60
50

48
41

40

36

30

23

22
20...
Average Settlement Value Per Employee
2007-2011
$14,000

Average Settlement Value

$12,000

$10,000
$8,000
$6,000
$4,000
$...
Average Settlement Value Per Employee
Per Class Period Year, 2007-2011
$1,600

Average Settlement Value

$1,400
$1,200
$1,...
Settled Cases by Type of Allegation
2011

2007 - 2011
Minimum
Wage, 20
Donning and
Doffing, 27

Minimum
Wage, 9

Tip Pooli...
Settlement Dollars by Industry, 2007-2011
Healthcare/Healthcare
Services, 4.25%

Manufacturing, 1.54%

Telecommunications/...
Thank you!
Questions?

36
Dr. Elizabeth Becker
NERA Economic Consulting
1166 Avenue of the Americas
29th Floor
New York, NY 10036
212.345.5096
betsy...
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Wage & Hour Claims And Class Actions - Conference Materials

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American Conference Institute's 17th National Forum on Wage & Hour Claims and Class Actions will provide you with insights and strategies tailored to defend against newest claims and manage the most complex wage and hour issues. Earn CLE, CLE Ethics credits.

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Wage & Hour Claims And Class Actions - Conference Materials

  1. 1. American Conference Institute’s 17th National Forum on Wage & Hour Claims and Class Actions January 24, 2013 — Miami, Florida Department of Labor Update: Responding to Enhanced Enforcement Initiatives and Aggressive Investigations Presented by: Dr. Elizabeth Becker NERA Paul DeCamp ECONOMIC CONSULTING Jeffrey D. Patton Glenn G. Patton
  2. 2. Leadership Changes at DOL • Secretary of Labor Hilda L. Solis resigned in early January 2013. President Obama has not yet nominated her replacement (as of mid-January 2013). • There has been no Administrator of the Wage and Hour Division since December 2007. The second of President Obama’s two nominees withdrew in August 2011. • Nancy Leppink resigned as Deputy Administrator in mid-December 2012. • Acting Deputy Administrator Mary Beth Maxwell is currently running the Wage and Hour Division (as of mid-January 2013). 2
  3. 3. Semi-Annual Regulatory Agenda • The Fall 2012 agenda, issued December 24, 2012, contains five items involving WHD: – Amendments to the FMLA regulations: NPRM issued in February 2012, comment period closed in April 2012, and final action projected for March 2013. – FLSA and domestic service: NPRM issued in December 2011, comment period closed in March 2012, and Final Rule projected for April 2013; rule would deny companionship services exemption for third-party employment and narrow the scope of exempt duties. 3
  4. 4. Regulatory Agenda (cont’d) – FLSA Right to Know: Agenda for first time acknowledges that this rulemaking contemplates addressing disclosure to workers of not only “their status as the employer’s employee or some other status”, but also “if an employee, how their pay is computed”; “Next Action Undetermined”. • Very likely in conjunction with this item, WHD issued a Proposed Information Collection Request on January 11, 2013, contemplating a 30-month survey to be completed in March 2014 assessing “employment experiences and workers’ knowledge of basic employment laws and rules”. 4
  5. 5. Regulatory Agenda (cont’d) – FLSA Child Labor Hazardous Occupation Order No. 7: WHD seeks information regarding its non-enforcement position as to power-driven patient/resident lifts in health care establishments; “Next Action Undetermined”. – FLSA Child Labor regulations involving agricultural hazardous occupations: NPRM issued in September 2011, comment period closed in December 2011, and proposed regulation withdrawn in May 2012; regulatory item listed as “completed”. 5
  6. 6. New Guidance From DOL • Two new (Deputy) Administrator’s Interpretations: – AI 2013-1 (Jan. 14, 2013): Addresses several issues involving meaning of phrase “son or daughter” as applied to adults incapable of self-care under the FMLA. – AI 2012-1 (Dec. 12, 2012): Addresses application of MSPA, FLSA, and OSH Act field sanitation standards to “raking, gathering, baling, and loading of pine straw gathered from pine trees grown for commercial timber”. – First AIs since the three issued in 2010 (two reversing Bush-era FLSA positions and one involving the FMLA). 6
  7. 7. DOL Amicus Briefs • DOL’s web site lists nine amicus briefs filed in wage and hour cases since January 1, 2012 (through mid-January 2013). All nine briefs side with the workers. • Positions taken: – Transportation and visa expenses for H-2A workers are primarily for the employer’s benefit. (9th Cir.) – Arbitration agreements with class action waivers are unenforceable because they prevent vindication of FLSA rights. (2d Cir.) 7
  8. 8. DOL Amicus Briefs (cont’d) – In treating tips beyond the tip credit as “earnings” subject to garnishment, the employer violated Title III of the Consumer Credit Protection Act and the FLSA’s minimum wage provision. (11th Cir.) – A contractual waiver of the FLSA’s statute of limitations is void as against public policy. (6th Cir.) – Volunteer firefighters are employees under the FLSA and the FMLA. (6th Cir.) – Cable installers are employees, not independent contractors, under the FLSA. (11th Cir.) 8
  9. 9. DOL Amicus Briefs (cont’d) – Undocumented workers may sue for FLSA minimum wage and overtime for hours worked, and immigration status is irrelevant at trial. (8th Cir.) – An individual owner of an employer corporation is personally liable as an employer under the FLSA based on control. (2d Cir.) – Two-step collective action certification procedure is proper under the FLSA, so the court should deny the employer’s mandamus petition. (5th Cir.) 9
  10. 10. Enforcement Priorities • Independent contractor misclassification: – Memoranda of Understanding with 13 states and the IRS for information sharing and coordination. – Focus: workers with no W-2 employer. – WHD now routinely asks for Form 1040 records. • Call centers: Pre-shift and post-shift activity. • Next stop: Challenges to fluctuating workweek compensation for employees who receive bonuses, commissions, or other types of non-salary, nonovertime compensation? 10
  11. 11. Targeted Industries • • • • • • Restaurants Health care Car washes Janitorial (especially in hotels and motels) Construction (residential and commercial) Retail franchisors as joint employers / integrated enterprises • Government contracting 11
  12. 12. Issuance of WH-58 Forms • Form WH-58 both a receipt and release of future claims. • Prior to 2008, DOL routinely provided WH-58 forms. • Since 2008, WH-58 forms not provided unless DOL has conducted a “full investigation.” • May not be available in self-disclosure situations. • DOL also issuing WH-58 forms limited to specific time periods that may be shorter than 2 years. • Creates uncertainty about scope of release/waiver. 12
  13. 13. Liquidated Damages & rd 3 Year • Historically, DOL focused on obtaining 2-years of back wages during investigations. • DOL investigators now investigating potential liability during third year where violation(s) may be willful. • Asking for liquidated damages as condition to settlement of investigation. • Liquidated damages most likely to be pursued in independent contractor misclassification situations. 13
  14. 14. Beware of Civil Money Penalties • CMPs are the DOL’s new secret weapon. • They’re not just for child labor violations anymore! • Repeat: Prior notice of violation from Wage and Hour Division or previous adjudication. 29 CFR § 578.3(b) • Willful: Employer either knew that its conduct was prohibited or showed reckless disregard for the requirements of the Act. 29 CFR § 578.3(c) 14
  15. 15. Beware of Civil Money Penalties • Relevant Factors: See 29 CFR § 578.4 – Size of employer; – Existence of good faith efforts to comply; – Whether there is bona fide dispute as to violation; – Previous history of violations; – Commitment to future compliance; – Amount of time between violations; – Number of employees affected; and – Any pattern to the violations. 15
  16. 16. Amount of Civil Money Penalties • CMPs up to $1,100 per violation. • CMPs up to $5,000 for failure to cooperate. • Higher penalties for child labor violations ($11,000 per worker). • DOL has secret formula for valuing CMPs (formula for repeat violations is lower than willful violations). • CMPs for OT and minimum wage violations go back to WHD to fund additional enforcement efforts! 16
  17. 17. DOL’s CMP Procedures • Timing: DOL generally waits to address CMPs until after agreement is reached on payment of back wages. • Objections: Must object to CMPs and request hearing in writing within 15 days. • Meeting: DOL may meet to discuss objections. • Hearing: If no agreement reached, then CMP assessment goes to ALJ for hearing. 17
  18. 18. DOL’s CMP Procedures • Pleadings: DOL’s notice acts as complaint and employer’s objection serves as the answer. • Decision: ALJ reviews entire record (hearsay rules do not apply to prior investigation files) and issues written opinion. • Appeal: Employer has 30 days to appeal ALJ decision to Administrative Review Board. • Collection: DOL can deduct CMPs from any amounts owed to employer or file a civil action. 18
  19. 19. Individual Defendants • DOL naming owners and senior managers as defendants. • Employer: “Any person acting directly or indirectly in the interest of an employer in relation to an employee …” 29 U.S.C. § 203(d). • Requires showing of “operating control” over employees: • Power to hire and fire; • Ability to supervise; • Power to set or adjust wages; and • Maintenance of employment records. 19
  20. 20. Frequency and Types of Claims Brought by DOL* • FLSA: Minimum Wage and Overtime – 2,696 • FMLA – 261 • Migrant Seasonal Agricultural Protection Act – 150 • Davis-Bacon and Related Acts – 150 • FLSA: Child Labor – 110 *As of October 2012 http://ogesdw.dol.gov/results.php 20
  21. 21. Types of Employers (NAICS Coding)* • • • • • • Full Service Restaurants – 493 Hotels and Motels – 248 Limited Service Restaurants – 243 Child Day Care Services – 217 Supermarkets and Grocery Stores – 188 Other – 3,553 *As of October 2012 http://ogesdw.dol.gov/results.php 21
  22. 22. Enforcement Data 2.5 • Online data base – public access to workplacerelated information. • Multiple agencies report to the same website. • Non-compliant employers more easily discoverable from other types of violations. http://ogesdw.dol.gov/ http://ogesdw.dol.gov/data_catalogs.php 22
  23. 23. Enforcement Data 2.5: Wage and Hour Compliance Data • Contains all concluded WHD compliance actions since 2007. • Includes: – – – – Whether violations were found; Back wage amount; Number of employees due back wage; and Civil money penalties assessed. http://ogesdw.dol.gov/ http://ogesdw.dol.gov/data_catalogs.php 23
  24. 24. Enforcement Data 2.5 Search & Share http://ogesdw.dol.gov/ http://ogesdw.dol.gov/data_catalogs.php 24
  25. 25. Enforcement in 2013: Increased Budget Request • WHD asked for an additional $10 million from 2012 • Purpose: “[A] continued shift to greater directed and complaint activity in priority industries.” • Shifting funds to increase enforcement of entities likely to have overtime violations. http://www.dol.gov/dol/budget/2013/bib.htm#whd 25
  26. 26. Wage and Hour Case Settlements, 2007 - 2011 120 107 Number of Cases 100 91 92 2009 2010 80 60 40 20 34 20 0 2007 2008 2011
  27. 27. Mean Settlement Values by Year, 2007 - 2011 $25,000,000 Settlement Amount $20,000,000 $15,000,000 Overall Mean: $8,508,358 $10,000,000 $5,000,000 $2007 2008 2009 2010 2011
  28. 28. Settled Wage and Hour Cases by Settlement Amount, 2007-2011 70 Number of Cases 60 50 40 30 20 10 0
  29. 29. Settled Wage and Hour Cases by Average Settlement Amount Per Employee, 2007-2011 160 140 Number of Cases 120 100 80 60 40 20 0
  30. 30. Drivers of Variability in Wage and Hour Settlements  Duration of Violation Period  Number of Employees in Settlement  Statute (FLSA/State Laws)  Jurisdiction of Case  Nature of Allegations  Industry
  31. 31. Settled Wage and Hour Cases by Number of Employees, 2007-2011 70 66 Number of Cases 60 50 48 41 40 36 30 23 22 20 10 14 7 2 0 4
  32. 32. Average Settlement Value Per Employee 2007-2011 $14,000 Average Settlement Value $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $2007 2008 2009 2010 2011
  33. 33. Average Settlement Value Per Employee Per Class Period Year, 2007-2011 $1,600 Average Settlement Value $1,400 $1,200 $1,000 $800 $600 $400 $200 $2007 2008 2009 2010 2011
  34. 34. Settled Cases by Type of Allegation 2011 2007 - 2011 Minimum Wage, 20 Donning and Doffing, 27 Minimum Wage, 9 Tip Pooling, 10 Tip Pooling, 5 Donning and Doffing, 8 Missed Meals and Breaks, 96 Overtime, 244 Missed Meals and Breaks, 36 Overtime, 78 Misclassificat ion, 109 Misclassificat ion, 28 Off-theClock, 117 Off-theClock, 13
  35. 35. Settlement Dollars by Industry, 2007-2011 Healthcare/Healthcare Services, 4.25% Manufacturing, 1.54% Telecommunications/U tilities, 5.55% Technology, 7.49% Other, 12.37% Retail, 35.17% Financial Services/Insurance, 21.44% Transportation/Shipping, 6.70% Food & Food Services, 5.49%
  36. 36. Thank you! Questions? 36
  37. 37. Dr. Elizabeth Becker NERA Economic Consulting 1166 Avenue of the Americas 29th Floor New York, NY 10036 212.345.5096 betsy.becker@nera.com Paul DeCamp Jackson Lewis LLP 10701 Parkridge Boulevard Suite 300 Reston, VA 20191 703.483.8305 DeCampP@jacksonlewis.com Jeffrey D. Patton Spilman Thomas & Battle, PLLC 110 Oakwood Drive Suite 500 Winston-Salem, NC 27103 336.725.4491 jpatton@spilmanlaw.com Glenn G. Patton Alston + Bird LLP 1201 West Peachtree Street Atlanta, GA 30309-3424 404.881.7785 glenn.patton@alston.com 37
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