Copyright © 2013. Infor. All Rights Reserved. www.infor.com 11
How to survive – and
pass – a labor audit
Presented by:
Lisa Schreter
Shareholder
Littler Mendelson, P.C.
Atlanta
404-760-3938
lschreter@littler.com
Angelo Spinola
...
Triggers for DOL Investigations
• Complaints
– Employees, unions, competitors, advocacy groups
– DOL will not disclose whe...
USDOL Investigation Process
4
Investigation
Preparation
Opening
Conference
Document
Review
Employee
Interviews
Back Wage
C...
The Care and Feeding
of a USDOL Investigator
• Always treat with deference and respect
• Provide a private and comfortable...
Keys to Successful Resolution
of a US DOL Investigation
• Involve attorneys at an early stage
– But, in most cases, behind...
Keys to Successful Resolution
of a US DOL Investigation
• Work towards getting the investigator out of your
workplace quic...
The Pandemic Continues:
Wage and Hour Class Actions Are Here To Stay
• 4,204 wage and hour state
and federal court
class/c...
Industries Targeted
Employers’ payroll & timekeeping procedures
are under attack
• Employers who have been sued represent ...
Automation
Automated Payroll, Timekeeping and Scheduling
Solutions, When Properly Designed and
Implemented, Can Reduce Pay...
Targeted Practices
But.....some automated pay practices have been
the target of wage and hour class claims.
11
Top 4 Payroll Practices Subject to
Class Action Claims
• Automatic Meal Deductions
• Rounding
• Exception Time Reporting
•...
Auto Deductions for Meal Periods:
The Problem
• Class actions challenging employers’ use of
automated deductions for meal ...
Auto Deductions for Meal Periods:
The Law
• DOL opinion letter and field operations handbook
make clear under federal law ...
Auto Deductions for Meal Periods:
What’s an Employer to do?
• The most conservative approach? Eliminate use of auto
deduct...
Rounding: The Risk
Class Action Lawyers Have Successfully
Challenged Employer Rounding Practices.
• $1.29 million settleme...
Rounding: The Problem
• Supervisors can eviscerate proper rounding rule
by instructing employers to only clock in within
n...
Rounding: The Law
• As an “enforcement
policy” DOL accepts
rounding if:
– Arrangement averages out
so employees are “fully...
Rounding: What’s an Employer to do?
• Eliminate rounding rules.
OR
• Monitor actual operation of
rounding rule to ensure a...
Exception Time Reporting: What is it?
• A timekeeping system where
the employer pays the
employee for his or her
scheduled...
Exception Time Reporting:
The Problem
• May not comply with federal and state law which
requires employer to retain record...
Exception Time Reporting: The Risks
• January 2009 – $8.8 million settlement, where call
center employees’ time reported a...
Time Shaving: The Risk
• Class action lawyers routinely claim that supervisors
instruct employers to work off the clock an...
Time Shaving: The Problem
• Timekeeping systems allow managers to edit non-
exempt time records.
• Some systems have not r...
Time Shaving: The Law
• Supervisors may edit
timecards to correct
legitimate errors (i.e.
missed time punches).
• Supervis...
Time Shaving:
What’s an Employer to do?
• Provide managers and employees with training regarding
wage and hour compliance ...
Time Shaving:
What’s an Employer to do? (continued)
• Provide a robust compliant
mechanism that allows anonymous
reports o...
An Effective Compliance Program
• Wage and Hour Policies
• Eliminate Assumptions
• Complaint and Investigation
Procedures
...
What The Future Holds?
29
Questions?
How to Survive
(and pass)
a Labor Audit
Lisa Schreter
Shareholder
Littler Mendelson, P.C.
Atlanta
404-760-3938
lschreter@l...
32Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
...
33Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
5 Ws of HCM
Attract, retain, develop, promote the right work...
34Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
...
35Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
For More Information
• For a free ROI calculation, copy of t...
36Copyright © 2012. Infor. All Rights Reserved.
www.infor.com
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Webinar: How to survive and pass labor audit

  1. 1. Copyright © 2013. Infor. All Rights Reserved. www.infor.com 11 How to survive – and pass – a labor audit
  2. 2. Presented by: Lisa Schreter Shareholder Littler Mendelson, P.C. Atlanta 404-760-3938 lschreter@littler.com Angelo Spinola Shareholder Littler Mendelson, P.C. Atlanta 404-760-3921 aspinola@littler.com
  3. 3. Triggers for DOL Investigations • Complaints – Employees, unions, competitors, advocacy groups – DOL will not disclose whether a complaint has been filed or the source of the complaint • Targeted Investigations – Designed at district or regional level to address specific issue in an industry or geographic area • Statistically Valid Compliance Surveys – National surveys to assess compliance in an industry (e.g., retail) or with a specific FLSA provision (e.g., child labor) 3
  4. 4. USDOL Investigation Process 4 Investigation Preparation Opening Conference Document Review Employee Interviews Back Wage Calculations Closing Conference
  5. 5. The Care and Feeding of a USDOL Investigator • Always treat with deference and respect • Provide a private and comfortable room – Preferably in an area where the investigator will not have immediate access to employees • Assign a management employee to facilitate the investigation – Gather requested documents – Assist with scheduling employee interviews – Ensure investigator does not wander unescorted 5
  6. 6. Keys to Successful Resolution of a US DOL Investigation • Involve attorneys at an early stage – But, in most cases, behind the scenes – Investigators will feel less threatened working with an HR professional of facility manager – If investigation cannot be resolved with the investigator, attorneys can “appeal” to the District Director • Establish a reputation as a good faith employer and your commitment to compliance • Cooperate with the investigation – Do not give in to unreasonable demands – Do not tolerate an abusive investigator 6
  7. 7. Keys to Successful Resolution of a US DOL Investigation • Work towards getting the investigator out of your workplace quickly – Investigators should start small (spot check of payroll records, a few employee interviews), and close the investigation quickly if satisfied that the employer is in substantial compliance – If investigator is not satisfied as to compliance, s/he will expand the investigation • Commit to taking additional steps to ensure future compliance – DOL considers back wages as a necessary but temporary resolution, and thus cares more about future compliance 7
  8. 8. The Pandemic Continues: Wage and Hour Class Actions Are Here To Stay • 4,204 wage and hour state and federal court class/collective actions filed in 2012. • Represents 92% of all employment class actions filed. • 2,257 cases involved challenges to timekeeping practices. 8
  9. 9. Industries Targeted Employers’ payroll & timekeeping procedures are under attack • Employers who have been sued represent a “Who’s Who” of corporate America. • Cases have targeted virtually every sector of our economy: – Healthcare – Telecommunications – Retail – Transportation – Manufacturing – Banking – Insurance 9
  10. 10. Automation Automated Payroll, Timekeeping and Scheduling Solutions, When Properly Designed and Implemented, Can Reduce Payroll Costs and Wage and Hour Compliance Problems. 10
  11. 11. Targeted Practices But.....some automated pay practices have been the target of wage and hour class claims. 11
  12. 12. Top 4 Payroll Practices Subject to Class Action Claims • Automatic Meal Deductions • Rounding • Exception Time Reporting • Time Shaving 12
  13. 13. Auto Deductions for Meal Periods: The Problem • Class actions challenging employers’ use of automated deductions for meal periods are rampant. 13
  14. 14. Auto Deductions for Meal Periods: The Law • DOL opinion letter and field operations handbook make clear under federal law that an auto deduction is permissible if employee actually takes the meal. • Courts are split. 14
  15. 15. Auto Deductions for Meal Periods: What’s an Employer to do? • The most conservative approach? Eliminate use of auto deduction feature. • Alternative approach? Pair use of auto deduction feature with additional compliance measures. – Clear written policy describing bona fide meal period and what to do if the meal is not taken or interrupted by work. – Provide training to managers and non-exempt employees on proper timekeeping - including meal and rest period compliance. – Utilize advanced clock features that ask an employee if the meal period was taken. If the employee certifies the meal was taken the deduction is taken. If not, the employee is paid for the meal. – Require employees on a daily basis to review time entries, and if correct, certify the accuracy of the records. 15
  16. 16. Rounding: The Risk Class Action Lawyers Have Successfully Challenged Employer Rounding Practices. • $1.29 million settlement with DOL based on allegations that included rounding down of time for a class of 16,000 workers. • $19 million settlement with class of 13,000 employees based on allegations that included rounding down of time. 16
  17. 17. Rounding: The Problem • Supervisors can eviscerate proper rounding rule by instructing employers to only clock in within narrow window (i.e. with a 15 minute round within 7 minutes before shift start). • Some employers do not review operation of rounding rule over time. • Law requires you to look at how rounding works for each employee. • Warning: Advances in time clock technologies make it difficult to argue that “actual” start and end times cannot be captured. 17
  18. 18. Rounding: The Law • As an “enforcement policy” DOL accepts rounding if: – Arrangement averages out so employees are “fully compensated for all the time they actually work.” – Over time rounding does not result in a failure to compensate employees for all working time. – Rounding to nearest 5 minutes, one-tenth or quarter of an hour. 18 General Rule: Insubstantial or insignificant periods of time that cannot as a “practical administrative matter be precisely recorded” may be disregarded
  19. 19. Rounding: What’s an Employer to do? • Eliminate rounding rules. OR • Monitor actual operation of rounding rule to ensure all non- exempt employees are being fully paid for all working time. 19
  20. 20. Exception Time Reporting: What is it? • A timekeeping system where the employer pays the employee for his or her scheduled work time unless the employee provides the employer with notice that he or she did not actually work the scheduled time. 20
  21. 21. Exception Time Reporting: The Problem • May not comply with federal and state law which requires employer to retain records of the time actually worked by employees. • Does not provide records to refute plaintiffs’ claims they worked more than their scheduled work time. 21
  22. 22. Exception Time Reporting: The Risks • January 2009 – $8.8 million settlement, where call center employees’ time reported as 40 hours every week. • Plaintiff’s Attorney: “Using exception time reporting is a sure way to get a class action.” • Park v. Seoul Broadcasting System (S.D. N.Y.): Summary judgment denied because payroll records showed 40 hours each week. Company claimed it let employees leave early after 40 hours, but court rejected argument because Company had no records to support. 22
  23. 23. Time Shaving: The Risk • Class action lawyers routinely claim that supervisors instruct employers to work off the clock and improperly edit time records to meet budgetary constraints. 23
  24. 24. Time Shaving: The Problem • Timekeeping systems allow managers to edit non- exempt time records. • Some systems have not required supervisor’s to record the reason for time edits. • Some supervisors are not familiar with legal obligations and have improperly “edited” employee time records to reduce overtime and reported hours. 24
  25. 25. Time Shaving: The Law • Supervisors may edit timecards to correct legitimate errors (i.e. missed time punches). • Supervisors may not alter a timecard for other reasons such as inefficiency, failure to obtain advance approval of overtime. 25
  26. 26. Time Shaving: What’s an Employer to do? • Provide managers and employees with training regarding wage and hour compliance and proper timekeeping. • Utilize a time and attendance system that provides managers with a field where they can notate the reason for payroll edits. • Publish a clear timekeeping policy which: – Prohibits off the clock work. – Instructs employees to immediately report any manager who instructs an employee to work off the clock and falsifies time record. – Advises employees that no one is authorized to instruct another employee to work off the clock. 26
  27. 27. Time Shaving: What’s an Employer to do? (continued) • Provide a robust compliant mechanism that allows anonymous reports of wage and hour concerns. • Promptly investigate and resolve wage and hour complaints. • Periodically audit manager “edits” particularly where there is a high incidence of missed punches and edits. 27
  28. 28. An Effective Compliance Program • Wage and Hour Policies • Eliminate Assumptions • Complaint and Investigation Procedures • Training • Audits • Exemptions: Developing Evidentiary Support 28
  29. 29. What The Future Holds? 29
  30. 30. Questions?
  31. 31. How to Survive (and pass) a Labor Audit Lisa Schreter Shareholder Littler Mendelson, P.C. Atlanta 404-760-3938 lschreter@littler.com Angelo Spinola Shareholder Littler Mendelson, P.C. Atlanta 404-760-3921 aspinola@littler.com
  32. 32. 32Copyright © 2012. Infor. All Rights Reserved. www.infor.com Copyright © 2012. Infor. All Rights Reserved. www.infor.com 32 Human Capital Management Your largest asset … your largest opportunity for competitive advantage
  33. 33. 33Copyright © 2012. Infor. All Rights Reserved. www.infor.com 5 Ws of HCM Attract, retain, develop, promote the right workforce to flexibly meet business goals Workforce Skillsets Payroll Geographical Allocation Shifts
  34. 34. 34Copyright © 2012. Infor. All Rights Reserved. www.infor.com Copyright © 2012. Infor. All Rights Reserved. www.infor.com 34 Key to a Solid HCM Strategy Transform the way people and organizations perform and unify any content, process, software, service and device … to raise Return on Capability
  35. 35. 35Copyright © 2012. Infor. All Rights Reserved. www.infor.com For More Information • For a free ROI calculation, copy of today’s slides, recording link, pricing or additional product information: Look for email next 24 hours from Wendy Cook to make request • Upcoming webinars and events: infor.com and enwisen.com • HR Technology Show – October 7-9 – Las Vegas • IQPC HR Shared Services – October 16-18 – Orlando • Timekeeping Practices for the Affordable Care Act – October 24 • HR Tech Europe – October 24-25 – Amsterdam • DevLearn – October 23-25 – Las Vegas
  36. 36. 36Copyright © 2012. Infor. All Rights Reserved. www.infor.com

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