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


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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

Published in: Technology, Career
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How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers

  1. 1. How to Avoid Costly Wage & Hour Pitfalls for Construction, Engineering & Landscaping Employers Featuring Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP
  2. 2. Welcome Today’s Host Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. 773-499-7512 2 ©2012 Seyfarth Shaw LLP
  3. 3. EPAY Systems -- designed to meet the needs of your complex, distributed workforce • Reduce your labor costs by 5% or more • Keep you in control and in compliance 3 ©2012 Seyfarth Shaw LLP
  4. 4. 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? 4 ©2012 Seyfarth Shaw LLP
  5. 5. Our Speakers Kyle A. Petersen Associate, Seyfarth Shaw LLP Labor & Employment (312) 460 -5000 Rebecca P. Bromet Partner, Seyfarth Shaw LLP Labor & Employment (312) 460 - 5000 5 ©2012 Seyfarth Shaw LLP
  6. 6. Ask Your Questions To ask a question, simply type your question in the “Question” box on the right side of your screen. 6 ©2012 Seyfarth Shaw LLP
  7. 7. Overview: Trends for 2013 • • • • • Litigation trends o Continued aggressive plaintiffs’ bar and agency Increased agency enforcement Compliance Risks – Surprise!!! “Riskiest” times of day. o Pre & Post Shift o Meal Times o Travel time Simple Safeguards 7 ©2012 Seyfarth Shaw LLP
  8. 8. 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 litigation o One firm successfully targets an industry and is quickly followed by other plaintiffs’ firms who target other employers in that industry 8 ©2012 Seyfarth Shaw LLP
  9. 9. Trends Continued • • Aggressive outreach efforts to identify potential plaintiffs o Outside companies sending email blasts to employees of target companies o Ads on Facebook, Twitter 7064 lawsuits filed under the Fair Labor Standards Act (“FLSA”) in 2012 o Record high number o State wage-and-hour actions raise this number significantly o Of all state and federal class or collective actions filed in the U.S., vast majority are wage and hour claims 9
  10. 10. Top 10 Private W&H Settlements 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) 10 ©2012 Seyfarth Shaw LLP
  11. 11. FLSA Cases in Federal Court 1993-2012 11 ©2012 Seyfarth Shaw LLP
  12. 12. 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 12 ©2012 Seyfarth Shaw LLP
  13. 13. Increased WHD Enforcement Capabilities Number of W age and Hour Division Investigators, 1987 to 2011 1,100 1,050 1,006 1,000 970 951 952 942 938 950 942 938 949 950 945 898 900 893 865 850 835 850 804 800 809 788 800 773 751 781 750 732 731 700 650 600 1987 1989 1991 1993 1995 1997 1999 Applied Econom ic Strategies , us ing U .S. D epartm ent of Labor, Wage and H our D ivis ion data. 13 ©2012 Seyfarth Shaw LLP 2001 2003 2005 2007 2009 2011
  14. 14. Compliance With The FLSA Is Not Easy • • • • • • • • The Fair Labor Standards Act was enacted in 1938 o Minimum Wage o Overtime o 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 14 ©2012 Seyfarth Shaw LLP
  15. 15. 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? 15 ©2012 Seyfarth Shaw LLP
  16. 16. 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. 16 ©2012 Seyfarth Shaw LLP
  17. 17. 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. 17 ©2012 Seyfarth Shaw LLP
  18. 18. 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. 18 ©2012 Seyfarth Shaw LLP
  19. 19. 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 19 ©2012 Seyfarth Shaw LLP
  20. 20. 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. 20 ©2012 Seyfarth Shaw LLP
  21. 21. Mistake #4 • • We don’t pay employees to ride in a truck. Key issues: o Home to work, or vice versa, typically is not compensable o Between job sites is part of the “continuous workday” and must be paid o If you don’t pay it, how do we track the time? Could be a recordkeeping issue if a lawsuit is filed. 21 ©2012 Seyfarth Shaw LLP
  22. 22. 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. 22 ©2012 Seyfarth Shaw LLP
  23. 23. Polling Question • Do you use an automatic meal period deduction? 23
  24. 24. 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? 24 ©2012 Seyfarth Shaw LLP
  25. 25. 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. 25 ©2012 Seyfarth Shaw LLP
  26. 26. 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 26 ©2012 Seyfarth Shaw LLP
  27. 27. 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. 27 ©2012 Seyfarth Shaw LLP
  28. 28. Polling Question • True/False: All managers are exempt and do not need to be paid overtime. 28
  29. 29. 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. 29 ©2012 Seyfarth Shaw LLP
  30. 30. 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. 30 ©2012 Seyfarth Shaw LLP
  31. 31. Polling Question • True/False: Employers can avoid all of these overtime problems simply by using independent contractors. 31
  32. 32. 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? 32 ©2012 Seyfarth Shaw LLP
  33. 33. 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. 33 ©2012 Seyfarth Shaw LLP
  34. 34. 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. 34 ©2012 Seyfarth Shaw LLP
  35. 35. 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. 35 ©2012 Seyfarth Shaw LLP
  36. 36. EPAY Systems Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. 36 ©2012 Seyfarth Shaw LLP
  37. 37. EPAY -- In Time with You Complex pay rules? Mobile workforce, union contracts, multiple job assignments? No problem! Uniquely flexible 37 ©2012 Seyfarth Shaw LLP
  38. 38. Reduce your labor costs Eliminate erroneous pay calculations, time rounding, and management inconsistencies Eliminate buddy punching Reduce costs associated with paper checks. Save an average of $2.87 per pay period/per employee. or more! Reduce administration time in preparing payroll Biometric time clocks with camera and finger print reader 38 ©2012 Seyfarth Shaw LLP
  39. 39. Minimize Compliance Risk • • • • • • Audit Trails Overtime Meal Breaks Pay Differentials Privacy and Security Reduce Workers Comp Claims • Did you have an accident free day? 39 ©2012 Seyfarth Shaw LLP
  40. 40. Over 40,000 customer sites 40 ©2012 Seyfarth Shaw LLP
  41. 41. Easy, Anywhere Time Tracking Blueforce adapts to how YOU do business 41 ©2012 Seyfarth Shaw LLP
  42. 42. Upcoming Education • Public Demonstration: Time & Labor Management for the Distributed Workforce o March 14: 10:00 cst Register at 42 ©2012 Seyfarth Shaw LLP
  43. 43. 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 43 ©2012 Seyfarth Shaw LLP
  44. 44. Thank You! Kyle A. Petersen Associate, Seyfarth Shaw LLP Labor & Employment (312) 460-5000 Rebecca P. Bromet Partner, Seyfarth Shaw LLP Labor & Employment (312) 460-5000 44 ©2012 Seyfarth Shaw LLP
  45. 45. 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 Systems o Twitter -- @EPAYsystems o Sign up for our e- newsletter at 45 ©2012 Seyfarth Shaw LLP
  46. 46. Thank You! 46 ©2012 Seyfarth Shaw LLP