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How to Avoid Costly Wage & Hour Pitfalls
for Staffing and Security Employers
Featuring Seyfarth Shaw LLP

©2012 Seyfarth S...
Welcome

Today’s Host
Michelle Lanter Smith

Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-75...
EPAY Systems -- designed to meet the
needs of your complex,
distributed workforce

• Reduce your labor
costs by 5% or more...
Today’s Discussion
Federal court filings of wage and hour class and
collective actions have increased more than 500%
since...
Our Speakers

Arthur J. Rooney
Partner, Seyfarth Shaw LLP
Labor & Employment
arooney@seyfarth.com
(312) 460 - 5000

Alexan...
Ask Your Questions

To ask a question, simply type
your question in the “Question”
box on the right side of your
screen.

...
Overview: Trends for 2013
•
•
•
•
•

Litigation trends
o Continued aggressive plaintiffs’ bar and agency
Increased agency ...
Trends

•

Aggressive plaintiffs’ law firms have created
consortiums, jointly filing class/collective suits

•

In recent ...
Trends Continued
•
•

Aggressive outreach efforts to identify potential plaintiffs
o Outside companies sending email blast...
Top 10 Private W&H
Settlements in 2012
1. $99 Million – Novartis (misclassification of pharma sales reps)
2. $40 Million –...
FLSA Cases in Federal Court
1993-2012

11
©2012 Seyfarth Shaw LLP
WHD Continues To Be Aggressive
•

•
•
•

Increase in targeted investigations in low-wage/high risk
industries

Increase in...
Increased WHD Enforcement
Capabilities
Number of W age and Hour Division Investigators, 1987 to 2011

1,100

1,050
1,006

...
Compliance With The FLSA
Is Not Easy
•
•
•
•
•
•
•
•

The Fair Labor Standards Act was enacted in 1938
o Minimum Wage
o Ov...
Mistake #1
•

•

Employees have to pay for their own
uniforms no matter what.

Key issues:
o Are the uniforms generic or
e...
A Few Simple Safeguards
•
•
•

Receive authorization for the deduction (if required
by state law).
Do not count a uniform ...
Mistake #2
•

•

Requiring individuals to show up at work and
wait to clock-in.

Key Issues:
o How long in advance of the ...
A Few Simple Safeguards
•
•

•

Only require people to be at work by their scheduled
start time.
If employees are required...
Mistake #3
•
•

Not including all required time in the calculation
of hours worked
Key issues:
o Pay for pre- and post-shi...
A Few Simple Safeguards
•

•

•

Do not let hourly employees start working
until they are on the clock (but don’t require
...
Mistake #4
•
•

We don’t pay employees for training.
Key issues:
o Do you require employees to attend companysponsored tra...
A Few Simple Safeguards
•
•

If the company-sponsored
training is mandatory, pay for it.
Otherwise, make sure that both
ma...
Polling Question
•

Do you use an automatic meal period deduction?

23
Mistake #5
•
•

Automatically deducting for meal
periods, even if not taken.
Key issues:
o Do they actually take a break?
...
A Few Simple Safeguards
•
•
•
•

Implement a policy that only uninterrupted meal
periods are unpaid.
Implement a system to...
Mistake #6

• Failure to take a strong stand against
off-the-clock work

• Key issues:
o Failure to properly compensate fo...
A Few Simple Safeguards
•
•
•

Implement strong policies and set expectations.

Train managers to look out for and report ...
Polling Question
•

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

28
Mistake #7
•
•

We call them “manager” or “supervisor,” so
they don’t get overtime.
Key Issues:
o Recommendations for hiri...
Mistake #8
•
•

The employee didn’t work any overtime for a
single employer, so no overtime pay is due.
Key Issues:
o All ...
Polling Question
•

True/False: Employers can avoid all of these
overtime problems simply by using independent
contractors...
Mistake #9
•
•

Labeling everyone an independent contractor.

Key issues:
o How much control is there over their work?
o H...
A Few Simple Safeguards
•
•
•
•

Auditing pay practices & exempt status at direction
of counsel.
Review pay practices.
Rev...
Mistake #10
•
•

Not paying separated employees all of
their earned “wages.”
Key issues:
o Did the employee use all of his...
A Few Simple Safeguards
•
•
•

Your benefit plans should clearly describe how
employees earn vacation, commissions, and
bo...
EPAY Systems

Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.

36
EPAY -- In Time with You

Complex pay rules?
Mobile workforce,
union contracts,
multiple job assignments?

No problem!

Un...
Reduce your labor costs

Eliminate erroneous
pay
calculations, time
rounding,
and management
inconsistencies

Eliminate bu...
Minimize Compliance Risk
•
•
•
•
•
•

Audit Trails
Overtime
Meal Breaks
Pay Differentials
Privacy and Security
Reduce Work...
Over 40,000 customer sites

40
Easy, Anywhere Time Tracking

Blueforce adapts
to how YOU
do business

41
Upcoming Education
Compliance Webinar Series with Seyfarth Shaw LLP

•

Preparing for the Affordable Care Act (ObamaCare)....
Thank You!

Arthur J. Rooney
Partner, Seyfarth Shaw LLP
Labor & Employment
arooney@seyfarth.com
(312) 460 - 5000

Alexande...
Connect with us
Connect with EPAY on:
o LinkedIn – follow our company page at EPAY Systems
o Twitter -- @EPAYsystems
o Sig...
Thank You!

45
©2012 Seyfarth Shaw LLP
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How to Avoid Costly Wage and Hour Pitfalls for Staffing and Security Employers

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How to Avoid Costly Wage and Hour Pitfalls for Staffing and Security Employers

  1. 1. How to Avoid Costly Wage & Hour Pitfalls for Staffing and Security Employers Featuring Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP
  2. 2. Welcome Today’s Host Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 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
  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
  5. 5. Our Speakers Arthur J. Rooney Partner, Seyfarth Shaw LLP Labor & Employment arooney@seyfarth.com (312) 460 - 5000 Alexander J. Passantino Senior Counsel, Seyfarth Shaw LLP Labor & Employment apassantino@seyfarth.com (202) 463-2400 5
  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
  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 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 (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 for training. Key issues: o Do you require employees to attend companysponsored trainings? Or is it voluntary? o Does the training provide employees with skills that are transferrable? Or is the training specific to your company? 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 • • If the company-sponsored training is mandatory, pay for it. Otherwise, make sure that both managers and employees understand that the training is voluntary. o Policies should clearly state that the training is voluntary 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 “supervisor,” 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 supervisor?  Easy case to certify as a collective/class action. 29 ©2012 Seyfarth Shaw LLP
  30. 30. Mistake #8 • • The employee didn’t work any overtime for a single employer, so no overtime pay is due. Key Issues: o All hours worked on behalf of staffing company must be included in determining hours worked, even if worked by different employers o Employees likely to be jointly employed by staffing company and client o Reimbursement/charge rates and practices have no impact on overtime obligations 30 | ©2013 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 • • Not paying separated employees all of their earned “wages.” Key issues: o Did the employee use all of his or her earned vacation time? o Did the employee earn a bonus or commission, or even a portion of one? o How are vacation days, commissions, and bonuses “earned” under your policy? 34 ©2012 Seyfarth Shaw LLP
  35. 35. A Few Simple Safeguards • • • Your benefit plans should clearly describe how employees earn vacation, commissions, and bonuses. In many states, you need to ensure that employees do not forfeit any earned vacation, bonuses, or commissions upon separation. Make sure you know the requirements of each state where you have employees, because there are differences. 35 ©2012 Seyfarth Shaw LLP
  36. 36. EPAY Systems Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. 36
  37. 37. EPAY -- In Time with You Complex pay rules? Mobile workforce, union contracts, multiple job assignments? No problem! Uniquely flexible 37
  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! Biometric time clocks with camera and finger print reader 38
  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
  40. 40. Over 40,000 customer sites 40
  41. 41. Easy, Anywhere Time Tracking Blueforce adapts to how YOU do business 41
  42. 42. Upcoming Education Compliance Webinar Series with Seyfarth Shaw LLP • Preparing for the Affordable Care Act (ObamaCare). May 22: 12:00 cst • Reduce Costs with Pay Cards. June 19: 10:00cst • 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 42
  43. 43. Thank You! Arthur J. Rooney Partner, Seyfarth Shaw LLP Labor & Employment arooney@seyfarth.com (312) 460 - 5000 Alexander J. Passantino Senior Counsel, Seyfarth Shaw LLP Labor & Employment apassantino@seyfarth.com (202) 463-2400 43 ©2012 Seyfarth Shaw LLP
  44. 44. Connect with us Connect with EPAY on: o LinkedIn – follow our company page at EPAY Systems o Twitter -- @EPAYsystems o Sign up for our e- newsletter at EPAYsystems.com Connect with Seyfarth Shaw LLP: o Wage & Hour Litigation Blog http://www.wagehourlitigation.com/ o Twitter - @SeyfarthShawLLP 44 ©2012 Seyfarth Shaw LLP
  45. 45. Thank You! 45 ©2012 Seyfarth Shaw LLP

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