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1. Healthcare’s Wage & Hour Claim
Challenge:
Practical Steps to Protect Your
Organization
May 3, 2011
2. Reid Bowman, Esq.
• General Counsel of ELT.
• Over 25 years of HR and labor
employment law experience,
primarily working with multi-
state employers.
• Designs strategic ethics, wage
& hour, discrimination
prevention, and employment
law compliance programs.
3. Bradley Strawn, Esq.
• Shareholder, Littler Mendelson.
• Concentrates his practice advising
employers in complex class and
collective actions involving
overtime and other wage-related
claims.
• Routinely advises employers
on legal compliance and litigation
prevention measures relating to
wage and hour.
4. Agenda
The Numbers Tell the Story
The Numbers Tell the Story
Greater Enforcement by the DOL
Healthcare is a Major Target
Key Risk Areas
Targeted Areas
Practical Compliance Solutions
Practical Compliance Solutions
Training Solutions that Tangibly
Reduce Risk and Deliver a ROI.
6. A Question For You
Do you consider wage and hour
issues to be the number one
employment law risk facing
your organization?
Yes
No
7. Wage & Hour Class/Collective Actions:
The Flood Continues
All Other
Of the 4,152 Employment
Law 9%
employment class
action lawsuits filed
in federal or state
court in 2010,
3,785 (or approx.
91%) were wage Wage
and hour related & Hour
complaints! 91%
8. Wage & Hour Lawsuits Becoming
Stronger Focus for the Plaintiff’s Bar
• Non-government wage and
hour settlements in 2010
remained high. For the top
10 settlements in 2010:
Total: $241M
Average: $22M
Median: $14.8M
9. The Beat Goes On
Total Number of FLSA Cases *
8,000
12.4% Increase
6,825
6,073 from 2009-2010
6,000 5,393
4,000
2,000
0
2008 2009 2010
What does this all mean?
More class/collective action players for the future.
*http://www.uscourts.gov/Statistics/JudicialBusiness/JudicialBusiness2010.aspx
11. The New DOL
• Secretary of Labor Hilda
Solis:
“Make no mistake
the DOL is back in
the enforcement business.”
• National public awareness
campaign: “We Can Help”
• “Bridge to Justice”
Campaign
12. DOL’s Enforcement Approach
“Plan, “Plan, Prevent, and Protect””
• Encourages employers to “find and fix” violations before the
DOL Investigators arrive.
• Employers are expected to design and implement plans to avoid
violations of workplace laws.
•According to the DOL: "[a]ny employers that seek to exclude
workers from the FLSA's coverage will be required to perform a
classification analysis, disclose that analysis to the worker, and
retain that analysis to give to WHD enforcement personnel who
might request it.”
Bottom line: DOL making obligation to “find and fix” an
affirmative duty; absence of those action viewed as a
compliance failure. – From 4-26-2010 DOL Regulatory Agenda
13. Targeting Healthcare Employers
• Focus on industries "known for
employing vulnerable workers"
Healthcare specifically referenced
• February 22, 2010, DOL Press Release:
– 66% of healthcare employers
investigated by Albany office in last
5 years violated
– Collected more than $2 million in
back wages
– Announced major compliance
initiative targeting New York
healthcare employers
14. Heightened Government Enforcement
• December of 2009: SSM
Healthcare pays $1.7 million in
back wages to nurses for work
done during unpaid meal breaks
to settle DOL lawsuit.
• February, 2010: Missouri
hospital pays $280,000 to
employees for unpaid pre- and
post-shift work, and work during
auto-deduct meal periods.
15. A Question For You
In the past 12 months, has your
organization been faced with a
wage & hour claim from current
or former employees?
Yes
No
I don’t know
16. Health Care Class Actions Are All
Over the Map
Wage Hour Class/Collective Action Complaints Against Healthcare
Organizations Since 1/1/09
WA MT ND
AK
4
MN
1 ME
SD WI
OR ID
3 52
VT
NH
WY MI
NY MA
IA
CT RI 14
NE
1 30 32 PA 2
IL IN
9OH 5
154 NV UT 1 NJ
CO
KS MO
4 WV
MD
DE 3
1 1 3
CA 7 KY
3 VA
4 2 OK 1 TN 20 1 NC
AZ NM
AR
D.C. 2
SC
MS AL
GA
1
HI
22
TX LA 1 12 10
FL
95
17. Thomas & Solomon
• Small law firm in Rochester
New York began targeting
large health care systems with wage and hour class
actions in 2008
• 2008 T&S filed class/collective actions against
healthcare systems in Rochester, New York
• Quickly moved to Buffalo and Syracuse, New York
• Spring 2009, filed class/collection actions against
Pittsburgh-area healthcare systems
18. Thomas & Solomon
• September 2009 filed
actions against 5 Boston
healthcare systems
• November 2009 filed actions against 7 Philadelphia-area
healthcare systems
• March 2010 filed more than 20 federal and state court cases
against almost every major healthcare institution in New York City
• New healthcare employers added to www.hospitalovertime.com
website frequently.
Website lists healthcare employers in 48 states, the District of
Columbia, Guam, Philippine Islands, Puerto Rico, and Virgin
Islands.
19. Modus Operandi
• Obtain employees’ names and addresses
from publicly available directories of
healthcare licenses.
• Send “investigatory” letters to employees’
homes to offer assistance in protecting
employees’ rights.
• Obtain “consents” through word of mouth,
home mailings, and website:
hospitalovertime.com.
• Target largest healthcare employers in
specific cities.
20. Modus Operandi (cont’d)
• Simultaneously file actions against largest
healthcare employers in target cities.
• Boilerplate complaints with virtually identical
claims asserted against all targeted employers.
• Issue press releases to garner media attention.
• Generally file motion for conditional
certification with complaint or very soon after
filing of complaint.
• Force employees to fight on two fronts by filing
claims in state and federal court.
21. What to Expect: Solicitation
Plaintiffs’ firms are hiring outside companies to send email blasts to
employees of target companies. Below is actual text from one such
email:
-----Original Message-----
From: Hours Worked [mailto:medrecallnewscl@gmail.com]
Sent: Monday, January 04, 2010 3:50 PM
To: [INSERT NAME]
Subject: You May Not Have Been Paid For All The Time You Were Permitted To Work
IF YOU WORKED AS AN HOURLY EMPLOYEE FOR A HEALTH CARE FACILITY OR HOSPITAL
OUR INVESTIGATION SUGGESTS THAT...
YOU MAY NOT HAVE BEEN PAID FOR ALL THE TIME YOU WERE PERMITTED TO WORK!
PROTECT ANY AMOUNT YOU MAY BE OWED BY CALLING NOW.
(this is not a sales program)
BECAUSE OF SEVERAL EMPLOYMENT LAWS, EVERY DAY YOU DELAY MAY ELIMINATE YOUR ABILITY TO RECOVER
MONEY.
CALL TOLL-FREE FOR NO OBLIGATION INFORMATION (888) 668-3817
22. What to Expect: Solicitation
• Lawyers are using vendors such as “services to
lawyers” (http://servicestolawyers.com/home/),
traditionally used for medical malpractice,
workers compensation claims and car accident
cases, to spam employees of hospitals and
healthcare providers with this type of information.
• Email addresses can be identified either by:
– Identifying a domain name
(____@littlerhospital.org)
and obtaining an employee roster
– Obtaining a list of employees (such as nurses)
from a professional licensing board
23. The “Copycat” Problem
• Major players like Thomas & Solomon have provided
a roadmap to other plaintiffs’ firms
– “Copycat” firms piggyback on the efforts of others by
copying publicly available work product and strategies
– Electronic resources facilitate information sharing among
Plaintiff’s firms practicing in same industry (i.e. “Pacer”
federal court filings readily available to the public)
• Carlson Lynch
– At least two recent auto-deduct class actions against major
hospital systems in Illinois
– Also hit healthcare systems in PA & Ohio
24. Other Law Firms Now Looking
at Healthcare Employers
• Joseph Sellers of Cohen Milstein
– Lawyer who filed huge gender discrimination class action v. Wal-Mart
recently filed wage hour class action against Gentiva
• Klafter Olsen, major class action law firm
– auto-deduct meal break case against Kindred
• Blumenthal, Nordrehaug & Bhowmik, California
– Several class actions against Kaiser—IT misclassification
• Outten & Golden, New York
– Ruggles v. Wellpoint: significant nurses misclassification collective
action
• Shavitz Law Group, Florida
• Morgan and Morgan, Florida
- Shavitz & Morgan – high volume firms targeting smaller employers
26. Pay Practices
1. Auto Deductions for
Meal Periods.
2. Deductions for Short
Meal/Rest Breaks.
3. Exception Time
Reporting.
4. Rounding.
5. Early Arrivers and
Long Punching.
27. Pay Practices (con’t)
6. Pre- and Post-shift Computer Logging
and Other Activities.
7. Discrepancies Between Time Records
and Other Electronic Records.
8. Remote Work.
9. Garbage In, Garbage Out.
10. Failure to Include Bonuses, Incentives,
and Commissions in Overtime
Calculation.
11. Editing Time Records.
29. A Question For You
In 2011, my organization is
spending more on wage and
hour compliance and risk
management:
Yes
No
I don’t know
30. The Good News
• Despite rising number of claims, there
are measures employers can take now to
strengthen defenses and make
themselves a less attractive litigation
target.
• Many “preventative steps” can be
quickly implemented with little or no
cost.
• Most healthcare employers already have
the basic compliance structure in place
on which a more elaborate wage and
hour compliance model can be built.
31. Building a Good Faith Defense to
Off-the-Clock Claims
• Key problem for healthcare
employers is lack of sufficient
evidence to establish proper
timekeeping and “good faith”
defense to off-the-clock claims.
• Compliance model should be
targeted toward building evidence
of employer’s good faith efforts to
ensure employees accurately
report and are paid for all working
time.
32. Obstacles to Effective Compliance
Model
• Employees and managers have
misconception about respective legal
obligations and what is compensable
working time.
• Employees are often careless
timekeepers.
• Some managers may instruct employees
to work off-the-clock due to budgetary
restrictions.
• Some unscrupulous employees may
falsely claim off-the-clock work.
33. What is a Faragher/Ellerth Defense?
• In certain areas of the law,
courts have recognized
something called the “doctrine
of avoidable consequences,”
which prevents a party from
recovering damages where the
injured party could have
avoided harm through
reasonable efforts.
34. What is a
Faragher/Ellerth Defense?
• Used for 10+ years in Title VII
matters, following US
Supreme Court decisions in
Faragher and Kolstad.
• Courts have now started to
recognize the validity of this
defense in wage and hour
actions.
35. What if We Don’t Use
Preventive Measures?
• Recent nationwide collective action lawsuit (1/20/10)
filed against Northwestern Memorial Healthcare in
Illinois alleges that failure to use remedial measures
constitutes evidence of employer “bad faith” and “willful”
wage and hour violations:
– “Despite this ‘off-the-clock’ work, defendant did not provide
additional compensation to Plaintiff or other class members,
nor did it take ameliorative measures to ensure that such
‘off-the-clock’ work ceased occurring.”
• Failure to adopt any remedial measures could be used
against a healthcare company in wage and hour
litigation.
36. Element 1:
Adopt and Publicize Clear
Timekeeping Policies and Procedures
• Timekeeping policies should appear in
handbooks, ethics policies, and collective
bargaining agreements.
• Require signed receipt to demonstrate
knowledge
of policies and procedures.
37. Element 1: (cont’d)
Adopt and Publicize Clear Timekeeping
Policies and Procedures
Recommend policies should:
• Define working time with examples that
target most common misconceptions.
• Address meal periods, and instruct
employees on what to do if a meal
period is interrupted or missed.
• Prohibit off-the-clock work but advise
that in the event work is performed,
employees will be paid.
• Require immediate reporting of off-the-
clock work within 72 hours of
occurrence.
38. Element 1: (cont’d)
Adopt and Publicize Clear Timekeeping
Policies and Procedures
Recommend policies should:
• Provide a mechanism for employees to report
off-the-clock work.
• Require advance authorization for overtime
except in the event of an emergency.
• Advise employees that no one is authorized to
require off-the-clock work.
• Require employees to pursue alternative
complaint mechanism by calling 1-800 number
if no response received from initial complaint
within 5 business days.
39. A Question For You
Regarding wage and hour
training, in the next 12 months,
my organization is:
Already conducting
training
Planning to implement
training
Considering training
I don’t know
40. Element 2:
Training
• Train both managers and employees
regarding FLSA and state law wage
and hour requirements and Company
timekeeping policies and procedures.
• Training should involve interactive
learning model with examples
targeted toward common violations
(i.e., missed meal periods, improper
supervisory instructions, and
volunteering).
41. Training ROI
• Prevent inadvertent federal and
state law violations.
• Prevent claims:
• Policies are clear and
irrefutable.
• Plaintiff credibility?
• More difficult to certify a class.
• Reduce damage awards and
potentially build a good faith
defense.
• Build a culture of compliance.
42. When To Train
• Should be integrated into
employment relationship.
• Should be done regularly to
reinforce policies and
understanding:
– Employee orientation.
– New manager training.
– When there are new legal
developments or policy changes.
– Every 2 years.
– More often for highly specialized
compensation jobs.
43. Who Should Be Trained
• Employee training should
focus on the basics, such as:
– Review of key policies.
– Define hours worked.
– No off-the-clock work.
– Meals and rest periods.
– Rules relating to OT.
– Reporting and correcting
errors, and misconduct.
44. Who Should Be Trained
• Manager training should
focus on employee topics, plus:
– Compliance responsibilities.
– Handling employee
complaints.
– Manager misconduct.
– Prohibition against
retaliation.
– Good record keeping
practices.
45. Training Solutions
• Live Training:
– Instructor led and tailored to audience (i.e., senior
leaders).
– When highly customized materials required.
• E-learning:
40%+ (and growing) of employers today chose e-learning
solutions.
– Interactive and engaging – hands on experience.
– Creates electronic records and employee
acknowledgments.
– Significant cost savings
– Easy to reach bulk of managers and employees –
repeatedly.
– Content can be duplicated for evidentiary purposes.
– Ensures exposure to policies
46. Online Training Advantage
• Online training is consistent and
repeatable.
• As a result, can be presented to a
jury or mediator exactly the way
learner saw it.
Clearly demonstrates that if after
training employee violated
policies, it was NOT because of
lack of understanding, but
deliberate attempt to circumvent
employer’s pay rules.
47. Online Training Certification Page
Employees must
certify that they
Have completed the
course;
Have reviewed your
wage & hour and payroll
policies and will abide by
them; and
Know who to call with
any questions or
concerns
48. Element 3:
Certification of Time Records
• Require non-exempt
employees to review time
records.
• Daily review is ideal but
something less frequent can
be used provided employees
have the opportunity to
review actual records.
• Provided records are
correct, require employee
certification as to accuracy.
49. Element 3:
Certification of Time Records
• If records are not correct, require
employee to identify any
inaccuracies to permit immediate
correction.
• Require employees to review
accuracy of paycheck and, if
systems permit, certify secondary
review. On-line tools make this
level of review more available.
• Certification should cover off-the-
clock work and meal periods.
50. Element 4:
Adopt a Robust Complaint Mechanism
• Most employers already have some type of
complaint mechanism in place…..but
• Existing complaint mechanisms often do not
specifically reference wage and hour issues.
• Revise existing complaint mechanism to ensure
it specifically addresses wage and hour issues.
• Publicize complaint mechanism in handbooks,
open door policies, collective bargaining
agreements, ethics handbooks, and other
employee communication channels.
51. Element 4: (cont’d)
Adopt a Robust Complaint Mechanism
• Train managers and payroll personnel
to be alert to payroll concerns and
treat any complaints with same level
of attention as other employee
relations complaints (i.e., sexual
harassment).
• Promptly investigate payroll concerns
using same techniques and controls as
other types of internal complaints.
• If determined to be appropriate, take
prompt and effective remedial steps.
• Effective remediation may require
payment of back wages.
52. Element 5:
Audit Time Records for Compliance
• Adopt an audit protocol to ensure
employees and managers are
following policies and procedures.
• Audit protocol should be designed to
be discoverable in the event of future
litigation as part of Company's good
faith defense.
• Promptly investigate and remediate
any discovered violations.
• Implement appropriate discipline for
managers and employees in the event
of violations.
53. Element 6:
Impose Appropriate Discipline for Policy
Violations by Employees and Managers
• In some reported cases, employers
have been criticized for quickly
disciplining employees for
timekeeping violations but
not doing so for manager violations.
• Manager misconduct is increasingly
being characterized as “wage theft”.
• Promptly address Manager
misconduct. Where confirmed,
consider it a serious violation of the
Company's most important policies.
54. Element 7:
Periodic Reminders
• Timekeeping policies and procedures
should be reinforced through available
communication means.
• Annual letter to all employees.
• Newsletters.
• Ethics alerts
• Postings.
• Refresher training.
55. A Question for You…
If your organization may be interested
If your organization
in purchasing ELT’s online training
may beand you would likein ELT
solutions, interested an
purchasingto follow uponline
Sales Executive
ELT’s with you,
type "YES" in the box below.
training solutions, and
you would like an ELT
Sales Executive to
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