USDOL + ABA = Trouble?

If you have spent any time at home during a weekday recently, or have noticed the billboards along the highway, you know that plaintiff attorneys (the ones who sue you) are increasingly advertizing to capture the business of unhappy ex-employees or unhappy employees who feel that they have been incorrectly compensated. Wage and hour lawsuits are on the rise. The ability to turn one complaint into a class action suit makes it even more attractive to these attorneys. The US Department of Labor has made it easier for attorneys by publishing on their website the names of companies that have been investigated by the USDOL, detailing the findings against them. (See US Department of Labor: It's War! And Employers Are The Enemy)

Yesterday I read (thanks to fellow blogger Stephanie Thomas) about a program between the USDOL and the American Bar Association that will provide referrals to attorneys when someone files a complaint. According to Patrick Smith "...the purpose the collaboration is to 'help workers resolve complaints received by DOL’s wage and hour division.'" According to his post in the Iowa Employment Law Blog:

Beginning December 13, 2010, people with unresolved complaints under the Fair Labor Standards Act (FLSA) or Family and Medical Leave Act (FMLA) will be sent a letter explaining their rights, and providing a toll-fee number that will connect them with an ABA approved lawyer referral service in their area. These are complaints that the Department of Labor is otherwise charged with investigating but apparently cannot because of what the Secretary of Labor described as the Department’s “limited capacity.”

Writing in The DOL's Lawyer Referral Arrangement with ABA Not Likely to Help Employers or Employees  Smith opines that this arrangement will not be good for employers or employees in the long run. He states that "Contrary to the assumptions underlying this program, in my experience and that of other employer side lawyers I know, the lion’s share of companies are conscientious about complying with the employment laws. The high cost of defending employee claims and the risk of an adverse outcome, regardless of the merits of the suit, give employers an economic incentive to comply with the law." He feels it will increase the cost of litgation and take money away from rewarding the employees in the company. His opinion is that are more effective ways to deal with non-compliant companies than increasing their litigation risks.

Attorney Daniel Schwartz, writing in the Connecticutt Employment Law Blog, has a diffferent opinion of the program. In his post, US Department of Labor Teams with ABA For Lawyer Referral Service, Schwartz says "This seems to be a win-win type partnership not only for the USDOL and the ABA, but also a win for employers and employees alike. Any employer that has dealt with a pro se litigant (i.e. someone representing his or her self) can understand how expensive it is to litigate such cases. Having a competent and qualified counsel to represent individuals should, in the long run, help employers solve any thorny issues that arise."


In a comment to Smith's article he also states "People who are going to sue are going to do so regardless of whether they have an attorney. And in such cases, employers are better off with an attorney representing that individual than a pro se plaintiff. All this program provides is something that local bar associations have done -- refer people to speak to an attorney." In this particular case Schwartz maybe right. This could be a good thing if the people suing you may have a better class of lawyer than you may find off a TV ad. Perhaps a good attorney may actually discourage them from pursuing a frivolous suit.

So "the jury is out on this one" (yes, pun intended). It remains to be seen what kind of activity this alliance aka "referral program" may bring. What do you think? Good thing or bad thing?

By the way, the best lawsuit preventative is a good, compliant Human Resources system with well trained supervisor and managers. If you are not sure you have one, let me know. I can help you.

If you wish to read Patrick Smith's post it can be found here. Likewise the different point of view by Daniel Schwartz can be found here.

DOL Stands for Department of Labor NOT Department of Employers

I have written numerous times about the efforts of the US Department of Labor to increase their compliance efforts. They have taken a much more advesarial stance to dealing with employers. To find those posts I have written just do a search on this blog on USDOL. One of the posts you will find deals with their "WE CAN HELP" program. This is designed to help your employees report you, their employer, to the DOL so you can be investigated.

My fellow blogger Jon Hyman, an employment attorney, was poking around on the We Can Help pages and he came across something very interesting. He discovered something called the Work Hours Calendar. It is a tool for your employee to track their work time. It provides a way for employees to record arrival time, start time, break and meal times, stop time and when they actually leave. It gives lessons on overtime, misclassification, and what are called donning and doffing rules. These are the activities employees engage in to prepare for and to conclude work. They are told to keep these records and then to send them to the DOL. You can find this worksheet here.

Jon and I both believe that the Wage & Hour division is looking in particular for violations that can be classified as "off the clock". I strongly suggest that you go to Jon's blog and read his take on this. He can be found at  Do you know? The DOL is encouraging employee covert ops in your business.

Pay particular attention to his final line. Can you really put off that wage & hour audit? I don't think so. Find yourself a good consultant or good attorney and get this done. (In great modesty, I can make a very personal recommendation for a great consultant. )

Independent Contractors: Perhaps the Government Should Clean Up Its Own Mess

I have a WIN-WIN-WIN suggestion based on the following news story I heard on the WSB radio in Atlanta this morning. Scott Slade reported:

ONE REASON THE POSTAL SERVICE LOSES SO MUCH MONEY IS ITS USE OF THE PRIVATE-CONTRACTOR GAME. NEWLY RELEASED AUDITS SHOW THE AGENCY HAS HIRED BACK HUNDREDS OF FORMER TOP EXECUTIVES AND LOWER-LEVEL WORKERS AS PRIVATE CONSULTANTS, SOMETIMES AT TWICE THEIR OLD PAY SCALES.... THIS WEEK THE POSTAL SERVICE IS EXPECTED TO REPORT BILLIONS MORE IN LOSSES DUE TO DECLINING VOLUME. IT FACES A BUDGET GAP OF $230 BILLION OVER THE NEXT 10 YEARS.

Now if this was a large company in the private sector the Department of Labor and the IRS would be all over this abuse of the use of INDEPENDENT CONTRACTORS. I am pretty sure what the Post Office is doing would not pass the IRS rules for independent contractors. If you need to be remind of what these are you can read my post The IRS and HR: Who is an Employee?

What are the WINS in the IRS and USDOL cleaning up the Post Office?

• Win #1: The Post Office will stem the loss of money. We need the Post Office to survive. (At least at my house anyway, my wife works for an envelope company. Send more letters!)
• Win #2: The investigation of the Post Office will give the government some badly needed credibility. It will show they hold themselves to the same standard as they hold the private sector. (Well almost, you still cannot sue the government.) It could serve as a strong warning to the private sector to clean up their IC issues.
• Win #3: Having investigators occupied with the Post Office will keep some of them out of the field investigating private companies. Someone out there, perhaps you, might get a reprieve.

There you have it. A WIN-WIN-WIN suggestion to start off a Monday. Do you see any other positives that could come out of this? What about the downside?

Employment Law Compliance: It Is Not Your Father's USDOL

I know there have been some arguments amongst HR people calling for reform in the HR field to have "legal" handle compliance and let HR deal with "people/talent" issues. My reaction to that statement is that it works very well in a company that has "legal". However, far many more companies do not have an in-house legal department and to go to outside to legal counsel would be very expensive. So the HR practioner has to be the "compliance officer." And in today's world that is NOT a simple issue. As I have stated many times in this blog the world of employment compliance is much more complicated and dangerous. The USDOL has hired 250 more wage & hour investigators, another 200 or so OSHA investigators, another 100 or so contract compliance officers for the OFCCP, the IRS is putting on more people to investigate independent contractor situations, the EEOC has been given several million dollars to beef up its efforts, ICE is getting hot and bothered about I-9s and all of them say the fines will be increased heavily and they are looking for CRIMINAL cases not civil remedies. And State DOLs are jumping on the bandwagon too.

One well known "Co-Employer" or PEO, which used to advertise their services as a way to recruit and retain employees is now advertising using the phrases "Trampled by overpowering employment law", "steeper fines", "harsher penalties" and "choking on red tape". So people are starting to sit up and pay attention. You should too...

I borrowed from the old Oldsmobile commercial for my title. This is not the same USDOL from 20 years ago. This one has stated you as an employer are stealing from your workers and they are out to get you. So beware and remember this is the US DEPARTMENT OF LABOR, NOT THE US DEPARTMENT OF EMPLOYERS. Hone those compliance skills and keep up to date on the ever changing world of employment law.

And, by the way, you had better pay attention to the National Labor Relations Board too. They also are not on your side and may make rules changes that may make it much easier for someone to organize you employees. You make wake up one day and have a union in your lap.

Great way to start a week huh?....

A Pre-Labor Day Warning

As we come up to Labor Day, a day originally intended to appease labor unions, I thought it would be constructive to remind readers of the current state of affairs with the U.S. Department of Labor. Notice that last word please... it is NOT the U.S. Department of Employers. There is a Secretary of Labor, who has a union background and family history. She has publically stated that that employers are stealing money from their employees and that she is "the new sheriff in town" who will rectify the situation. So the Wage & Hour section has hired more investigators. The Office of Federal Contract Compliance, part of the USDOL, has also stepped up investigations, in particular applying a standard of equal wages to federal contractors. OSHA, also part of the USDOL, has hired more investigators and the Assistant Secretary has announced that he intends to pursue CRIMINAL solutions to safety violations.

The USDOL has also broadcast a program called WE CAN HELP. See my April 6, 2010 post entitled US Department of Labor: It's War! And Employers Are The Enemy .

So what can you do as an employer? Well I would suggest the following:

• Have accurate records of all employees rates of pay.
• Make sure all employees are accurately classified.
• Make sure your independent contractors are indeed independent.
• Have clear policies on overtime and make sure employees and supervisors know them and follow them.
• Have clear policies on work performed outside of "normal" work hours. Often called "donning" and "doffing" rules they deal with the prepartory work necessary to do work.
• Make sure people taking meal breaks do so for at least a half hour and that they are full relieved of ALL duties.

I will give you an example of a violation. My son worked for a landscaping company. The boss had them arrive at the workplace for a meeting prior to being released to the worksite at 8 am. He did not pay them for the meeting. He paid them from 8 am until 5 pm. His reasoning was that they were not performing the work they were hired for by sitting in the meeting. BIG NO-NO.

So if you are dealing with alot of hourly workers be very, very aware.

Feds Getting Heavy on I-9 Enforcement: So Dot Those I's and Cross Those T's

I have written several times on the new emphasis that the Feds, specifically the USDOL, the EEOC, the OFCCP, and ICE of Homeland Security, are putting on clamping down on employers. Well I picked up my copy of HRMagazine today and read the column "Federal Enforcers Wield Big Sticks". Writer Beth Mirza provides more ammunition to what I have been saying. She is talking in particular about the I-9 form. She quotes attorney Mary Pivec, of Keller and Heckman LLP as saying employers are "carrying extreme liability" in their I-9 forms because aggressive agents are "looking for people to prosecute."

According to Mirza and Pivec the volume of I-9 audits will be stepped up considerably in 2010 and , get this, THEY ARE NOT SEEKING CIVIL REMEDIES, THEY USING CRIMINAL ENFORCEMENT AGAINST EMPLOYERS! This means business owners can have their PERSONAL PROPERTY SEIZED and middle managers (aka HR) can be charged with THE FELONIES OF CONSPIRACY AND HARBORING.

That is not the only arena. Wage and Hour class action suits are on the rise, OSHA is getting very aggressive and seeking criminal remedies and a friend told me today that federal contractors are now being told by the OFCCP that the will be found guilty of discrimination if they source candidates through social media sites since the majority of social media users are white. I have not confirmed the last bit of information, but I will let you know if I do. But the other stuff is fact.

So your HOUSE had better be in order! Unless you think you look good in an orange or blue jumpsuit.

No Wonder this Job is So Hard: Contradictory Messages From the Government

Being in Human Resources today is no "bed of roses." (For my non-English speaking readers, this idiom means "a comfortable situation". Though I have often wondered since roses also have thorns.) Anyway, I digress. The fact is that being in HR is tough, especially for the compliance side of the house. Part of this difficulty comes from the contradictory messages the Federal government puts out. On the one hand we have laws that prohibit illegal, or in today's parlance "undocumented", aliens from holding jobs in the United States. This the 1986 Immigration Reform and Control Act for those of you unsure. This law created that form, the I-9, that so many companies screw up on. In addition to that, we have a whole set of laws designed to deal with businesses that do business with the government, aka Federal Contractors, that prohibit any use of illegal labor. These regulations require that federal contractors even verify legal status by using the E-verify system. So you would think the Federal government would be dead set against ANY promotion of illegal workers.

Yet, in this video, U.S. Secretary of Labor Hilda Solis, announces that even if you are "undocumented" you are to be afforded protection of US laws. Some groups are saying she is violating the law. I don't think that technically correct, but the message certainly is contradictory to what other aspects of the Federal Government (USCIS) and the OFCCP (which is part of DOL) say to employers.


By the way, I dicussed the We Can Help site that this video appears on back on April 6th, when I discussed US Department of Labor: It's War! And Employers Are The Enemy . This video shows definatively that We Can Help is not an employer friendly program.

WOW! Proposed Legislation That Actually Sounds Good

I am somewhat surprised at myself for saying this but a piece of legislation got proposed on May 17th that actually makes sense. The US Department of Labor delivered the  Unemployment Compensation Integrity Act draft legislation to Congress on Monday May 17th. The draft legislation, if enacted, will help states fight employer fraud and reduce improper benefit payments.

According to Secretary Solis "The Unemployment Compensation Integrity Act would give states the additional resources and tools they need to guarantee that only those who are eligible for benefits receive them and employers who defraud the system pay their fair share of taxes."

These resources and tools include:

• Among several provisions, the act would permit states to use up to five percent of recovered unemployment compensation overpayments to deter and detect benefit overpayments.
• It also would allow states to use up to five percent of contributions collected due to employer fraud or tax evasion — including misclassification of employees — to combat these problems.
• Mandates would include requiring states to assess a penalty of not less than 15 percent of the amount overpaid on any overpayments that result from claimant fraud.
• The act also would give employers an incentive to provide timely, accurate and complete information about why their former employees no longer work for them — information that is critical for states to make proper benefit payment decisions.
• Additionally, the act would require employers to report the first day of earnings for new hires to the National Directory of New Hires. This step would help to reduce overpayments due to individuals who return to work but continue to collect unemployment compensation.

So, this legislation can clean up Unemployment Fraud. Now if we can just get Workers' Comp fraud cleaned up that will be helpful too.

An Aggressive USDOL Means Jobs: Interested?

The "New Sheriff in Town" is hiring. Secretary of Labor Hilda Solis, in her aggressive campaign against employers is in need of "deputies." You cannot conduct all those enforcement activities without people. So the USDOL is in a big hiring mode. If you have ever considered working for the government and want to apply your HR background this may be an opportunity. The Feds, just like any other employer needs talent, especially management talent (that is an understatement, but we won't go there).

If you are in need of work, can swallow your pride (just kidding) and go over to the "enemy" (your HR friends may never talk to you again) here is the link to DOORS (DOL Online Opportunities Recruitment System) where you can view jobs that are available.

I am not sure what the long term prospects may be, but if you stick around, the Federal Government may be the only organization that will be able to afford to pay pensions.

Four Blog Posts You Need To Read Immediately if You Are In HR

Here are four great blog posts with some terrific information that all HR pros need to read. The posts will speak for themselves. Good reading by some great bloggers.

Do you know? DOL to require “compliance plans” by Jon Hyman

On the Upsides & Downsides of Proactive Pay Audits by Ann Bares


The Real Reason for Exit Interviews by Sharlyn Lauby


How to lose a good employee in under five steps by April Dowling

OSHA: "A New Sheriff In Town"

In a speech to the American Bar Association in March 2010, Assistant Secretary of Labor for Occuaptional Safety and Health, David Michaels said "I know that by now you've all heard Secretary Solis describe DOL under this Administration as the "new sheriff in town." This is not an abstract wish; it is a stern description of how OSHA is now working - and I take this phrase seriously."


OSHA has taken a much more intense and "gonna get you" approach to dealing with employers. Michaels went on to further comment "First and foremost, we will emphasize strong enforcement - as evidenced in our record-breaking $84.7 million citation against BP Texas City, and the sharp increase in our egregious cases." He then added "If the threat of a fine isn't enough, we have other ways to drive home the point that employers need to obey the law." (My emphasis). To emphasis the point he stated "...we conducted the first-ever vehicle seizure in an OSHA whistleblower case..."
 
According to attorneys at Seyfarth Shaw much of what OSHA administers may now have criminal implications. Injuries may now be indictable and employer representatives and executives may now be subject to criminal prosecution. They number of citations will be stepped up in the "willful" catagories and fines will be increased substantially.
 
A company's liability under the Multi-employer Workplace Doctrine will increase. As an employer using outside contracting companies in your facility you will now be responsible for the safety training of those employees. Failure to provide this training is a violation and may be deemed a willful violation.
 
The general duty clause will take on broader meaning to allow OSHA to cover anything not specifically covered in the regulations. Ergonomics will become a bigger issue.
 
Michael's further states in his speech.. So, you can expect to see us moving, to the extent we can, toward higher penalties, not only to send a message to those employers who neglect their workplace responsibilities, but also to those employers who need reminding that a safe workplace is not something to think about only when it's convenient - when you have the time and money - but every day."
 
So, are you feeling that target on your back getting bigger?
 
Tomorrow I will conclude the week with some tips on what you can do to prevent or mitigate a visit from an OSHA inspector.

Five Steps to Diminish Wage & Hour Problems

First off let me get the disclaimer out of the way. I am NOT an attorney. I am NOT providing legal advice. I am making these statements from the perspective of an HR professional, consultant and HR instructor that has dealt with Wage & Hour issues for a long time. With that said here is my list of things that may help you avoid a wage & hour investigation or, if you have one, may help you come out better as a result.

1. Step 1: Be educated. If you have been in HR for any period of time you have run across FLSA issues. You may think you know them. Hopefully you do. However, my 12 years of teaching has shown is that many people know how their company does things and not what the law says. Many times the "company" way of doing things is NOT correct. Additionally, there are variations on wage & hour issues that vary by states and also muncipalities. There is alot of material out there that will provide you guidance, the only caveat is to make sure you are getting materials published as recently as possible. The FLSA was altered substantially in 2004, so stay away from pre-2004 materials. The USDOL website actually offers materials that will help educate you. You can see their powerpoint by clicking Fair Labor Standards Act.
2. Step 2: Educate your managers and supervisors. The interaction between manager and employee is where the "rubber meets the road" and most of your violations will occur here. Make sure they understand that no one works for "free." Make sure they understand not only the rules but also company policy on how to deal with issues as unauthorized overtime, breaks, meal times, travel time and "donning and doffing" time. Wage and Hour Law (Basic Training for Supervisors) is a guide book you can get from Amazon that provides some good basic training.
3. Step 3: Realize that jobs classified at EXEMPT must truly meet the exemptions standards set forth by the FLSA. Job titles do not reign supreme. You can review these exemptions by viewing this powerpoint on exemptions. If as a result of your review of the exemptions you find it necessary to interview managers and/or employees, the lawyers of Seyfarth Shaw recommend that you involve an attorney in order to preserve the attorney-client privilege. If you engage an outside consultant make sure their work is being directed by an attorney as well in order to safeguard the privilege.
4. Step 4: Create the appropriate policies. This includes a "Safe Harbor" policy to help protect you in case mistakes do get made. This policy needs to prohibit improper deductions, provides a mechanism for employees to complain TO YOU about them, and specifies you will correct the errors and promise to not make those mistakes again. Depending on the nature of your workforce you also need to specify other policies that deal with your employee population and the way they report time, get paid for that time and under what circumstances. These may include some of the things mentioned above, such as meal times, overtime, being fully relieved of work during meal times. But it may also include training time and travel time. You need to be specific to your workforce.
5. Step 5: Train your employees. We covered supervisor training, but rather than having them correct behavior all the time it is easier to explain to employees what correct behavior is and thus avoid wage and hour issues. So once you have the policies written make sure you spend some time educating.

The USDOL has targeted some specific industries, including healthcare, restaurants, janatorial services, day care, car washes, and the temporary help business. But just because you are not on this list does not make you safe. A complaint from an employee or ex-employee may also bring a visit. So hopefully this brief statement may help you avoid some problems. Will it stop all of them? No.. remember the FLSA is 700 pages long. But the more you can do to ward off complaints being filed, the more you can do to keep investigators from visiting, the more you can do to lessen the impact of what they may find if they do visit, the better off you will be.

Tomorrow, stay tuned for what lies in store from OSHA.

US Department of Labor: It's War! And Employers Are The Enemy

In a press release issued April 1 (yes April Fools Day, but this is no joke) Secretary of Labor Hilda Solis announced the release of the "We Can Help Program." If you were a trusting soul you might think this was a program to help employers correct wage and hour mistakes so that workers would be properly compensated. The FLSA is not an easy law to understand and deal with. After all there over 700 pages of regulatory text and over 50 statutory exemptions. So what would be better than a program to help employers to better understand this law. Well if this is what you think then you are the April FOOL.

The "We Can Help Program" is "being spearheaded by the department's Wage and Hour Division, will help connect America's most vulnerable and low-wage workers with the broad array of services offered by the Department of Labor. The campaign will place a special focus on reaching employees in such industries as construction, janitorial work, hotel/motel services, food services and home health care. It also will address such topics as rights in the workplace and how to file a complaint with the Wage and Hour Division to recover wages owed."  (My emphasis.) The AFL-CIO touted this announcement as a war on "wage theft" and Solis reiterated this by saying "If someone is stealing your wages, you can and should call the Department of Labor….We can help, and we will help. If you work in this country, you are protected by our laws. And you can count on the U.S. Department of Labor to see to it that those protections work for you." Employees are going to be "helped" to identify you as a thief and be taught how to report you. Luck you.

 

As further evidence that the USDOL is not going to be a friend of the American employer they have announced, according to Seyfarth Shaw attorney, and former Deputy and Acting Administrator of the USDOL, Alexander J. Passantino, that NO MORE opinion letters will issued. So an employer cannot ask for the USDOL to rule on a position to determine if it is exempt or not. Additionally, another 293 Wage & Hour investigators have been hired and trained and another 90 have been requested. A Chief Enforcement Officer has been appointed to head this effort up.
 
Additionaly actions that have or will occur include:

• Previous investigations will prompt more investigation
• An employers investigation history will be available on the website of the USDOL
• If  you accepted any stimulus money you will be investigated or if you are a subcontractor to someone who accepted stimulur money or is subject to Davis Bacon you will be subject to investigation.
• Information about investigations may be shared with other Federal agencies, such as the IRS and Department of Homeland Security and also with state department of labors.

One of the major outcomes of the second bullet is that personal injury attorneys these days are getting into the Wage & Hour business. They are bringing lawsuits on behalf of employees or ex-employees. They advertize on daytime TV these days. With the records of an investigation against you now being published on the USDOL website they now have identified targets and have been known to seek out your ex-employees or even your current employees. They are even actively soliciting the business when someone calls into them about other lawsuits, according to Seyfarth Shaw attorney, Louisa Johnson.

The USDOL has also announced increased OSHA efforts targeting employers and the NLRB will also step up efforts detrimental to businesses. Both of these issues will be discussed later in the week.

The net result of this new world order is that a BIG  target has been painted on the back of businesses and it is going to require you to be vigilant and proactive.

Tomorrow I will post on some of the Wage & Hour areas you need to pay particular attention to and what you should be looking for and doing with them. In the meantime, please pass this blog post around to other HR folks you know and in particular to any small businesses you know as well. Small business is particulary vunlerable just because they lack HR resources. Until tomorrow.....

Did You Know That OSHA Repairs The Holes in SOX?

There is an old saying that "You learn something new everyday." (For those of you with memory problems that statement is "You learn something knew everyday", LOL) Well today I did. I got One Minute Memo from the Seyfarth Shaw law firm entitled OSHA Steps Up Enforcement of Sarbanes-Oxley Whistleblower Claims. My first reaction to that headline was WHAT????  What does OSHA have to do with enforcing Sarbanes-Oxley violations? I was truly puzzled. What does violations of a financial disclosure law have to do with the agency that does safety inspections??
 
Do you know the answer? (Before you read the answer.)
 
Well it turns out that anyone that claims violations of Sarbanes-Oxley, in particular claims retaliation for reporting violations, must make the claim with the US Department of Labor. OSHA is part of the Department of Labor. And they just happen to have a lot of experience in investigating claims of retaliation for safety violations. As quoted in The Whistleblower Provisions of the Sarbanes-Oxley Act of 2002 by George R. Salem and Laura M. Franze:

"In the past, the Occupational Safety and Health Administration (OSHA) has reviewed the bulk of the complaints received by DOL, probably because most of the current whistleblower statutes administered by DOL involve allegations of safety violations. OSHA also has significant experience in handling allegations of retaliation. It is possible that a new unit, possibly one with specific financial experience, will be set up to handle initial investigations under Sarbanes-Oxley. However, OSHA currently has jurisdiction. Under current practices, the DOL investigates and then issues a “determination letter.” If the letter determination is not accepted by both parties, or the case is not otherwise resolved, the matter is assigned to the Office of ALJ and goes to administrative hearing. These hearings are relatively formal and resemble full-blown trials."

 

This was written in 2003. Given the One Minute Memo from Seyfarth Shaw it is apparent that no new unit was created. So if you are a public company who retaliates against employees for reporting financial violations you will be dealing with OSHA. Given that the Obama Administration Department of Labor has already announce increased enforcement in Wage & Hour and workplace safety this is an indication that SOX enforcement may also be stepped up. As a result Seyfarth Shaw recommends "...employers covered by SOX ... take steps to minimize the risk of claims alleging retaliation for protected whistleblowing. In particular, covered employers should promulgate appropriate ethics and anti-retaliation policies, train supervisors to comply with those policies, and implement hotlines and other methods by which complaints can be fielded and appropriately resolved without actual or perceived retaliation."

 

The lesson here is to make sure you darn your own SOX before OSHA comes in and sticks it to you!

Getting Punished for Trying to do Good: The Lesson in the Quik Trip Fine

QuikTrip, a Tulsa, Oklahoma based convenience store chain, has agreed to pay out $750,000 in overtime payments that the U.S. DOL said were due employees because of a violation of the Fair Labor Standards Act. By just looking at the headline you might think this is the "standard" case of a company working employees off the clock or not counting time they worked. Well if you thought that you would be very wrong. This case has to do with a company trying to do good things for their employees and rewarding them for their good work.

QuikTrip has a bonus system based upon a secret shopper program. Employees are rewarded for extra good work based upon their ratings in the program. What an excellent thing to do! However, QuikTrip got caught in a making a mistake that many companies probably don't even realize they could make too. In fact when I talk about this in the SHRM prep classes I teach most people are agast. The mistake that QuikTrip made was in giving nonexempt employees non-discretionary bonuses! Because if you give nonexempt employees non-discretionary bonuses you have to use that in your overtime calculation for the period of time that was covered by the bonus.

This 2003 article, entitled Intersection of Bonuses and FLSA - Is More Overtime Pay Due?, written by Jason Reisman of the law firm Obermayer Rebman Maxwell & Hippel, explains that "The FLSA requires that non-discretionary bonuses - those promised to employees - be allocated over the time period to which they apply and included in calculating the overtime pay due to non-exempt employees. Such a bonus, viewed under the FLSA as additional compensation for employees' work, requires additional overtime pay beyond the employees' regular overtime pay rate, which is one and one-half times their regular hourly rate of pay. Non-discretionary bonuses that are not paid on a weekly basis require allocation to each workweek covered by the bonus before recalculating the overtime compensation due. Generally, non-discretionary bonuses include attendance bonuses, individual or group production bonuses, bonuses for quality and accuracy of work, and retention bonuses." (For further information click on the link above.)

Discretionary bonuses do not require such payment, but may have consequences beyond just the simple payment of the bonus. To avoid problems Reisman suggests either of the following in constructing a bonus program for nonexempt employees.

1. True discretion - both the language of the bonus plan and the actual administration of the plan must demonstrate "discretion."
   


2. A percentage of total earnings (both straight time and overtime) payout. As to the latter option, instead of a lump sum payment, the FLSA authorizes employers to pay a "percentage bonus" because it automatically includes an allowance for overtime pay as well as for straight time pay. The percentage bonus tool can be a silver bullet to effect compliance with the FLSA overtime provisions, while leaving intact the non-discretionary format of the bonus. However, a percentage bonus still requires advance planning, as it may have associated side effects, such as causing the employer to make different bonus payouts for similarly situated employees who earn different amounts of money, by virtue of different pay rates or working different hours.
   

Or you just don't pay ANY bonuses to nonexempt employees! Overtime problem solved! But wait that certainly does not get you in the direction you want to go in with having committed employees whom you want to reward for helping the company be successful. So careful design and understanding and guidance needs to go into each bonus program you design. Realize the cost of the bonus is going to be greater than the actual bonus designation. And if you don't have someone on your HR staff qualified to do this then get a good compensation consultant to help you. It will be a whole lot cheaper than paying $750,000 in back pay. QuikTrip got burned trying to do something good you need to avoid the same happening to you.

I would like for some of my compensation buddies to weigh in on this and perhaps offer some additional advice. Ann? Phil? Folks at Compensation Cafe?

Helping Your Laid Off Workers: Have You Ever Heard of Trade Adjustment Assistance?

An article in the Wall Street Journal Online,on Monday April 20th, entitled Crazy-Quilt Jobless Programs Help Some More Than Others pointed out a program called Trade Adjustment Assistance. According to the USDOL website "Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) help trade-affected workers who have lost their jobs as a result of increased imports or shifts in production out of the United States. Certified individuals may be eligible to receive one or more program benefits and services depending on what is needed to return them to employment." According to the WSJ article TAA is "an obscure federal program called Trade Adjustment Assistance. Launched by President John F. Kennedy, TAA offers superior unemployment benefits to U.S. manufacturing and farm workers who lose jobs due to imports or production shifts out of the country."

A very small percentage of workers are receiving these benefits, mostly because few workers or companies are aware of the program. Groups of workers, or a company on their behalf, must apply for certification and then workers have to pursue it on their own. "To obtain TAA or ATAA services and benefits, a group of workers must first file a petition with the U.S. Department of Labor's Division of Trade Adjustment Assistance (DTAA) requesting certification as workers adversely affected by foreign trade. If certified, each worker in the group may then apply separately for individual services and benefits through their local One-Stop Career Center. Workers age 50 and older who are certified as eligible to apply for both TAA and ATAA may choose whether to participate in the TAA program or the ATAA program, but may not participate in both."

There are problems with the program beyond it being relatively unknown. One problem is that the staff to handle certification is only 3 people and they are overwhelmed with requests. Another problem, according to the WSJ article is "The trade-adjustment program underscores broader problems with the way U.S. unemployment benefits are distributed. Critics say it's impossible to pinpoint who, exactly, is displaced by global trade. Moreover, they say, singling out a small class of unemployed Americans for richer benefits is discriminatory." The U.S. unemployment-insurance system is a patchwork of state and federal programs. Each state administers its own benefits, doling out up to 26 weeks of checks based on the worker's former salary.

The patchwork nature of the system, the particular requirements of various programs make it difficult to determine who is eligible for what. But if your company or your terminated workers qualify for TAA the benefits are very nice. According to the WSJ "...the government sweetened the pot even more for TAA recipients. Workers approved after May 18 will qualify for an 80% tax credit for health insurance, up from 65% currently. They'll be eligible for as much as 2½ years of cash payments, up from two years now, with schooling and related transportation paid during the period. TAA beneficiaries over 50 who find lower-paying work can recoup as much as $12,000 in "lost" wages from the government, up from $10,000."

So if you are in a business that has suffered due to work being transfered overseas, or foreign competition is making business difficult check into the Trade Adjustment Assistance by clicking on the USDOL link above and learning if you can apply for certification for your workers.

FMLA Definately Needs To Be Cleared UP!

First let me admit I do not do any FMLA administration. My company is too small and most of my clients are as well. But I do get questions about it occasionally and as a knowledgeable HR professional I should know the answers. Well I got posed a question about the rolling year calculation and I was not sure of the answer, thought I knew but I was "iffy". So I posed the same question to a large group of contacts and got back an array of answers. So this indicates that ALOT of people don't know. I even used a help service and the answer they gave was not conclusive either. However, they gave me a link to an article that does give a definitive answer. You will find the link below.

First, here is the scenario. A company uses a "rolling year" calculation, as is recommended. An employee goes out on FMLA on Dec. 1, 2007 and is off the next 12 weeks, returning then around March 1st or so. The question is, when would this individual be then eligible for leave again? December 1, 2008 or March 1, 2009? The company's policy reads March 1. My answer was December 1. The answers from the group were divided.

Well, I am happy to say, my answer was correct, at least according to this article by the attorneys of Harper Gerlach PL. Here is the link to the article, which appeared in the Florida Employment Law Letter.

SHRM has alot of material available to members on the proposed FMLA regulations and on the front page of my company website, Omega HR Solutions , there is a link for the US DOL comment site. If you wish to comment on the proposed changes I would suggest you read this material.

FMLA obviously is, after 10 years, still a confusing and complicated law. With the changes that have occured with the addition of military provisions it has become even more complicated. So educate yourself!