DOL Demonstrates Commitment to Wage and Hour Violations with Launch of New "DOL-Timesheet" App
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In a highly visual public expression of its commitment to wage-and-hour violations, and to encouraging employees to file wage and hour complaints, the Department of Labor’s Wage and Hour Division entered the world of Smartphone apps when it recently launched its own “DOL-Timesheet” app for the iPad and iPhone. At first glance, the DOL-Timesheet App may not appear to be much more than the contemporary technological equivalent of a pad of paper, pencil, and some simple math. But not only does the DOL-Timesheet app track an employee’s hours and wages, it also: (1) contains a glossary of wage and hour terms; (2) informs workers about their rights under the Fair Labor Standards Act (FLSA); (3) contains easy to use links to contact the DOL’s Wage and Hour Division via phone or email; and (4) specifically instructs employees on how to file a wage violation complaint.
With all it does, there are still significant shortcomings and problems with the DOL-Timesheet app. The DOL candidly admits that the app does not address tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest. Additionally, the potential for human error or abuse creates inherent problems with reliability which may call into question the apps utility in a court of law. For example, it is unclear whether the DOL-Timesheet app includes metadata that would allow an employer to determine the time and date employees entered their time which in turn creates the potential that employees might overinflate their hours to seek benefits and compensation to which they may not be entitled.
Despite its shortcomings, the DOL left little question that it hopes and intends to use the information an employee tracks through its new app in its enforcement efforts when it stated the following in its press release announcing the app:
“This new technology is significant because, instead of relying on their employers’ records, worker now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.”
For employers, the key phrase in the DOL’s statement is the last. An employee’s personal time records are unlikely to supplant or surpass an employer’s properly maintained time records. But in the absence of a well maintained and effective time-tracking system, an employee’s personal time records will quickly rise in value in the court’s eyes.
It remains to be seen whether the DOL-Timesheet will garner much attention and use from employees. However, regardless of its ultimate popularity, the DOL-Timesheet app serves as a clarion call to employers to get their proverbial wage-and-hour houses in order. If you are uncertain whether your wage and hour practices hold water under the FLSA, now is as good a time as any to take a good hard look at them.
When to Pay Summer Interns: FLSA Guidance You Need to Know
Certain things have become the recognizable signs of spring. Budding leaves. Flowers. Chirping birds. And summer intern resumes. Especially during a slow or recovering economy, HR professionals are likely to receive many resumes from eager students or recent graduates hoping to work as interns in order to gain valuable experience and networking opportunities. Often, intern candidates offer to work for nothing in exchange for the chance to learn about a job or industry.
Of course the idea, however enticing, of free labor should raise red flags. In fact, the United States Department of Labor (“DOL”) has made it clear that, unless specific criteria are met, student “interns” working at for-profit companies are actually student “employees,” subject to the minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”). The DOL has identified the following six criteria for determining whether an individual meets the test for an unpaid intern:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Only if an internship program meets all of these requirements can participants be considered unpaid interns. And as you can imagine, meeting all of these requirements can be challenging. For example, the internship program must be structured around classroom or academic experience rather than around the employer’s business operations. For this reason, compliant programs are often developed and overseen by colleges or universities, which then give academic credit for participation. Moreover, the more the interns perform productive work for the employer (as opposed to job shadowing or similar activities), the more likely they will be deemed employees, entitled to minimum wage and overtime under the FLSA. You can find the DOL’s fact sheet on internship programs here.
At the end of the day, private employers seeking to benefit directly from eager students or graduates willing to work for the experience will find it difficult to meet DOL requirements. On the other hand, a company willing to provide work experience in order to be a good corporate citizen or to build relationships with schools or students, can structure an unpaid student intern program to meet those goals and comply with the law.
More Federally Mandated Wallpaper: Federal contractors must post a notice of employee rights under the National Labor Relations Act
Once again, employers are being given an old line: we are from the federal government and we’re here to help you . . . with your office decorating. Shortly after his inauguration, President Obama issued Executive Order 13496 (the “Order”). The Order directed that all federal contractors post a notice to their employees advising the employees of their rights under the federal labor laws. The Order required the United States Department of Labor to prepare implementing regulations, including the text of the posting. After a year’s work, the Department has completed its work, and the required poster is now available. Federal contractors and all subcontractors must begin posting the required notice by June 19, 2010.
Posting requirements are not new for federal contractors. In the 1980s, the first President Bush required contractors to post a notice advising employees of their rights to refrain from supporting unions’ political activities (the so-called “Beck” notices named after the U.S. Supreme Court case addressing the issue). President Clinton issued an executive order rescinding the Beck poster requirement; the second President Bush then reinstated the posting obligation. No surprise – in the Order President Obama again rescinds the obligation to post the Beck notice.
The new poster is available from the Department of Labor’s website here. The poster generally advises employees about their rights to engage in protected concerted activity under the National Labor Relations Act, as well as their right to refrain from engaging in that activity. The poster also describes the industries and employees that are not subject to the NLRA. Generally, the poster does a fair job of describing employee rights, and unlawful actions by both employers and unions. Of course, a single 11-inch by 17-inch poster cannot describe all of the complexities that have developed in the 75 years of NLRA enforcement. For example, health care employers should note that the poster does not even attempt to address the special rules applicable to various union activities in patient care areas.
The obligation to post the notice applies to all federal contracts that are above the “simplified acquisition threshold” applicable to federal contracts. Generally, the simplified acquisition rules are applicable to contracts with a total value less than $100,000. These provisions of the federal acquisition regulations are sometimes complex, and employers with questions as to their coverage should consult their attorney.
Federal contractors are required to include a contract provision requiring posting of the notice in all subcontracts, with a value of more than $10,000. Thankfully, in the final regulations the Department backed off its original proposal that subcontracts had to include the full text of the poster; now contractors can satisfy their obligations in this regard by incorporating the regulation by reference. Contractors should note that among the requirements of the contract clause is the obligation for subcontractors to include the provision in their contracts with their subcontractors; the Department’s regulations thus expressly require all businesses performing work on the federal contract to post the notice, regardless of their subcontract “tier” or whether the subcontract might itself be under the simplified acquisition threshold.
The poster must be physically displayed in the normal “conspicuous places” other employment related posters are located. The notice must be posted at all locations on which work on the federal contract is performed or is being allocated to the federal contract. When a substantial portion of the workforce does not speak English, the notice must be posted in the language spoken by those employees. When the employer routinely provides employees notices by electronic means, the employer must do so in this instance as well, typically by providing a link to the Department of Labor website.
What is a federal contractor or subcontractor to do?
For federal contractors or subcontractors that are already ubiquitously unionized, the poster may not cause any substantial headaches. Indeed, reminding unionized employees that there are certain things their union cannot do, as the poster plainly does, may not be a bad thing. For federal contractors or subcontractors that are not currently unionized, however, substantial issues are raised – especially if the employer wants to remain union-free. The new poster may raise employees’ awareness of their rights under the NLRA. It should also raise union-free employers’ attention to a systematic union avoidance program:
- Nothing in the Executive Order or the Department’s regulations prevents an employer from posting its own notice, right alongside the newly required poster.
- Employers should remind employees that it is official company policy that the employer does not believe a union is necessary or appropriate.
- The employer should remind employees of the advantages they enjoy by being union-free.
- If the company has not reviewed its nonsolicitation and nondistribution policy, it should be reviewed promptly to make sure that all of its provisions are in compliance with the law. If the company does not have a nonsolicitation and nondistribution policy – implement one!
- Make sure that your nonsolicitation and nondistribution policy, and any other policies or practices that might impact employees or others engaging in union organizing, are applied in a fair and nondiscriminatory fashion.
Of course, before undertaking any these actions, federal contractors or subcontractors should consult with their labor law attorney.
Federal Government to Crack Down on Misclassified "Independent Contractors?"
It's always risky to misclassify someone who should be an employee as an "independent contractor," but President Obama's 2011 budget proposal will increase the risks for employers. According to this budget summary from the U.S. Department of Labor, the misclassification of employees as contractors is estimated to cost the Treasury Department over $7 billion in lost payroll tax revenue over the next ten years. To help make up for this shortfall, the proposed budget includes funds earmarked for a "joint proposal" between the DOL and the Treasury Department to eliminate legal incentives for such misclassification, and an additional $25 million to target misclassification with 100 additional enforcement personnel and competitive grants to boost states’ incentives and capacity to address this issue.
If this budget provision goes into effect, employers will need to be particularly careful not to misclassify employees as contractors. Of course, it's already a risky proposition to misclassify employees as contractors. For example, as we reported back in 2008, FedEx was on the wrong end of a $14 million award after a California court concluded that the shipping giant misclassified hundreds of drivers as contractors. Lawsuits in this area are common, ranging from individuals seeking unpaid wages and overtime to multi-million dollar class actions. Federal and state governments are also known to go after employers for unpaid payroll taxes and associated penalties.
Are you concerned that your independent contractor might actually be a misclassified employee? The IRS has published this handy information on how to determine whether the employee is correctly classified. There is even an IRS form (Form SS-8) that you can file to seek the Service's help in determining if your employee is correctly classified. Of course, if you believe that you have misclassified employees working as contractors, it might be a good time to contact your labor and employment attorney.
President Obama Signs Expansion of FMLA Leave for Military Families
Earlier this week, President Obama signed the Fiscal Year 2010 National Defense Authorization Act (NDAA), a federal law that is enacted each fiscal year to specify the budget and expenditures of the United States Department of Defense. This year, the NDAA contains two expansions of the exigency and caregiver leave provisions for military families under the Family and Medical Leave Act (FMLA):
- Caregiver Leave: Employees could previously take up to 26 weeks of unpaid leave to care for a family member (spouse, child, parent or next of kin) who is an active service member currently undergoing treatment for a serious injury sustained on active duty; that leave has been expanded to allow leave to care for a veteran family member undergoing medical treatment, recuperation or therapy for a serious injury or illness that was sustained any time during the five years preceding the treatment.
- Exigency Leave: Employees could previously take up to 12 weeks of unpaid leave for qualifying exigencies relating to a reservist family member's call to active service; that leave has now been expanded to provide exigency leave benefits to the family of a member of any armed service on active duty.
These expansions became immediately effective when the law was signed.
For more information on the military leave provisions of FMLA, check out this Fact Sheet on FMLA Military Family Leave Entitlements from the Department of Labor Wage and Hour Division. While the fact sheet doesn't reflect these recent expansions, it does provide valuable information, including who is a qualifying family member and what is a qualifying exigency.
California DLSE Reverses Itself Regarding Schedule and Salary Reductions for Exempt Employees
The California Department of Labor Standards Enforcement (DLSE) has issued an opinion letter in which it concludes that California law does not prohibit an employer from temporarily reducing the work schedule of an exempt employee from five days a week to four days a week, and correspondingly reducing the employee's salary by 20 percent. The employer in question was experiencing significant economic difficulty and wanted to temporarily reduce the schedules and salaries of exempt employees to avoid or limit the need for layoffs. The DLSE concluded that this practice does not violate the salary basis test and the affected employees would not lose their exempt status.
Although this conclusion is consistent with well-settled principles of federal law, it represents a reversal of the DLSE's opinion. The DLSE reached the opposite conclusion -- that an employer cannot reduce the salary of an exempt employee during a period in which the company operates a shortened workweek due to economic conditions -- in a 2002 opinion letter. The 2002 opinion letter relied on a federal court decision that the DLSE now characterizes as "not well-reasoned and misguided."
Although DLSE opinion letters are not binding authority, California courts usually give them a great deal of weight. Additionally, DLSE opinion letters provide insight into how the DLSE will interpret the law in cases it pursues as California's wage and hour enforcement agency.
New Website for Disability Information
The Department of Labor's Office of Disability Employment Policy today launched a new website that may be of use to employers seeking information on how to accommodate a disabled worker. At www.disability.gov an employer can research the applicable law and regulations, get ideas for appropriate reasonable accommodations, and locate additional resources. For example, clicking here will take you to information about accommodating deaf and hearing impaired workers. And here is useful information about tax incentives for complying with the ADA. The new site offers a myriad of social networking capabilities including a Twitter feed, RSS feeds and a blog. The site also includes a handy multi-state guide which employers could find very useful as they work to comply with all applicable federal and state disability laws.
Another Circuit Court Agrees: ADA Amendments Act is Not Retroactive
Congress did not intend for the ADA Amendments Act (ADAAA) to be retroactive, the Court of Appeals for the District of Columbia ruled yesterday, and applied pre-ADAAA law to dismiss an employment discrimination claim. Click here to read the court's decision in Lytes v. DC Water and Sewer Authority.
Congress passed the ADAAA in 2008 and the new law became effective January 1, 2009. The ADAAA significantly expanded the definition of "disabled" under the Americans with Disabilities Act (ADA). The Lytes court reviewed the legislative history of the ADAAA, and could not find in that history any indication that Congress intended the law to apply retroactively. The court also noted that Congress signaled its intend that the law not apply retroactively when it gave the ADAAA a specific effective date.
The DC Circuit joins the Fifth Circuit Court of Appeals, which also ruled in EEOC v. Agro Distribution, LLC that the ADAAA is not retroactive. Notably, the Department of Labor has also taken the position that the law should not apply retroactively. And, at least for now, it appears that the Equal Employment Opportunity Commission agrees.
Lytes and Agro Distribution are important cases for employers defending ADA claims; they make clear that for claims arising before January 1, 2009, pre-ADAAA standards of what constitutes a "disability" are likely to apply. For more information on the ADAAA, click here for the Stoel Rives World of Employment's ADAAA coverage.
DOL Secures $3.4 Million Settlement for NY Car Wash Employees
A portend of things to come in federal wage enforcment? Yesterday, a group of New York car washes have agreed to pay over one thousand current and former employees a total of $3.4 million to settle a lawsuit filed by the Department of Labor (DOL) alleging violations of the Fair Labor Standards Act (FLSA). Click here to read the consent decree in Solis v. LMC et al.
As we reported back in May, the Department of Labor received a budget increase of 10 percent and is devoting most of that increase to enforcement. Employers can expect to see more activity from the DOL to enforce wage and hour laws, especially large cases against groups of employers.
In the meantime, sit back, relax and enjoy Rose Royce:
Federal Minimum Wage Increases to $7.25 Effective July 24
Employers take note: the federal minimum wage increases to $7.25 per hour effective July 24, 2009. For more information, check out the Department of Labor's Fair Labor Standards Act site.
Of course, many states also have minimum wage laws, an where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. Click here for the Department of Labor's handy list of minimum wages by state, effective January 1, 2009. (Note: the chart does not accurately reflect that Nevada's minimum wage will increase effective July 1, 2009 increase from $5.85 per hour to $6.55 per hour, while the minimum wage for employees not receiving health benefits will increase from $6.85 per hour to $7.55 per hour).
Need the Department of Labor's minimum wage posters? Here they are:
IRS, DOL Publish New Info on COBRA Subsidy
Today the Department of Labor expanded its FAQs on the COBRA subsidies included in the American Recovery and Reinvestment Act of 2009 (ARRA). Click here to read the DOL's new COBRA FAQs.
Wondering what the tax implications of the subsidy are, or whether the person asking for the subisidy is truly eligible? Click here to read the IRS's Premium Assistance for COBRA Benefits. If that doesn't answer your tax questions, click here to visit the IRS's ARRA page.
As a reminder, employers can click here to download the new model COBRA notices.
Sick to death of COBRA and need to relieve the stress it's caused? Click here to visit Orisinal - a site full of calming, zen-like computer games.
And finally, click here to visit the Stoel Rives World of Employment's complete COBRA coverage.
DOL Issues FAQs on COBRA Subsidy
The Department of Labor's Employee Benefits Security Administration has posted answers to 10 frequently asked questions regarding the COBRA subsidies included in the new stimulus package. Most relate to individual claims for the subsidy, but the information may be helpful to employers as well.
For more information about the subsidy, click here to read our coverage at the Stoel Rives World of Employment. Or, click here to go to the Department of Labor's COBRA Subsidy Website.
(Okay, this picture has nothing to do with the continuation of health care, and the FAQs don't say anything about snakes. We just like to keep things interesting at the Stoel Rives World of Employment.)
Obama Nominates Rep. Hilda Solis as Labor Secretary
Today's New York Times is reporting that President-Elect Barack Obama will nominate California Representative Hilda Solis as his administration's Secretary of Labor, the cabinet-level position that oversees the Department of Labor.
John Sweeney, head of the AFL-CIO (a coalition of labor unions) praised the appointment of Solis to the position. And not without good reason: Solis has been a champion of the Employee Free Choice Act (EFCA), which labor unions have made their #1 legislative priority for 2009. The EFCA would , among other things, require employers to recognize a union as the exclusive bargaining agent for its employees based solely on a "card check" process rather than a secret ballot election. If passed, it is expected to drastically increase union organizing and unionization rates.
Of course, if the unions are happy about the Solis pick, you can bet some employers are not. As reported in the Times, the U.S. Chamber of Commerce, a pro-employer group, expressed "disappointment" over the selection of a labor secretary that supports EFCA, but promised to work with Solis.
The selection of Solis should not come as a surprise: President-Elect Obama has voiced his support for EFCA and other pro-employee legislation, and was expected to select a like-minded labor secretary. This selection does not, however, mean that EFCA will pass without a fight. Don't be surprised if the Republicans use their filibuster power either to delay its passage or to win some pro-employer concessions before allowing it to pass.
Washington's Minimum Wage To Rise to $8.55 January 1, 2009
Washington employers get ready to give your minimum-wage employees a raise: effective January 1, 2009, Washington's minimum wage will increase to $8.55 per hour, allowing Washington to maintain the highest minimum wage in the country. For more information, click here to read the Department of Labor and Industries' Press Release. Washington's current minimum wage is $8.07 per hour.
As previously reported in the Stoel Rives World of Employment, Oregon's minimum wage will increase to $8.40 also effective January 1, 2009. Following voter initiatives, both Oregon and Washington now tie their minimum wages increases to the Consumer Price Index.
The federal minimum wage is now $6.55 per hour, but will go up to $7.25 per hour effective July 24, 2009. For information on minimum wages in other states, check out this interactive map of the United States showing minimum wage rates, available from the U.S. Department of Labor.
DOL Issues Final FMLA Regulations
Today the Department of Labor published its Final Regulations Implementing the Family and Medical Leave Act (FMLA). They go into effect on January 16, 2009 (60 days after publication). Click here to download the final FMLA regulations. (Warning! The document is 762 pages long! However, much of that is a handy explanation of the changes and the comments the DOL received.)
The final regulations address many aspects of FMLA, the federal law that provides eligible employees the right to take unpaid leave for certain absences, such as: the birth or adoption of a child; to care for a child, spouse, or parent with a serious health condition; or because of the employee’s own serious health condition. The final regulations also address new military family leave entitlements enacted as part of the National Defense Authorization Act, which provides leave rights to employees who provide care for covered servicemembers with a serious injury or illness.
Highlights of the final regulations include:
- Incorporation of new military family leave requirements into the regulations, with specific guidance on administering military leave
- Clarification on administering intermittent leave, including an explanation of when an employee may be transferred during intermittent or reduced schedule leave
- Clarification on employee eligibility following breaks in employment such as extended leaves
- Clarification on what constitutes a "serious health condition," including revised definitions of "incapacity" and "continuing treatment"
- Clearer guidelines for administering pregnancy and childbirth leaves
- Consolidated guidelines on adoption leave
- Clarification of how to count holidays in cases where an employee takes leave in increments of less than a full workweek.
- Clarification on administering leave to care for a parent
- A new requirement that when an employee gives less than 30 days' notice of a foreseeable leave, the employee must explain the reason for failing to give 30 days' notice
- An explanation of how much information an employer can obtain in the medical certification to substantiate the existence of a serious health condition and the employee’s need for leave due to the condition
There are many more minor changes, too many to list in a single blog post. To get the full picture, download the final regulations.
New Federal Legislation Would Penalize Employers' Use of "Independent Contractors"
The U.S. Congress is currently considering legislation that would impose significant penalties on employers who improperly classify employees as "independent contractors" to avoid paying for benefits.
The Employee Misclassification Prevention Act (S. 3648) was introduced in the Senate on September 29, and is sponsored by Senators Edward M. Kennedy (D-Mass.), Barack Obama (D-Ill.) and John Kerry (D-Mass.). Features of the bill include:
- Amending the Fair Labor Standards Act (FLSA) to prohibit the misclassification of an employee as an independent contractor, providing for liquidated damages and civil penalties of up to $10,000.
- Requiring employers to keep records on and notify workers of their employment or independent contractor classification and their right to challenge that classification.
- Requiring state unemployment insurance agencies to audit employers who misclassify employees.
- Allowing the Department of Labor and the Internal Revenue Service to share information on cases where employers misclassify workers.
- Requiring the Department of Labor to perform targeted audits focusing on employers in industries that frequently misclassify employees.
- Directing the Department of Labor to establish a Web site that summarizes the rights of employees under the FLSA and other federal laws.
A companion bill, H.R. 6111, was introduced in the House in May. Don't expect this bill to become law as long as President Bush is in the White House, but with a likely democratic majority in Congress and a new President, passage of the bill appears very likely. Employers should be aware of the existing risks of incorrectly classifying employees as "independent contractors," including claims for unpaid overtime, minimum wage claims, benefits claims, workers' compensation liability, and tax penalties.
