From what I can see, for employers who already try to do right by their employees, it’s going to be pretty much business as usual. Of course, you want to make sure to check things out periodically with your lawyer to make sure your well-meaning policies don’t inadvertently run afoul of the law. But in general, if you were operating on the up-and-up before, you don’t have much to worry about now.

Where it starts to get interesting is for employers who have been cutting corners a bit, being a tad more, uhmmm… “aggressive” in their interpretation of wage and hour regulations. And it should be getting downright scary for those types who have been cheating employees out of earned overtime, paying less than minimum wage and deliberately misclassifying employees to avoid paying OT and withholdings.

“More Aggressive” DOL

According to the Washington Labor & Employment Wire, we can probably expect a more aggressive Wage and Hour Division of the DOL under an Obama administration.

In a July 27, 2008 letter to the Department of Labor, President-elect Obama set forth his vision for a WHD that listens to worker advocacy organizations and more actively initiates its own investigations. President-elect Obama also indicated his desire to expand the scope of WHD’s activities, criticizing the Bush administration’s emphasis on only four industries (agriculture, accommodation and food services, manufacturing, and health care and social services). He also indicated his desire to increase funding for the WHD in order to actualize the enhanced role he envisioned for it. With the support of a Democratic Congress, the Obama administration could make this vision a reality.

Already Happening?

If anybody needs further convincing, how about this announcement I found on the Talking Union blog?

Apparently, today (November 12) at noon, at the US DOL - Frances Perkins Building at 200 Constitution Avenue NW in Washington DC, a press conference will be held by Kim Bobo, Executive Director of Interfaith Worker Justice to discuss her new book, Wage Theft in America: Why Millions of Americans Are Not Getting Paid — And What We Can Do About It.

In what has been described as “the crime wave no one talks about,” billions of dollars worth of wages are stolen from millions of workers in the United States every year. The scope of these abuses is as staggering as it is wrong — paying employees far less than the legal minimum wage, purposefully misclassifying employees as independent contractors, illegally denying workers overtime pay — and only now are people beginning to take notice. Kim Bobo’s major new book Wage Theft in America offers a sweeping analysis of the crisis and provides concrete solutions, with special attention to what the new presidential administration should do about the problem.

Just in case you didn’t notice the first time… this press conference — while not an “official” government-sponsored event — was organized by members of the American Federation of Government Employees union Local 12 who work at the Department of Labor, and is being held in the Department of Labor building.

Brace Yourselves for More Litigation

According to the Collabrus Expert Compliance Blog, “a 2008 survey sponsored by international law firm Fulbright & Jaworski L.L.P, indicates that U.S. companies now anticipate an rise in new actions and government probes,” and wage and hour actions head the list.

While many types of cases have seen a decrease over the past couple of years, companies have been seeing an increase in wage and hour lawsuits. Wage-and-hour litigation was the largest single issue cited by employers as a concern for the coming year.

Beyond lawsuits, companies also indicated they were seeing an increase in government actions as well. The folks behind the survey concluded both government actions and lawsuits will likely continue to increase in the coming year. (This is entirely in line with other predictions I’ve read elsewhere.)

Of course, it’s possible even if you’re doing everything “by the book” you might get caught up in a lawsuit anyway. You can either ignore the possibility and get caught by surprise, or you can follow the wise advice of the Boy Scouts and “Be Prepared!”

So, what can you do? Well, when’s the last time you conducted a wage and hour audit? When’s the last time you sat down with your lawyer to review your employee handbook and employment policies and practices? If it’s been more than a year or two, it’s time to do it again. Sure, you need to track time and attendance accurately and make sure you pay everyone fairly for all the hours they work, but wage and hour compliance is not just about overtime. If you’ve got all your I’s dotted and T’s crossed, you’ve got a much better chance of surviving any DOL investigation or wage and hour lawsuit than if you’re just “winging it.” Take this seriously. The survival of your business may depend on it.

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Lopez was reportedly a cook at Danny’s Mexican Restaurants, owned by Daniel and Graciela Ramirez, for ten years. He filed suit in July 2007 claiming the restaurant didn’t pay him overtime. Worse, he said they fired him when he demanded they pay him the wages he was owed.

According to Lopez, he worked up to 74 hours a week, but was only paid his regular rate of $7 per hour. He said the restaurant had workers use multiple time cards to avoid officially recording overtime, destroyed wage and hour records and paid workers in cash — at only their regular hourly wage, not time and a half overtime — for their extra hours.

The jury found not only did the restaurant fail to pay the required overtime, but that the violations were willful. Further, they found Lopez was fired as retaliation for his wage demands. He was awarded $84,520 for unpaid overtime, lost income, and damages.

Seems like a pretty expensive lesson… and I wonder how many other employees of this restaurant chain will now feel empowered to file a complaint, too?

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Even with just a few employees not getting required overtime over a period of time, it can be worth it for both the employees and the lawyer to bring suit. For FLSA violations, even one employee working off the clock can be enough to warrant a claim.

The problem is, it’s easy for employees to end up working off the clock. It can go on for a long, long time — maybe employees don’t realize what they’re entitled to under the law, or maybe they’re afraid to report it. Sometimes employees put in extra hours on their own, thinking they’re “helping out.” Even if employers and employees have the best of intentions, all it takes is one complaint.

Russell points out it’s the employer’s job to make sure employees get paid for the hours they work. To ensure you don’t end up in trouble inadvertently, you may want to consider spelling it out in your policies that employees are not to work “off the clock,” or you may want to mandate they have to leave their workspace during lunch and break periods to ensure they don’t work through them. It may even require taking disciplinary action against employees if they continue to work extra unpaid or “off the clock” hours.

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What on earth would make you think at that point it was a good idea to not only largely ignore those court orders, but continue to violate the provisions of the FLSA?

See, that’s the position in which Manuel Jaime, co-owner of several El Maguey Mexican Restaurants in Missouri reportedly found himself not too long ago. In an article unfortunately apparently no longer available on their website, the Lee’s Summit Journal reported the U.S. District Court for the Western District of Missouri had found Jaime in civil contempt for violating provisions of previous consent orders and had imposed some fairly draconian penalties.

Lest one think court orders could be allowed to slide with impunity, consider the situation in which Mr. Jaime now finds himself:

• The amount of the outstanding balance related to the earlier court order was doubled as compensation to his employees for the delay in their payments.
• He’s still on the hook for the remaining balance of the later court order.
• He has to pay all attorney fees and court costs.
• He has to help the Wage and Hour Division figure up all the additional back wages he owes for violations since February 2007 — and pay double the amount computed.
• He can’t open any additional restaurants or renew any liquor licenses until he’s paid all the back wages in full.
• And he has to set up a process for employees to file anonymous complaints about any future FLSA violations at all businesses he owns, manages or controls.

Wouldn’t it just have been easier (and cheaper) to pay the back wages the first time around? Or better yet, install a good time and attendance system and make sure you pay everybody correctly to start with?

I’m just sayin.

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So, do employers have to allow employees time off to vote?

The answer, it turns out, is a resounding maybe. In most states there is some kind of law on the books specifying that employers must allow employees time off to vote. But how much time and what the penalties are for non-compliance varies from one state to the next.

Of those states that mandate employers must allow time off for voting, most permit employees to be absent between one and three hours without adverse employer action. Kentucky allows employees to take off up to four hours to vote. Wow. I guess they must vote slowly in Kentucky, or something. (Just kidding, Kentukians! You know I love you like I love my luggage.)

A few states require employees to request leave in advance. Some even vary the amount of time off allowed based on how far the polling place is from the place of work. Some specifically prohibit employers from docking employee pay if they’re absent for the purpose of voting, as long as they’re not absent for longer than the allowable time. Others don’t specify.

Thirteen states (Alaska, Arkansas, California, Delaware, Mississippi, Minnesota, New Jersey, New York, Ohio, North Dakota, South Carolina, Texas and Pennsylvania) don’t specify a particular amount of time. Most of these simply prohibit employers from interfering with employees’ right to vote and say employers must grant “reasonable” time off (whatever that might be).

Fourteen states (Connecticut, Florida, Idaho, Indiana, Louisiana, Maine, Michigan, Montana, New Hampshire, North Carolina, Oregon, Rhode Island, Vermont and Virginia) and the District of Columbia don’t have any statute specifying any time off for voting. But when an election has generated this much interest, employers might do well to be at least a little lenient with allowing their employees to exercise their voting rights.

As an employee, if you’re in one of those states that doesn’t mandate time off to vote — and even if you’re in one of the others where time off is written into the law — you might consider voting early (if your state allows it). You may be able to exercise your right to vote without taking any time off from work at all (or spending a long time standing in line on Election Day).

Either way, whether you’re an employer or an employee, get out there and vote!

Hat top to Dorsey & Whitney LLP for preparing a totally awesome state-by-state summary of the regulations! (PDF document)

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(Summary judgment means the judge thought the case was so clear-cut they didn’t even have to go to trial. Basically, it says the facts of the case are such that there’s no reason to argue it; the party to whom the summary judgment is granted would win, no matter what. It’s a very strong statement against the practices of the company.)

The primary issue raised in the case was that apparently the company treated these employees as “salaried exempt” when it came to (not) paying them overtime, but would dock their pay when they missed part of a day.

As Judge Crotty wrote, “Gristede’s clearly sought to treat workers as ‘hourly’ for some purposes, (i.e., docking them for hours not worked during the workweek), but ’salaried’ for other purposes (i.e., not paying them overtime for hours worked in excess of the workweek).”

And, see, the thing is, you can’t do that. If, as Gristede’s lawer, Kevin Nash, asserted, their policies were “consistent with industry standards,” then the industry standards need to be changed. It’s what Linda Neilan, lawyer for the employees called a “heads-I-win, tails-you-lose arrangement.”

While it may be true — as Mr. Nash reportedly stated — that these types of employees “have been treated historically as salaried employees“ in the supermarket industry, what the judge was saying was that Gristede’s wasn’t consistently treating them that way. The company was calling them salaried exempt, but when it came to how the company treated them, Gristede’s changed how it handled their pay depending on what would be most favorable to the company.

I’m all in favor of companies tracking and managing how employess spend their time at work. I mean, for gosh sakes, I work in the time and attendance industry, so it would be pretty odd for me to think otherwise. But you need to be fair about it. If you’re going to dock their pay when they’re out, fer cryin’ out loud, pay them overtime when they work extra. If you’re getting free overtime work out of them, it’s not right to dock them for every doctor’s appointment, school play or bit of car trouble that causes them to come in a little bit late or leave a little bit early.

Bottom line, there would likely have never been a case, and Gristede’s would likely not have found themselves potentially on the hook for what the plaintiff’s lawyers estimate could be up to $25 million, if they had treated these employees fairly and consistently. By getting greedy and trying to stack the deck in the company’s favor, they ended up possibly costing themselves big.

Gristede’s lawyers say they plan to appeal. Yeah. Good luck with that.

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According to an article in the Rocky Mountain News the Canadian-based Earl’s restaurant chain has agreed to pay $499,566 of back wages to 234 employees at three locations in Colorado and Arizona.

Apparently, they required their wait staff to share 3 percent of their tips with the managers and cooks — which, as I’ve reported before is illegal under federal law — and required them to contribute 75 cents a day from their tips to a so-called “dine and dash fund” to cover unpaid checks if a customer left without paying.

Of course, tip pools aren’t necessarily illegal, but they are if they force tipped workers to share their tips with other employees (such as managers and cooks) who don’t usually make tips. You can’t use their tips to save you money on wages for other workers.

Working at Racetrack a Bad Bet

The New York Times reports when the State Labor Department investigated operations at the Saratoga Race Course in New York, the interviewer found 80% of the 110 backstretch workers interviewed were not paid minimum wage or time-and-a-half overtime, despite many of them working seven days a week, up to 360 days a year.

Even worse, they reported issues with housing — having to sleep in bedbug-infested dorms, sometimes on the floor for lack of a bed, and having to eat at soup kitchens because they couldn’t afford to eat at restaurants in Saratoga Springs — and some said they hadn’t had a pay raise in over ten years.

Typically these employees (grooms, hot walkers and night watchmen) are employed by individual trainers. Investigators also interviewed 88 of the 115 trainers who operate at the track, and discovered that 77 of them didn’t keep the minimum time and attendance records required by law.

The state labor commissioner, M. Patricia Smith, estimated the backstretch workers were being cheated out of $70K in pay per week because of violations.

The investigation is ongoing as of this writing.

Cement Overshoes for Cemex

Meanwhile, from the Houston Chronicle, we learn of the case of Cemex, who are being sued by the U.S. DOL for failure to pay overtime to about 2,000 cement truck drivers across eight states to the tune of about $5 million.

Evidently, the company paid the drivers a “piece rate” based on the amount of work they performed, as well as an “incentive bonus” when they worked more than 40 hours a week.

The problem was, those exra payments apparently weren’t included in Centex’s calculation of overtime pay (seems that’s required under federal law).

The article quotes Martha Shellist, a wage and hour lawyer in Houston, who says this is a fairly common overtime violation, because many companies don’t understand they have to include bonuses and commissions as well as regular base pay when determining what constitutes “time-and-a-half” for overtime.

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According to an article in the Lebanon Daily News, Pennsylvania Counseling Services Inc. was ordered by the U.S. DOL to pay $196,477 for overtime and record-keeping violations. The DOL’s investigation showed the firm didn’t pay 203 employees for travel time between client locations or for time spent writing reports and attending office meetings. As a result, the employees should have been paid overtime, but weren’t. Also, some employees were misclassified (a common problem, it seems).

While $196,477 sounds pretty bad, there is a bright side. Turns out, the company had been audited twice before, most recently in 2004, and found to be clean as a whistle both times. And this time around, they cooperated fully with the investigation.

So at least in part because of these facts, the DOL found the violations weren’t “willful” — which would have made things much worse for the company. So they weren’t assessed any penalties, and only had to come up with the money they should have paid if they’d calculated employee work hours correctly in the first place.

Yeah, it would probably have been better if they’d done things right to start with — but when all’s said and done, once the audit’s underway, you’re probably better off cooperating than stonewalling the investigators. Maybe they don’t find anything wrong… and if they do, at least you might be able to avoid additional penalties.

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In fact, you can download posters free from various government websites and print them out yourself.

But that doesn’t stop some unscrupulous companies from trying to make a quick buck. According an article in the Chicago Tribune, the state of North Dakota obtained a settlement of $50,000 against the “Mandatory Poster Agency” of Lansing, Michigan, to clear up charges of fraud and false advertising.

Apparently, this “company” would send direct-mail solicitations to unsuspecting businesses claiming the businesses were required to buy wage and hour and unemployment posters, and “helpfully” offering to sell them the necessary posters.

And they didn’t just target North Dakota businesses. According to ND Attorney General Wayne Stenehjem, while the $50K North Dakota settlement is the largest, since 2001 there have been 24 other settlements against the company in other states.

Ya know, periodically scammy companies send me letters trying to con me into transfering my website domain registrations to them. They look all official, but they’re not. I’ve learned to recognize these, and when I get them I just throw them away.

If you get a letter from somebody claiming you’re required to buy wage and hour or overtime posters, I advise you to do the same thing. Toss ‘em out. Or better yet, forward the letter to your state’s Attorney General. Maybe that’ll teach the scammers a lesson, eh?

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But here’s the weird part. According to the survey, a majority of respondents still use pretty old-fashioned methods for tracking time… things like hand-written timesheets and Excel spreadsheets. Not too surprising for regular readers of this blog, nearly 20% also said they encouter errors pretty much every payroll cycle.

Now, put that together with the increase in wage and hour lawsuits and DOL enforcement and you’ve got yet another reason to automate your time and attendance tracking. Those data downloads directly to your payroll processor or software can really cut out those clerical errors (not to mention saving you a ton of time on payroll prep).

Food for thought, eh?

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