practical guide to wage and hour liability · 2011. 11. 4. · covenant aviation security corp:...

Practical Guide to Wage and Hour Liability

Presented by:

Mark Blondman, Blank Rome LLP

Michael J. Eagles, Comcast Corporation

M. Teresa Gavigan Blank Rome LLPM. Teresa Gavigan, Blank Rome LLP

Larry R. “Buzz” Wood, Blank Rome LLP

@BlankRomeLLP #EmergingIssues7

7th Annual Emerging Issues for In-House Counsel 11/2011

© Blank Rome LLP 2011 All Rights Reserved

Introduction and Agendag

• Panelists• Agenda

– Update on key litigation, legislative and administrative developments– Hot topics – What to be on “look out” for and proactive steps

employers should be taking to avoid claims




Wage Hour Claims – Recurring and Si ifi t N Cl iSignificant – New Claims• Recent (since October 1) filings and certifications( ) g

– Anderson v. Sara Lee Corp: FLSA collective action of more than 2,000 current and former employees conditionally certified/donning and doffingand doffing

– Martinez v. Covenant Aviation Security Corp: Suit alleges violation of FLSA and New York Labor Law/off the clock work

– Lunger v. Union of Orthodox Jewish Congregations of America: Suit alleging that youth directors were not paid for all time worked, i l di k d t t d t i t I lincluding weekend retreats and trips to Israel

– Fenstemaker v. Indianapolis Colts: Claim by hostesses that not paid minimum wage


g



FLSA Settlements – Recurring and Significantg g

• Reported Settlements (since October 1):p ( )– McLaurin v. Prestage Foods: $1.8 million to class of 1,800 workers

for donning and doffing claimC $ f ff f– Alderman v. 21 Club, et al: $2 million to class of wait staff for

withholding tips and failure to provide overtime– Davis v J P Morgan Chase: $42 million to loan underwriters who Davis v. J.P Morgan Chase: $42 million to loan underwriters who

were classified as exempt– Vang v. Burlington Coat Factory: $5.7 million to assistant managers

for alleged misclassification




Litigation Updateg p

• Collective/Class Action Litigationg– Impact of Dukes v. WalMart

• MacGregor et al v. Farmers Insurance Exchange 2:10-cv-03088 ( S C ) f f(D. S.C.): Denying conditional certification of nationwide collective action

• Spellman v American Eagle Express 2:10-cv-01764 (E D Pa ) : Spellman v. American Eagle Express 2:10 cv 01764 (E.D. Pa.) : Court refused to reconsider order conditionally certifying collective action but acknowledging that Dukes may be

i “ ti ” l ipersuasive on “common question” analysis– Early Trial Plans – Are They Worth It?– Full Tender – Can You Use to Preclude Jurisdiction? Attorney’s Fee


Full Tender Can You Use to Preclude Jurisdiction? Attorney s Fee Award?



Litigation Update (Cont’d)g p ( )

• FLSA “Collective”/Rule 23 Class Actions – Are they ycompatible?

– Shahriar et al. v. Smith & Wollensky Restaurant Group Inc. et al., C. A #10 1884 (2 d Ci 9/26/2011)A. #10-1884 (2nd Cir., 9/26/2011)

• Two separate federal actions/removal of a state court action –what about these? what about these?

• Arbitration of Wage and Hour Claims




Legislative Initiativesg

• Focus on Independent Contractor Classification– Federal Legislation

• H.R. 3178 http://www.govtrack.us/congress/billtext.xpd?bill=h112-3178– Employee Misclassification Prevention Actp y

– State Laws• California – Signed by Governor Brown on October 9 – adds financial

penalties for companies and persons who engage in “willful penalties for companies and persons who engage in willful misclassification” of employees as independent contractors

• Other state initiatives: In last few years, legislatures in Colorado, Connecticut, Delaware, Illinois, Indiana, Massachusetts, Maryland, Connecticut, Delaware, Illinois, Indiana, Massachusetts, Maryland, Maine, Nebraska, New Hampshire, New Jersey, Pennsylvania, Utah, Vermont, Washington and Wisconsin have enacted legislation relating to classification issue and legislatures in Kansas, Kentucky, Minnesota,


Ohio and Rhode Island have bills pending for consideration



Administrative Initiatives

• The IRS and DOL Have been Very BusyThe IRS and DOL Have been Very Busy

– Independent Contractor Misclassification

• IRS/DOL/State Memorandum of Understanding -http://www.faircontracting.org/PDFs/independant_contractor_abuse/MOU.pdf

• IRS Voluntary Classification Settlement Program -http://www.irs.gov/pub/irs-pdf/f8952.pdf; p g p p p ;

http://www.irs.gov/pub/irs-pdf/i8952.pdf

May be “good deal” but look before you leap


–May be good deal but look before you leap



Wage and Hour Issues – Some Common I d Th ht A idi Li bilitIssues and Thoughts on Avoiding Liability

• Classification Issues• “Off the Clock” Work• Meal/Rest Periods• Record Keepingp g




Before Your “Workers” Come In The Door, A I Y N d t C id ?Any Issues You Need to Consider?• Are they employees or independent contractorsy p y p

– Make sure you review the “test”• IRS - http://www.irs.gov/pub/irs-pdf/p15a.pdf• DOL - http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

• The IRS and State governments are looking to enhance i l ifi brevenue – misclassifiers beware




Classification – Exempt v. Non Exemptp p

• Are they exempt or non exempt from right to overtimey p p g– Most Common Exemptions:

• Executive Employees -htt // d l / hd/ / li /f i /f 17b ti hthttp://www.dol.gov/whd/regs/compliance/fairpay/fs17b_executive.htm

• Administrative Employees -http://www.dol.gov/whd/regs/compliance/fairpay/fs17c_administrative.htm

• Professional Employees -http://www.dol.gov/whd/regs/compliance/fairpay/fs17d_professional.htm

DOL enhanced review of Executive and Administrative Exemptions– DOL enhanced review of Executive and Administrative Exemptions• Make sure that they continue to exercise independent judgment

and discretion




They Are In The Door – When Are They On The Clock For Computation of Wages Preliminary Clock For Computation of Wages – Preliminary Activities

• Are employees entitled to pay once they walk in the door? Are there activities for which they must be compensated? Are y pthere activities for which they need not be compensated?




Preliminary Activities – Hypothetical• Karen has been employed with Company for eight years as an

administrative assistant supporting SVP of salesadministrative assistant supporting SVP of sales• She is paid on an hourly basis and is regularly scheduled to

work 8:30 a.m. to 5:30 p.m.p• On Monday, the SVP of Sales asks Karen to come in a few

minutes early on Tuesday to help him finalize some material y y pfor the quarterly sales meeting. It is the third time this month that the SVP of Sales has asked Karen to come in early

• On Tuesday, Karen arrives at her desk and begins logging onto her computer at 8:20. Her computer is up and running by 8 25 d h i di t l b i ki th


8:25 a.m. and she immediately begins working on the presentation



Your Employees Eat During the Workday –Th M l P i d C d H th ti lThe Meal Period Conundrum - Hypothetical• Karen is normally scheduled for an unpaid half hour lunch y p

between 12:00 p.m. and 12:30 p.m.• On Wednesday, the SVP of Sales stops by Karen’s desk at

12:15 while she is eating lunch. The SVP asks Karen if she would mind typing an e-mail for him that needs to go to the COO i di t lCOO immediately

• Karen spends the next 15 minutes drafting the e-mail and finishing her lunch By 12:30 p m she has finished the e mail finishing her lunch. By 12:30 p.m., she has finished the e-mail and her lunch and goes back to her normal work activities.




Meal Periods

• Compensable unless at least 30 uninterrupted minutes without p prelief from all work duties

• California Supreme Court conducting oral argument in early November in Brinker Restaurant Corp. v. Superior Court of San Diego County

– Court is expected to confirm whether employers have an affirmative duty to ensure that employees actually take the meal period or merely afford the employee the opportunity to take the meal periody p y pp y p

• Other states require meal breaks of a certain length by a particular time in the work day


y



Be Aware of State Laws on Meal & Rest PeriodsPeriods

California New Hampshire21 States (including PR) Have Meal and Rest Period Laws

California Colorado Connecticut

New Hampshire New York North Dakota

Delaware Illinois

Oregon Puerto Rico

Kentucky Maine Massachusetts

Rhode Island Tennessee Vermont Massachusetts

Minnesota Nebraska

Vermont Washington West Virginia


Nebraska Nevada

West Virginia



Record Keepingp g

• Who is responsible for keeping records of hours worked by non p p g yexempt employees?

– http://www.dol.gov/whd/regs/compliance/whdfs21.htm

• What are the most common pitfalls for employers and how do we avoid them




Record Keepingp g

• Who is responsible for keeping records of hours worked by non p p g yexempt employees?

– http://www.dol.gov/whd/regs/compliance/whdfs21.htm

• What are the most common pitfalls for employers and how do we avoid themSi ifi f k i d ti d • Significance of keeping records – presumptions and contemporaneous records by employees

DOL Smartphone app – DOL Smartphone app –http://itunes.apple.com/us/app/dol-timesheet/id433638193?mt=8




DOL Smartphone Appp pp

“Anyone who writes a negative comment “Anyone who writes a negative comment about the app are employers who are stealing from their employees and do not stealing from their employees and do not like the fact the employee can now prove it. Take the power back!!! Thanks DOL”





“I babysit for several different families that “I babysit for several different families that pay me different rates so this is perfect for me to track how much they owe me at the me to track how much they owe me at the end of the month!”





“What a handy little tool Some people “What a handy little tool. Some people seem a little paranoid about people using it, but it’s not meant to replace payroll tools but it s not meant to replace payroll tools, come on. Just a handy timekeeper to help track things. I can also see using it informally to track volunteer time or billable hours, etc. Nice job!”




Best Wage & Hour Practices• Have a time recording policy and train your employees

Require employees to record their work time and meal breaks and • Require employees to record their work time and meal breaks and instruct them not to round

• Prohibit employees from working off the clockProhibit employees from working off the clock• Consider your time recording system when making automatic

deductions for meal breaks• Consider whether you need to compensate certain categories of

employees for preliminary (or postliminary) work• Implement procedures and guidelines for the use of PDAs• Periodically review/audit your job classifications


• Use independent contractors properly



practical guide to wage and hour liability · 2011. 11. 4. · covenant aviation security corp:...

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