Strategic HR Lawyer

And you thought that governmental agencies didn't share information? Think again.

On September 19, 2011, the US Department of Labor (DOL) and the Internal Revenue Service (IRS) signed a Memorandum of Understanding that is intended to improve the agencies’ coordination of efforts to end business practices of misclassifying employees in order to avoid providing employment protections. In addition, labor commissioners and other agency leaders in seven states - Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington - have signed similar memorandums of understanding with the department's Wage and Hour Division, as well as the Employee Benefits Security Administration, Occupational Safety and Health Administration, Office of Federal Contract Compliance Programs and Office of the Solicitor. The state labor agencies of Hawaii, Illinois and Montana, as well as with New York's attorney general, have announced plans to sign similar agreements.

Under these memorandums of understanding, the U.S. DOL will now share information and coordinate law enforcement with the IRS and participating states providing an opportunity to “level the playing field for law-abiding employers” and ensuring “that employees receive the protections to which they are entitled under federal and state law.”

These memorandums of understanding arose as part of the DOL’s Misclassification Initiative to prevent, detect, and remedy employee misclassification and also provide an opportunity to “foster, promote and develop the welfare of the wage earners, job seekers and retirees; improve working conditions; advance opportunities for profitable employment; and guarantee work-related benefits and rights.”

Employers have appreciated the advantages of work arrangements with those considered to be independent contractors because these arrangements often allow for cost savings and flexibility.  The “advantages” can be significant, as employers do not pay unemployment insurance taxes, workers' compensation premiums, or the employer's portion of Social Security and Medicare taxes for independent contractors.  In addition, these workers generally are not eligible for other benefits such as insurance and retirement benefits and also are not protected by most employment laws and, therefore, typically give up overtime wages, pensions, and protections from unlawful discrimination.   

So, what do the Memorandums of Understanding and the Misclassification Initiative mean for employers? Employers who use independent contractors should be prepared to defend its classification of these workers as independent contractors. Employers may risk exposure to liability for failure to pay minimum wages and [any applicable] unpaid overtime, unpaid payroll and related taxes and withholdings, as well as liquidated damages, fines, penalties and any potential attorneys’ fees and costs. 

The determination of whether a worker is an independent contractor or an employee can be very difficult and may even vary from law to law.  Visit some of the applicable IRS and DOL websites and review the factors for determining an employment relationship and employee or independent contractor status.

In addition, the IRS announced, on September 21, 2011, a new program, the Voluntary Classification Settlement Program (VCSP) designed to permit businesses to voluntarily reclassify workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes. To participate in this new voluntary program, the taxpayer must meet certain eligibility requirements, apply to participate in VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS. 

 

Posted By Diane Pfadenhauer In Wage & Hour | Permalink

Is this just a gadget or an empowering legal tool?

Earlier this month the U.S. Department of labor launched its first smartphone application – the DOL-Timesheet. This timesheet application, available in English and Spanish, provides a timesheet that will assist employees with tracking their work hours and determine wages owed. Users can track regular work hours, break time, and overtime hour for one or more employers; they will be able to add comments on information related to their work hours, view a summary in a daily, weekly, and monthly format, and email the summary of work hours and gross pay as an attachment.

What makes this opportunity significant is that instead of relying on employer records, workers can now keep their own records. This information could prove to be invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.

Should employers be reviewing their time keeping systems? And, could this lead to more complicated situations challenging the employer with details of time records that disagree?

This free app is compatible with the iPhone and iPod Touch; the Labor Department will be looking into updates that would allow similar versions for other smartphone, such as Android and Blackberry, as well as other pay features that would provide for detail on tips, commissions, bonuses, deduction, holiday pay, pay for weekends, shift differentials, and pay for regular days of rest.

For those who don’t have a smartphone, the Wage and Hour Division has a printable work hours calendar. This calendar, available in English and Spanish, allows an employee to track rate of pay, work start and stop times, and arrival and departure times. It also includes information about workers’ rights and how to file a wage violation complaint.

Both the app and the calendar can be downloaded from the DOL’s Wage and Hour Division homepage.

 

Posted By Diane Pfadenhauer In Employment Law , Wage & Hour | Permalink

Are you considering hiring teens this summer? The US Department of Labor website provides useful information for compliance with state labor laws … it may be time to review child labor rules and regulations.

The Department of Labor monitors child labor and enforces child labor laws and under the Fair Labor Standards Act (FLSA). These rules vary depending upon the age of the worker and his or her occupation.  With the FLSA – Child Labor Rules Advisor one can view an introduction to federal child labor rules and link to discussions on the US DOL Wage and Hour Division State Labor Laws. 

The US DOL Wage and Hour Division also provides a summary of Employment/Age Certification Issuance Practices Under State Child Labor Laws.  The Federal government does not require work permits or proof-of-age certificates for a minor to be employed. However, many states may require them for workers of certain ages.  These certificates help to protect the employer from prosecution for employing an under-aged worker.  Having these age certificates constitutes a good faith effort to comply with minimum age requirements.

For employers in New York, in addition to the many resources available on the Department of Labor Wage and Hour Division State Labor Laws site we referenced above, you can visit additional links specific to the New York State Department of Labor as they relate to Laws Governing the Employment of Minors.

Don’t make a mistake when it comes to hiring minors this summer – do the right thing. 

Posted By Diane Pfadenhauer In Employment Law , New York Law , Policies & Procedures , Staffing, Recruitment, Selection , Wage & Hour | Permalink

Providing internship and training programs can benefit businesses as well as students. These programs can provide many great opportunities to young workers but are these interns doing it solely for the experience and working without pay? Some actually think so. The New York Times recently published an interesting article discussing the scope of the problem.   And it should come as no surprise that the Federal and State Departments of Labor are out in force. As we approach the summer months, when internship levels are at their highest, these guidelines will help keep employers in compliance.

In order to explain the federal internship regulations, The US Department of Labor Wage and Hour Division has provided an Internship Programs Under the Fair Labor Standards Act (FLSA) fact sheet making available the information needed to determine whether interns must be paid the minimum wage and overtime under the Fair Labor Standards Act (FLSA) for the services they provide. Some circumstances under which individuals who participate in internships or training programs may do so without compensation.  This fact sheet provides the necessary criteria to determine whether an employment relationship exists and whether the intern is entitled to minimum wage and overtime compensation.

New York State also has rules concerning the use of interns. It relies on the factors used by the USDOL but also adds a few of its own factors. Follow this link to a recent NYS DOL Opinion Letter on this subject: http://www.labor.ny.gov/sites/legal/counsel/pdf/Other/RO-09-0189.pdf

When hiring an intern, carefully review federal and state law … and avoid labor law violations.

Follow this link to the New York Times article: The Unpaid Intern, Legal or Not

Posted By Diane Pfadenhauer In Employment Law , New York Law , Staffing, Recruitment, Selection , Wage & Hour | Permalink

The Health Care reform legislation everyone has been talking about has a provision which affects the rights of nursing mothers.  While we have related legislation in New York, the federal Wage and Hour Division has recently issued a FACT SHEET with its interpretation of the new nationwide requirements. Here are the basic requirements:

1. Generally, employers are required to provide reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time, in a private place other than a bathroom.
2. Employers are required to provide a reasonable amount of break time to express milk as frequently as needed by the nursing mother. The frequency of breaks needed to express milk as well as the duration of each break will likely vary.
3. The location provided must be functional as a space for expressing breast milk. If the space is not dedicated to the nursing mother’s use, it must be available when needed in order to meet the statutory requirement. A space temporarily created or converted into a space for expressing milk or made available when needed by the nursing mother is sufficient provided that the space is shielded from view, and free from any intrusion from co-workers and the public.
4. Only employees who are not exempt from the FLSA’s overtime pay requirements are entitled to breaks to express milk.
5. Employers with fewer than 50 employees are not subject to the FLSA break time requirement if compliance with the provision would impose an undue hardship. Whether compliance would be an undue hardship is determined by looking at the difficulty or expense of compliance for a specific employer in comparison to the size, financial resources, nature, and structure of the employer’s business.
6. Employers are not required under the FLSA to compensate nursing mothers for breaks taken for the purpose of expressing milk. However, where employers already provide compensated breaks, an employee who uses that break time to express milk must be compensated in the same way that other employees are compensated for break time.

 

Posted By Diane Pfadenhauer In Wage & Hour | Permalink

For those of us in New York State, we have been experiencing an increase in scrutiny by the state concerning the misclassification of employees as independent contractors.  Now the federal government has gotten into the game and made this issue part of its federal budget.  Here are few things that are about to happen:

1. A $20 million raise for the Department of Labor (DOL) - from about $220 million to $240 million. The focus of this money will be to training investigators on misclassification issues.
2. The budget proposal for 2011 includes a $25 million initiative between the DOL and the Treasury Department with a goal of eliminating or reducing opportunities under current law for employers to misclassify workers. It includes hiring 100 new enforcement personnel to target worker misclassification. 
3. Lastly, new legislation under the Taxpayer Responsibility, Accountability and Consistency Act (2009) would make it more difficult for for employers to classify workers as independent contractors for employment tax purposes. It would increase employer penalties.

So for those employers who think that some of their workers are independent contractors, think again.  They probably aren't and the stakes associated with misclassification are only getting higher.

Thanks to fellow Lexbloggers at the Hunton & Williams law firm for bringing this to our attention.

 

 

Posted By Diane Pfadenhauer In Wage & Hour | Permalink

There has been a great deal of speculation about increased government enforcement in the wake of the recession and the new administration in Washington.  Well, now the rubber has hit the road.  Asserting that "employment and labor laws are regularly and systematically violated," the US Department of Labor has begun the process of hiring hundreds of new employees to focus on enforcement of federal labor laws.  According to US Secretary of Labor, Hilda Solis, "Beginning this year and into 2010, I am hiring an additional 250 new wage and hour investigators so we can continue to effectively monitor wage and hour violations. During the first six months of this year, the Department of Labor already has recovered more than $82 million in back wages for nearly 107,000 minimum wage workers."

In addition, the Wall Street Journal reports the following:

• There will be 150 investigators added in the Wage and Hour division to enforce wage rules and child-labor laws.
• 100 staff will be added to ensure contractors on stimulus projects are in compliance with applicable laws, increasing the division's staff by more than one-third.
• The Employee Benefits Security Administration is adding 75 staffers to conduct nearly 600 more criminal and civil investigations.
• The Occupational Safety and Health Administration recently formed a task force to design an enforcement program for severe violators.

Follow this link to: Secretary Solis' Press Release

Follow this link to WSJ's article:  Labor Department to Tighten Scrutiny

Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law , Wage & Hour | Permalink

Think you're under the radar and too small to be pursued by the U.S. Department of Labor for allegations of wage and hour violations?  Think again.  Long Island Business News reports that the USDOL has commenced a law suit against a Pizzeria on Long Island.  According to the article:

"The suit comes after an investigation by the department’s Wage and Hour Division based in Westbury that discovered that about 24 employees working at the restaurant were required to work more than 40 hours during many weeks without being properly compensated for overtime hours. In addition, many of the workers were not being paid the federal minimum wage and that the Pinellos [owners] did not keep proper records regarding the hours employees worked, their rates of pay or other conditions of their employment."

The suit seeks to order the owners to pay the employees wage and overtime back pay owed, along with an equal amount in liquidated damages.

So even if think you are too small, don't be deluded by the thought that you  have EPLI coverage to protect you.  Many EPLI policies don't cover wage and hour violations.  And for a company this small, this could put them out of business!  Better to do things right in the first place.

Posted By Diane Pfadenhauer In Wage & Hour | Permalink

Don't forget that today the Federal Minimum Wage goes up to $7.25 per hour, from $6.55 per hour!  For most of us here in NY we already have a state minimum wage of $7.15.  But for those employers who pay above the minimum wage, you still need to update your postings!

Posted By Diane Pfadenhauer In Wage & Hour | Permalink

The Second Circuit Court of Appeals ruled recently that an employee who works overtime must be paid for those hours even though he/she may have been prohibited from working overtime.  There are many who already operate consistent with this ruling, so this may not be something new for all of you.  In the case of Chao v. Gotham Registery, an employment agency refused to pay for overtime for temporary nurses unless the overtime was approved in advance by the agency.  Thus, when the employees actually worked overtime without approval, they were not paid for those hours.  The Court held that the company's overtime practices violated the Fair Labor Standards Act.

Moral of the story - if your employees work overtime without permission, pay them and then address the matter as a discipline issue.

Thanks to the Connecticut Employment Law Blog for a comprehensive summary of the case. Posted By Diane Pfadenhauer In Wage & Hour | Permalink

The US Department of Labor Wage and Hour Division reports that is has recovered a record amount in back wages due employees in 2007.  According to an article on BLR.com, the Division collected a record $220,613,703 for 341,624 workers in 2007. Since fiscal year 2000, it has recovered more than $1.25 billion for nearly two million workers and is reportedly focusing on bringing large employers into compliance.
Posted By Diane Pfadenhauer In Wage & Hour | Permalink

January is often the time that states increase their minimum wages.  While the federal minimum wage will increase in July (to $6.55/hour) several states already have minimum wages above the federal level.  To see if your state is one of them (as of January 1, 2008), this page from the Department of Labor will tell you:

Minimum Wage Laws in the States

Check the states where you do business to see if you need to make any adjustments or update your posting (often for free by checking with your particular state for an updated free poster).
Posted By Diane Pfadenhauer In Wage & Hour | Permalink