A Southern California logistics provider was ordered to pay $120,000 in overtime back wages to 388 employees and also must implement a timekeeping system to shore up compliance issues.
Following a recent finding of the Department of Labor affirmed by a federal court in California, an additional $2,000 penalty also was assessed to the employer, Global One Logistics, by the departmentâs Wage and Hour Division to address the employerâs willful violations of the Fair Labor Standards Act. Employees were told to record only eight hours of labor each day regardless of how many hours they actually worked, according to a May 24 Labor Department press release.
Maintain accurate timekeeping
The court ordered Global One Logistics, which provides warehousing and distribution services for the home fashion and apparel industry,toimplement a reliable timekeeping system that allows each employee to accurately record their daily start and stop times, the Labor Department stated. The order also instructed the employer tonot alter or manipulate time or payroll records to reduce the number of hours actually worked and not to encourage or pressure workers to underreport hours worked, the statement said.
Aimee Delaney, partner at law firm Hinshaw & Culbertson, said that while the timekeeping order is not unusual, the FLSA places an obligation on employers to maintain accurate time records for its employees. It does not dictate a specific method, but there must be accurate records maintained, she said.Â
âDigital time and attendance systems do deter manipulating time and payroll records, particularly if you are comparing to handwritten timesheets,â Delaney said.
 âWillfulâ wage and hour violations
Investigators found the employer willfully failed to pay employees overtime at time-and-one-half their regular rates of pay when they worked more than 40 hours per week, according to the Labor Department. In addition to requiring employees to falsify the number of hours they worked each day, the employer also paid for the unrecorded hours in cash at workersâ straight-time rates, the Labor Department stated.
A âwillfulâ violation under wage and hours laws has specific meaning and consequences, said Delaney. If a violation is found to be willful, the statute of limitations for the claim goes from two to three years and there are additional penalties, such as the $2,000 levied against the employer, she said.
Aimee Delaney, partner at law firm Hinshaw & Culbertson.
âWhen used in the FLSA context, a violation is willful if the employer either knew or showed reckless disregard for whether its conduct was prohibited by the FLSA,â Delaney said.
Employers who purposefully manipulate payroll records in an attempt to avoid their legal obligations will be held accountable by the Labor Department, said Wage and Hour Division Assistant District Director Rafael Valles in West Covina, California.
âThe outcome of this investigation serves as a reminder to all employers to review their pay practices to ensure they comply with the law and as a reminder to workers that they have the right to be paid for all of the hours that they work.â
Compliance is an organizational responsibility
Minimizing the risk of wage and hour and overtime violations falls on several departments and various roles within the organization.Managers in particular often are on the frontline with workers and should be familiar with compliance and timekeeping requirements.
âThey know and are often the assigner and approver of overtime,â Delaney said. âManagers certainly bear a responsibility for knowing the state and federal requirements and not directing employees to do something out of compliance with those requirements.âÂ
Human resources and payroll departments often have higher-level oversight and compliance responsibilities. HR may not always be aware of specific timekeeping violations occurring day to day but can ensure that managers are properly trained.Â
âHR should also be aware if unusual or significant hours are being worked, which may prompt a review or audit to ensure employees working the additional hours are properly paid,â Delaney said. âPayroll is often simply a function of processing pay for what is reported on the time records. However, payroll certainly has a role to play in ensuring that all reported hours are paid correctly, including the correct overtime premiums.â
Labor Department enforcement
Delaney also pointed out that âoff the clockâ violations are among the clearest abuses of state and federal wage and hour laws.
âIt literally means you are requiring the employees to work while not recording their time, which means they will not be paid,â she said. âUnder the FLSA, non-exempt employees must be paid for all hours worked. Employers also have an obligation to maintain accurate time records.â
She added that this case isnât necessarily a predictor of tougher Labor Department enforcement of wage and hour laws. The violations presented in the facts were blatant violations of fairly established wage and hour rules, she said.Â
âOnce violations are found, the Labor Department is always going to ensure enforcement to get the employees paid the wages owed,â she said.
Time and attendance software takes the headache out of tracking your hourly employees. Workforce.com has automatic systems in place to help you streamline your processes, save time and protect your bottom line. Book yourdemo today.
As the Biden administration begins its push to strengthen unions and encourage workers to organize, employers should know what this could mean for their workforce.
Biden in late April announced through an Executive Order the formation of a pro-union task force to examine existing policies and provide recommendations on how they can âpromote worker organizing and collective bargaining in the federal governmentâ and recommend what new policies should be created. Itâs unlikely that employers will see any concrete action in the near future given that thereâs a 180-day window for the task force to report back, said Gerry Golden, a labor relations attorney with Neal Gerber.
Itâs no secret that union membership has suffered a drastic decline. Just10.8 percent of workers belonged to a union in 2020, compared to 20.1 percent in 1983. The numbers among private employers are bleaker.According to Gallup, over one-third of government employees (37 percent) belong to a union, versus just 6 percent of all private sector employees.
Four labor law experts âGerry Golden of Neal Gerber;Aimee Delaney of Hinshaw Culbertson;Anthony George of Bryan Cave Leighton Paisner LLP; andAmy Gaylord of Akerman LLP â offered their thoughts on Bidenâs union push and what it could mean for employers now and into the future.
Workforce: We saw a failure of unionization at the Amazon warehouse in Alabama. Is there still an appetite on the part of workers to unionize?Â
Gerry Golden: Itâs very difficult to draw conclusions from one election or to extrapolate those results as indicating a general trend. From the unionâs viewpoint, the Amazon employees were very dissatisfied over things like productivity pressures and inadequate measures to protect their health during the pandemic. While the union apparently had the support of at least half the employees when they filed their petition with the National Labor Relations Board, only about half the employees ended up voting and of those who voted, the union lost 2-1. One could speculate that at the end of the day, support for the union was dispelled by Amazonâs arguments, the generally favorable wages and benefits Amazon employees are paid and perhaps by fear that if the union won, Amazon might reduce or even move the operation. Those are just possible reasons and without more itâs impossible to know why the union lost so badly.
Gerry Golden, attorney at Neal Gerber
Aimee Delaney: Certain industries and categories of workers will always be prone to unionizing. Usually wages are a strong driver for employee interest, so when you see the movements like âfight for $15â and similar campaigns, you can see segments of workers who most definitely have an appetite to unionize.
Anthony George: (The appetite to unionize is not) nearly as great as in past decades. Union members are now barely 6 percent of the private sector workforce in the U.S., and that number has been declining steadily for many years. Unions may score an occasional high-profile success now and then, but the overall pattern is steady decline.
Amy Gaylord: While the loss at Amazon was obviously a huge disappointment to unions looking to make inroads into organizing some of the retail giants, I believe that this administrationâs emphasis on union organizing, including this task force and its endorsement of the Protecting the Right to Organize Act, will reinvigorate workers and unions and lead to increased organizing efforts not just in sectors where we have traditionally seen unionization but in areas, such as the tech industry, where unionization efforts have been fairly rare up to this point.
Workforce: What sectors could see a push in unionization? Are Sun Belt states ripe for unionization pushes given the newly released population shifts?
Golden:Sun Belt states are unlikely to see significant shifts toward unionization in the foreseeable future. They are mostly states with low union representation now, many are right to work states, which makes it more challenging for unions to organize and politically and culturally they arenât environments in which unions have support. As to sectors that might see greater organizing activity, I think it will continue to be in poorly paid jobs such as health care, warehousing and transportation. Keep in mind, many workers in the gig economy are likely open to unionization but they have many legal hurdles to overcome. So organizing among those groups wonât happen until some legal issues are changed or clarified.
Aimee Delaney, attorney at Hinshaw Culbertson
Delaney:The South has generally been a region that is not ripe for significant labor movement. It is not impossible to think that if population trends were significant enough, that this could begin to chip away at the unfriendly climate. However, more likely trends would be based on the industry and job sectors. Sectors whose wage rate is tied closely to the minimum wage could see an increased push for unionization as those efforts to increase minimum wage continue. There are also stories popping up in sectors that have traditionally been less susceptible to unionizing, (i.e., the tech sector and professional services).
George:All aspects of the gig economy are at risk of unionization as federal, state and local governments attempt to force Uber drivers, independent web designers and other individual entrepreneurs into the âemployeeâ mold.
Sun Belt states are also at risk as people migrate away from blue states into the red states of the Sun Belt. But even with those dynamics, I donât see labor unions reversing their decades-long decline into oblivion â at least in the private sector.
Gaylord:I think we are going to see increased unionization in new areas such as tech that have not traditionally been organized. I think cannabis is another industry where we will continue to see growth in union organizing efforts, as well as gig economy workers such as ridesharing and grocery delivery services like Instacart. Many of these workers were on the frontlines of the pandemic and may be seeking to enhance their safety as well as their job security and compensation. As to the Sun Belt, we just saw a nursesâ union win a historic election at a hospital in North Carolina. It was the first nursesâ union win in North Carolina and I believe the largest hospital union win in the South since 1975. I think that win can be directly tied to the issues I just mentioned â being on the frontlines of the pandemic and seeking enhanced safety measures and better working conditions. North Carolina has the second lowest percentage of union-represented workers in the country, just under 3.5 percent. Only South Carolina is lower. I think this union win is a portent of things to come and, while I have my doubts about the PRO Act ever making it past the Senate, I think that abolishing right to work laws in places like the Sun Belt will continue to be a primary objective of the Biden administration.
Workforce: Could the Biden task force have an effect on pay scales, or employers voluntarily increasing the minimum wage to avoid a union push?
Golden: Employers generally only adjust pay scales in response to market forces or, in some cases, in response to the threat of unionization. Interestingly, following its election victory, Amazon has already announced improvements. Itâs hard to imagine how the Biden task force and the administration could have an impact on wages outside of its ability to mandate changes applicable to federal contractors.
Delaney: Because the task force appears to be focused on the federal sector, I think that is unlikely. The task force itself would not have any ability to directly affect pay scales. However, I do think the proactive efforts you are seeing from, for example, big box retailers and some fast food chains to increase their hourly wage rates is done with an eye toward heading off unionizing efforts, among other reasons prompting the increases.
Anthony George of Bryan Cave Leighton Paisner LLP
George:Yes. Both to avoid a union organizing effort and to attract and retain good workers who might otherwise be lured away by the higher wages available (by government mandate) from federal contractors.
Gaylord:I think that employers who want to remain union free would be wise to make sure they are paying competitive wages and benefits so that their employees will feel that a union is unnecessary. I believe that is one reason Amazon was able to prevail in Alabama. They were already paying extremely competitive wages and benefits. We have heard unions and this administration talk a lot about a $15 minimum wage. Most of the warehouse workers at the Amazon facility in Alabama were already earning $15 an hour or more. So, Amazon workers did not believe that a union was necessary and voted against union representation.
Workforce: What should employers do to remain compliant with current labor laws?
Golden: All employers should bear in mind that the National Labor Relations Act applies to virtually all employers regardless of whether their employees are represented by a union. As a result, all employers should be familiar with the protections the NLRA provides their employees including their right to obtain union representation and how that may occur.
Delaney: It is important for employers to understand the rights and obligations imposed by the National Labor Relations Act. Non-union employers often donât realize that their employees have rights under the NLRA and that they can be subject to unfair labor practice charges, even though their workforce is not unionized. If an employer is faced with an organizing campaign, it is critical for the employer to understand what it can and cannot do in its campaign efforts and for the election. This is also a reason that it is important for employers to be aware of the Protecting the Right to Organize Act and potential changes this bill could bring if passed.
George: Pay attention, stay current, and speak with a labor lawyer. A president can do only so much by Executive Order, but both the National Labor Relations Board and the Department of Labor can and will make life easier for labor unions and harder for employers over the next few years. Changes are coming. Donât get caught flat-footed.
Gaylord:Audit their existing policies now. Make sure they have the assistance of competent labor and employment counsel, whether internal or external. Things are going to be changing quickly and employers need to make sure they are being kept up to date on the latest developments.
Workforce: Do you see any long-term ramifications from this action? In your crystal ball, what does the labor movement look like in 2024-25?
Golden: Todayâs workforce is changing rapidly due to technology and things like AI and robotics. More and more employees are comfortable confronting their employer over workplace issues. The future success of unions will depend on their ability to develop messages that address these issues, connect with diverse workforces and convince employees that a union can have a positive impact on their work lives.
Delaney: Itâs safe to say that we will see a shift toward pro-labor policy under the current administration. I think the biggest issue that should be on the radar of private employers at this time is the proposed Protecting the Right to Organize Act. There are significant changes proposed by this bill that upend decades of precedent and practice in favor of tilting the scales toward organized labor. This will impact union and non-union employers alike as it impacts, for example, the actions an employer can take if faced with an organizing campaign.
Amy Gaylord of Akerman LLP
George: Long-term, no. Among other things, anything Biden does by Executive Order will simply be reversed by Executive Order when the next Republican president takes office. I think the private-sector labor movement in 2025 will look very much like the labor movement in 2020 â and 2015 and 2010. Slowly but inexorably dying.
Gaylord:This task force is one way that Biden hopes to deliver on his promise to be most pro-union president this country has ever seen. I think over the next few years we will see labor law shaped in a way that is more union and employee friendly, making it easier for unions to organize workers, sometimes without the protections of an NLRB conducted election, and extending the coverage of the National Labor Relations Act to more workers than ever before such as individuals that have previously been considered independent contractors or supervisors.
Book your demo today to see how you will avoid costly penalties and ensure simplified and automated compliance to federal, state, and local labor regulations through Workforce.com’s powerful compliance platform.
Contractors have to follow a rigorous array of compliance requirements to do business with the federal government, or they risk losing their deals.
Private mail carriers contract with the federal government to help deliver mail across the nation. While they may have delivered parcels and letters on time, three Florida-based federal contractors failed to deliver all of their workersâ wages, which caught the attention of the U.S. Department of Labor.
Following its investigations, the Labor Departmentâs Wage and Hour Division determined that three mail haulers in northern and central Florida â Mercado Santiago Inc. in Middleburg, Copa Post Services LLC in Gainesville and M&M Superior Contracting LLC in Orlando â owed a total of $293,779 to 34 employees. All three employers violated requirements of the McNamara-OâHara Service Contract Act, according to a Labor Department statement. The Act is a labor law that requires government to use its bargaining power to ensure fair wages for workers when it buys services from private contractors.Â
Substantial fines for wage and hour violations
Kate Bischoff, an employment attorney at tHRive Law & Consulting LLC, said itâs a sizable penalty in a wage and hour case.
âThis averages out to about $8,700 per employee, which is no small amount,â Bischoff said. âDepending on the length of time the Wage and Hour Division was looking back, employees would have felt the absence of this amount. It would have been real to them.â
Division investigators found one employer, Mercado Santiago, failed to pay workers for all the hours that they worked, resulting in the contractor paying less than the prevailing wage rates required. They also said the employer failed to pay required health and welfare benefits for employees and failed to keep accurate time and payroll records. As a result, Mercado Santiago has paid $219,166 in back wages to 16 employees.
Bischoff said itâs unlikely that the pay issue was an oversight by Mercado Santiago.
âOver $13,000 in wages and benefits is significant,â she said. âWhile prevailing wages are tricky â so much attention to detail and coordination between workers, supervisors and managers â it would be hard not to notice the issue here. Plus, if certified payroll was checked regularly by the governmentâs contracting officer, it should have been easy to spot the issue.â
Investigators determined Copa Post Services also failed to pay required health and welfare benefits to workers. The employer has paid $25,848 in back wages to 10 employees, according to the Labor Department statement.
The division found M&M Superior Contracting failed to pay required prevailing wage rates. The employer also failed to pay required health and welfare benefits and holiday pay to workers, and failed to allow employees to accrue vacation time or vacation pay. The employer owes $48,765 in back wages to eight employees, according to the Labor Department statement.
âPrevailing wage laws provide a safety net for fair wages and benefits to workers on contracts providing services to the federal government. Enforcement of these laws protects the wages of American workers,â said Wage and Hour Division District Director WildalĂ De JesĂşs in Orlando in the statement. âThe Wage and Hour Division will remain vigilant in its work to ensure employees are paid in compliance with these laws, and that employers compete on a level playing field.â
In April 2013, the U.S. Postal Service awarded Mercado Santiago a contract to provide mail-hauling services in Duval, Clay and St. Johns counties. The contract expires in September 2022, the statement said. Copa Post Services hires employees to work at USPS locations delivering mail on SCA contracts in Alabama, Florida and Georgia. M&M Superior Contracting holds three separate SCA contracts to deliver mail for the USPS in Orlando.
Stricter wage and hour enforcement is coming
Bischoff predicted that under newLabor Secretary Martin Walsh, enforcement is going to ramp up, penalties will likely increase and the Labor Department may have a low tolerance for mistakes.Â
âIt is more likely the department will go straight to litigation before seeking to settle a dispute,â Bischoff said.Â
This could also mean the Labor Department will seek more debarment as a penalty, she added. Debarment means an employer is prohibited from contracting with the government.
âFor many, many contractors, debarment is an existential threat,â she said. âThese employers were contracted to carry the mail. If they donât have a contract with the USPS to carry mail, it is hard to imagine what they would do.â
To avoid wage and hour violations, Bischoff said employers need to act quickly to get wage and hour compliance in order.
âWith possible changes to the overtime salary threshold, minimum wages and more enforcement action, there is never a dull moment for HR and payroll professionals,â Bischoff said.
Consider the following COVID-19 safety and health violations OSHA recently uncovered at a Massachusetts tax preparation business.
Employees and customers were prohibited from wearing face coverings in the workplace despite a statewide mask order that mandated the business to require employees and customers to wear masks.
Employees were required to work within 6 feet of each other and of customers for multiple hours while not wearing face coverings.
Adequate means of ventilation in the workplace were not provided.
Controls such as physical barriers, pre-shift screening of employees, enhanced cleaning, and other methods to reduce the potential for person-to-person transmission of the virus were not implemented.
What did these violations cost this employer in OSHA penalties? $5,000? $10,000? $25,000?
How about $136,532!
According to OSHA Regional Administrator Galen Blanton in Boston, “This employer’s willful refusal to implement basic safeguards places her employees at an increased risk of contracting and spreading the coronavirus. Stopping the spread of this virus requires business’ support in implementing COVID-19 Prevention Programs, and ensuring that staff and customers wear face coverings and maintain physical distance from each other.”
This appears to be the first company cited under OSHA’s recently launched national emphasis program focusing on COVID-19 enforcement efforts. If you’ve waited for the past 13 months without taking COVID safety seriously in your business, you better do so now. OSHA is watching, and based on this one example, violations are going to be quite expensive.
Employee meetings are typically meant to discuss policies, reinforce training and build organizational transparency.
Two companies discovered the hard way that if not properly monitored, such gatherings can violate wage and hour and overtime laws, leading to the Fair Labor Standards Act violationsand steep financial penalties.
Investigations by the Department of Labor Wage and Hour Division determined that Keystone Adolescent Center Inc. owed workers $44,858 in back wages for time spent in meetings, while Maggianoâs Little Italy restaurant in Philadelphia owed 82 employees $116,308 in back wages for minimum wage and overtime violations stemming from pre-shift meetings.
According to investigators, supervisors and behavior specialists gathered every two weeks at Keystone Adolescent Centerâs five Greenville, Pennsylvania, facilities where they discussed policy changes, completed required training and reviewed safety procedures to help the at-risk youth they serve.
Keystone also used the meetings to distribute paychecks, yet failed to pay 80 workers who attended these meetings and required training outside of their regular shifts for the time they spent at them. The investigation determined that â by excluding this work time from employeesâ pay â Keystone Adolescent violated the FLSA, leading to the recovery of back wages for the workers.
Wage and hour violations during staff meetings
According to an April 5 Labor Department press statement, investigators found that Keystone paid employees for time spent at staff meetings and required training only if those meetings and training occurred during their scheduled shifts.Â
The employer failed to pay workers attending outside of their normal work hours for time they spent in those meetings and required training. Failing to record and pay for this time violated FLSA overtime and recordkeeping requirements, according to the statement.
âEmployers must pay employees all the wages they legally earn, which includes paying them for any hours they work outside of their scheduled shifts,â said Wage and Hour Division District Director John DuMont in Pittsburgh.
Complying with federal, state laws
Aimee Delaney, a labor and employment law expert at law firm Hinshaw & Culbertson in Chicago, said that any time an employer requires a non-exempt employeeâs attendance at a meeting, training or other mandatory event, the employer needs to realize that this time is considered hours worked and is compensable under state and federal law. This also means that if the time spent at the mandatory meeting puts the employee over 40 hours for the week, the employee is entitled to overtime for any time over 40 hours.
Attorney Aimee Delaney, Hinshaw & Culbertson
The employer also needs to understand that state law may require overtime at different thresholds.
âOne easy question an employer can ask itself when trying to determine if the time is compensable is whether the meeting or other event was mandatory, as that is usually a sign that the time must be paid,â Delaney said.
Compensation for pre-shift meetings
Oftentimes restaurant managers hold pre-shift meetings to motivate their employees, reinforce training or update the dayâs menu. It is time for which employers typically should also be paying their workers, which is the lesson Maggianoâs Little Italy restaurant learned the hard way after a Labor Department investigation.
Investigators found minimum wage and overtime violations of the FLSA. In addition to the $116,308 in back wages, the Wage and Hour Division assessed a civil money penalty of $68,060 as investigators deemed the violations as willful, according to an April 12 Labor Department press statement.
The division determined that by failing to pay workers for time they spent attending pre-shift meetings, the restaurant failed to pay the required federal minimum wage. Maggianoâs Little Italy required dining room servers to attend 15- to 30-minute meetings before the start of their scheduled shifts. When employees worked more than 40 hours in a workweek, this unpaid time triggered overtime violations, according to the Labor Department.
âRestaurant workers are often among the nationâs lowest paid, and most vulnerable, particularly during the coronavirus pandemic,â said Wage and Hour District Director James Cain in Philadelphia. âWhen employers fail to account for all hours employees work, they deprive workers of their hard-earned wages. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices, and ensure they comply with the law.â
Delaney noted that the Labor Department has a number of resources that explain the law and regulations on this topic specifically and there are specific rules on when activities by a non-exempt employee outside of work hours must be considered hours worked and/or compensable.
âWhile there may be a number of areas that employers can expect stricter compliance enforcement on with the new administration, this is a fairly settled area of the law and violations of this nature have been and will continue to be enforced regardless of a change in administration at the top,â she said.
Make wage and hour compliance headaches a thing of the past with Workforce.comâs industry-leadingtime and attendance software. Book yourdemotoday.
Recently confirmed Labor Secretary Marty Walsh will be the first union member to head the U.S. Department of Labor in half a century.
Given Walshâs extensive union background, labor-management issues such as the unionization push among employees at an Amazon warehouse in Alabama will be front and center during his tenure as the Labor Departmentâs new leader. Itâs also expected that Walshâs leadership of the agency will prompt a crackdown in the enforcement of wage-and-hour laws and workplace safety regulations, among other worker-friendly policies.
Kevin M. Young, a partner in labor and employment in Seyfarthâs Atlanta office,Jason E. Reisman, co-chair, Labor and Employment Practice Group, for Blank Rome in Philadelphia, andChristopher D. Durham, partner in Duane Morris’ Employment, Labor, Benefits and Immigration Practice in Philadelphia, offered their thoughts on what employers should expect as Walsh begins his tenure as the new Labor secretary.
Aggressive enforcement
Durham said employers can expect the Labor Department to more vigorously enforce employment laws through audits, investigations and court actions against employers, contrasting with the Trump administrationâs focus on securing employer compliance through education, outreach and other less adversarial means.Â
âThese shifting enforcement priorities will be supported by regulations and sub-regulatory guidance that is more protective of employee rights than the generally business-friendly interpretations of the prior administration,â Durham said. âWe have already seen examples of this regulatory shift in the DOLâs moves to undo the prior administrationâs regulations on joint employer status and tipped-employee wages.â
Young pointed out that while the Labor Department under Trump was not as light on employers as some might assume â the Wage & Hour Division set a new record for back wages recovered in 2019 â it took a softer approach than previous administrations on the topic of damage enhancements. Liquidated damages, which is a penalty in an amount equal to back wages owed, were taken off the table in all but the rarest cases, he said.
âThe new administration has reversed course on that issue, and itâs likely that other enforcement measures will reenter the picture, too,â Young said. âItâs not clear yet whether the number of investigations will increase â that depends on the budget as much as anything else â but employers should certainly be preparing for more aggressive investigations than in past years.âÂ
Reisman said that although Walsh was confirmed with strong bipartisan support, employers should expect his reputation as someone who is a consensus-builder to be tested early with so many critical items on his agenda, including the pandemic response and some critical Trump-era regulatory initiatives.
Employers also should expect there to be an ongoing clash between the age-old tensions that exist between the Labor Department when operated under a Republican administration and under a Democratic administration.Â
âThere is no question, given Walshâs labor background and leadership of the building trades, that he will be a staunch supporter of workersâ and unionsâ rights,â Reisman said. âHe will not want to alienate his base of union support, or that of President Biden, especially in light of Bidenâs promises to empower workers and unions.â
Employers can expect a return to a Labor Department that resembles and likely surpasses the enforcement efforts of the Obama administration, Reisman said. The DOL will be back on the trail of finding violations and holding employers accountable.Â
âThe focus will be less on assisting with compliance and educating employers and more on the gotcha game of penalizing employers who â knowingly or unknowingly â are not in compliance with the laws the DOL enforces,â he said.
Enforcing wage-and-hour and overtime violations
Nowhere will the shift in Labor Department enforcement priorities and positions be felt more by employers than enforcement of the Fair Labor Standards Actâs overtime and minimum wage requirements, Durham said.Â
âI expect the number and scope of audits conducted by the DOLâs Wage & Hour Division to increase substantially, and that the DOL will not be as willing to settle violations for less than âmake-wholeâ relief for affected employees,â he said. âIn addition to back wages, the DOL is more likely to insist that employers pay liquidated damages when settling a wage-and-hour investigation, and the DOL likely will increase the use of civil monetary penalties as a potent deterrent to send a message to employers.”
Employers should expect a return of the enforcement tools of the past, liquidated damages being almost automatic as penalties in wage-and-hour investigations, Reisman added. âWe expect more willfulness assertions by the DOL, which allow a back wage look-back period of three years, rather than two. And, yes, the use of civil money penalties will be used more broadly as a tool than in the last four years.â
Minimum wage and the tip credit
Young said that the new administration clearly supports increasing the federal minimum wage. And thereâs also little doubt that the benefit of any increase will apply for tipped workers.
âThe question here is whether the FLSA will continue to allow a portion of a tipped employeeâs minimum wage to come in the form of tips,â he said. âA recent federal legislative proposal would remove this so-called tip credit, requiring restaurants to directly pay the full minimum wage to each tipped employee, without credit or concern for the amount of tips they earn on the job. If passed, this could have a seismic impact on a restaurant industry that operates on thin margins and has spent most of the last year on life support.â
Supporting fair workweek and predictive scheduling
Fair workweek laws have swept the nation and in particular theretail, fast food and hospitality industries over the past decade or so, Young said. These laws are likely on the radar of Biden and Walsh.
One recently took effect in the presidentâs back yard (Philadelphia), and another has been the focus of lobbying efforts in Walshâs home state of Massachusetts, Young noted.
âInstituting this sort of reform at the federal level would require an act of Congress,â Young said. âAfter all, the DOL canât make new law, only interpret and enforce whatâs on the books, and I donât get the sense that this sort of measure is among Democratic lawmakersâ core labor priorities.âÂ
In the past couple of years multiple local jurisdictions including Chicago, Seattle and San Francisco passed predictive scheduling laws, with more such laws likely to hit the books in the coming years, Durham said. Â
Absent new legislation at the federal level, it is highly unlikely the Labor Department will impose requirements similar to these laws because the FLSA generally does not impose requirements on employers related to scheduling employees, he added.Â
âHowever, one way in which the DOL could enhance the financial benefit to employees of such laws would be to take the position that certain penalties under predictive scheduling laws, such as penalties for shift cancellations or other scheduling changes with insufficient notice to employees, need to be included in the regular rate of pay for purposes of calculating overtime under the FLSA,â Durham said. âThe DOLâs current position, set forth in a Fact Sheet published in December 2019, is that most such penalty payments do not need to be included in the regular rate of pay.â
Reisman also questioned whether the Labor Department will have the time or resources to make its way far enough down its priority list tofair workweek/predictive scheduling regulations, or what its authority would be in seeking an impact in that realm.Â
Still, he added, âAnything that would entail a nationwide policy or regulation such as paid leave could be well-received by many employers if it serves to preempt state and local laws and regulations that have created an almost unmanageable web of compliance pitfalls for multi-state employers.â
Labor law enforcement can strike your business at any time. Ensure simplified and automated compliance to federal, state and local labor regulations and avoid costly penalties. Book ademoand see Workforce.comâs powerfulcompliance toolsin action.
Recent wage and hour violations by a New Hampshire contractor is a signal to other employers that they should review their workforce management policies and overtime records for compliance with federal, state and local labor laws.
Facades Inc., a commercial exterior surfaces applicator-installer in Hampstead, New Hampshire, falsified pay records to cover up its failure to pay employees the required overtime wages they earned, according to a U.S. Department of Labor investigation.
The Labor Departmentâs Wage and Hour Division recovered $87,360 in back wages owed to 28 Facades Inc. employees. It also assessed a civil money penalty of $19,516 to address the willful nature of the violations, which included the employerâs falsification of payroll records, according to a DOL press release.
Check your workforce management policies
Small business owners have numerous priorities, and accurately managing payroll and time and attendance policies should always remain at the top, as the Facades case shows. Effectivelytracking employee hourswith an automated workforce management solution will clean up compensation and support compliance practices.
Investigators found Facades Inc. violated the Fair Labor Standards Act when it paid straight time for overtime hours worked by employees and concealed those payments as âreimbursementsâ in payroll registers. Rather than recording and paying for overtime hours at time-and-one-half workersâ regular rates of pay, the employer recorded only up to 40 hours in their records and masked their straight time payment for any additional hours, the release stated.
âWorkers deserve to get paid all the wages they have earned, and our enforcement of the law ensures that happens,â said Wage and Hour Division District Director Daniel Cronin in Manchester, New Hampshire. âIn this case, the employer attempted to conceal illegal straight-time-for-overtime payments. In addition to being held accountable for back pay, the employer paid a significant civil money penalty. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices to avoid violations like those found in this case.â
Automate your processes to avoid penalties
Employees deserve their paychecks on time and to be accurately compensated for the time they spend working. Automated payroll practices help eliminate delays, improve compliance and minimize costly errors.
With employment contracts, timesheets, benefits and labor laws, there are a lot of factors involved in payroll that can result in miscalculations. Workforce.comâspayroll integration solutionconnects with more than 50 payroll systems to ease compliance and enhance efficiency.Â
Ask for a demo of Workforce.comâs powerful time and attendance platform today and see how to make workplace compliance effortless and effective.
Earlier this week, the House passed an extension of the FFCRA as part of its $1.9 trillion COVID-19 stimulus bill. (I’ll cover its details in a future post, but if you’re curious now, head over to Jeff Nowak’s FMLA Insights.)
One of the new measures in this proposed extension is the inclusion of leave taken by an employee to obtain a COVID-19 vaccine or recover from any injury, disability, illness or condition related to the vaccine.
Bravo! But here’s the thing. Until this passes and becomes law, and even if it doesn’t become law, employers should be paying employees for time off related to the COVID vaccine. At least for now, vaccine appointments are scarce and employees who are eligible to get vaccinated must take appointments when they can get them. Many will need to get their vaccines during the workday. Moreover, post-vaccination, some employees will have a reaction serious enough to keep them house-bound for a day or so.
The way through the end of this pandemic and returning our lives to normal is by getting enough shots in arms as quickly as possible. As employers, want to encourage our employees to get vaccinated.
We don’t want employees to feel like they have to choose between obtaining a vaccine and obtaining a paycheck. Some will choose poorly. By paying employees for time off from work related to COVID-19 vaccinations, we are making the decision that these vaccines are a priority, and that we are not standing in our employees’ way from obtaining them as soon as possible.
For the past three years, the Department of Labor has been trying to get employees PAID for their unpaid overtime and minimum wages.
That’s PAID, as in the Payroll Audit Independent Determination program, a creation of the Trump administration that allowed employers to self-report FLSA violations to the Department of Labor without risk of litigation, enforcement proceedings, or liquidated damages.
As of last week, however, the PAID program is history, as the DOL announced its immediate end.
“Workers are entitled to every penny they have earned,” said Wage and Hour Division Principal Deputy Administrator Jessica Looman. “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage. The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.”
Pay close attention to that last sentence: “The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.” The era of federal agencies playing nice with employers through education and outreach is over. At least for the next four years, businesses should expect agency priorities to be enforcement, not education.
This means that if you have not recently audited all of your employment practices, your time is running out.
In the context of the FLSA, the question is not whether companies need to audit their wage and hour compliance, but whether they properly prioritize doing so before someone calls them on it.
It is immeasurably less expensive to get out in front of a potential problem and audit on the front-end instead of litigating or settling a claim on the back end. The time for companies to get their hands around these issues is now, and not when employees, their lawyers, or the DOL start asking the difficult questions about how employees are paid.
To a nation waiting for action, let me be clearest on this point: Help is on the way.
Those were the words of President Biden in announcing the ordering of 200 million additional COVID-19 vaccine doses, a hike in the distribution of doses to states, and a promise that there will be enough doses to fully vaccinate 300 million Americans by the end of summer.
It’s an ambitious plan, but it’s what we need to end a pandemic that has already claimed the lives of more than 425,000 Americans and will claim hundreds of thousands more before we close the book on COVID-19.
Vaccines, however, only work if people actually accept syringes in their arms. Too many of us say that they won’t.
According to one recent survey, 39 percent of Americans say that they either probably or definitely will not get the COVID-19 vaccine when it becomes available to them. Another survey pegs the number at 37 percent. While these percentages are trending down, and more of us say that we trust the vaccine and will get it, the needle on this issue isn’t moving quickly enough. According to Dr. Fauci, to reach herd immunity (the only thing that will end this pandemic), we need between 75 and 85 percent of the population to be vaccinated.
To overcome this vaccine hesitancy, some employers are offering their employees a financial incentive to obtain the COVID-19 vaccine when it becomes available. Retailers such as Trader Joe’s, Dollar General, and Instacart are offering small incentives such as a couple of hours of additional paid time off, or nominal (e.g., $25) stipends. Nursing homes, whose employees come in contact with our most vulnerable population, are offering similar incentives to their workers. Others are offering free marijuana (full disclosure: they are marijuana dispensaries).
If you are considering offering a financial incentive to entice your employees to obtain the vaccine when it’s available to them, I caution you to tread carefully to make sure that you do it within the bounds of our equal employment opportunity laws.
1. Vaccination rules must have exceptions for employees’ disabilities under the ADA and employees’ sincerely held religious beliefs under Title VII. For this reason, if you are offering employees a financial incentive to get vaccinated, you better be prepared to offer the same exact incentive to those who cannot get vaccinated because of one of these legally protected reasons.
2. Incentive programs must comply with the EEOC’s wellness program regulations. Admittedly, these regulations will not be final until March 8.
Given that COVID-19 vaccinations will stretch for months beyond that date, however, employers should be aware of these rules and the risks they pose. Under these proposed and soon to be final rules, employers may not offer any more than a “de minimis incentive” to encourage employees to participate in a wellness program such as one that incentivizes the receipt of the COVID-19 vaccine.
The EEOC does not define “de minimus,” but uses the example of a water bottle or a gift card of modest value as “de minimus” and a $50 per month reduction in annual health care costs, paying for an annual gym membership, or an airline ticket as “not de minimus.”
Employers are considering bribes because they work. We just need to make sure that we are doing so within the confines of the law. We don’t want to solve one problem only to create another.
