ExemptEmployees NavigatingWageand HourPitfalls PresentedBy RebeccaPrattBrometEsq JeremyWStewartEsq ThursdayMay32012 ID: 411343
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Reclassifying ExemptEmployees: NavigatingWageand HourPitfalls PresentedBy: RebeccaPrattBromet,Esq. JeremyW.Stewart,Esq. Thursday,May3,2012 ©2012SeyfarthShawLLP2| Top10WageandHourSettlementsin 2011 • $42Million–JPMorganChase&Co.(misclassificationofloanunderwriters) • $35Million–Oracle(failuretopayovertimeandprovidemealperiodsto qualityassuranceengineers,customersupportengineersandproject managers) • $34Million–CVSCaremarkCorp.(failuretopayovertimetostore managers) • $32Million–TysonFoods,Inc.(failuretocompensatefordonningand doffingandotherpre-andpost-shiftwork-relatedactivities) • $17.3Million–PartnersHealthCareSystem,Inc.(failuretopayforwork duringscheduledmealsandbreaks) • $15Million–DickSportingGoods(failuretopayfortimeworkedduring breakperiodsandwaitingtoleaveattheendoftheirshift) • $14Million–BenetoBulkTransport(failuretopaytruckdriversadequate overtime) • $11.3Million–Cin-Lan,Inc.(misclassificationofexoticdancersasexempt) • $10.5Million–DHLExpress(USA),Inc.(variouswage&hourviolations) • $10Million–SpearmentRhinoCos.Worldwide,Inc.(failuretopay minimumwageandsplittingtipstopayoverhead) ©2012SeyfarthShawLLP3| WageandHourChallenges • Governmentsdesperatefortaxrevenues • Misclassificationmayaffect10to30percentof employers 1 • IncreasedDOLfunding PresidentObama’sFY2012budgetsetsaside$240millionfor misclassification-specificinitiatives BetweenFY2009andFY2010,1,000enforcementpersonnel hiredthroughoutDOL.Trendcontinuesin2011withthe openingof13newoffices,theexpansionof6others,andan increaseinthenumberofinvestigators. ____________________ 1 Weil,D., ImprovingWorkplaceConditionsThroughStrategicEnforcement:AReporttothe WageandHourDivision (2010)(availableathttp://dol.gov/whd). ©2012SeyfarthShawLLP4| IncreasedWHDEnforcement Capabilities • Opened13newofficesnationwideandexpanded6othersin2011 NumberofWageandHourDivisionInvestigators,1987to2011 951 952 970 938 835 804 800 809 942942 938 949 945 898 850 788 773 751 732 865 781 731 893 950 1,006 600 650 700 750 800 850 900 950 1,000 1,050 1,100 1987198919911993199519971999200120032005200720092011 AppliedEconomicStrategies,usingU.S.DepartmentofLabor,WageandHourDivisiondata. ©2012SeyfarthShawLLP5| U.S.DOLStrategicPlan2011-2016 OutcomeGoal1.5–SecureWagesandOvertime • ProtectingVulnerableWorkers Focusonsubcontracting;third-partymanagement;franchising; independentcontracting;andothercontractualformsthatmake worker-employerrelationshiptenuousandlesstransparent • TargetingIndustries High-riskindustriesincludetheagricultural,janitorial, construction,andhotel/motelindustries ©2012SeyfarthShawLLP6| U.S.DOLStrategicPlan2011-2016 “ Plan/Prevent/Protect” • Principle:employersandothersmust“findandfix” violationsbeforeDOLinvestigatorarrives • Replace“catchmeifyoucan”withPlan/Prevent/Protect ©2012SeyfarthShawLLP7| U.S.DOLStrategicPlan2011-2016 WagesandOvertime • Multi-lingualpublicawarenesscampaign, WeCanHelp , toreachworkerswhoarereluctanttoreportviolations • Campaignaddressessuchtopicsasrightsinthe workplaceandhowtofileacomplaintwithWHD ©2012SeyfarthShawLLP8| “BridgetoJustice” • November2010: TheWageandHourDivisionandtheAmericanBarAssociation announcedanunprecedentedcollaborationprovidingforan AttorneyReferralSystem. WhenFLSAorFMLAcomplainantsareinformedthattheWage andHourDivisionisdecliningtopursuetheircomplaints,they mayalsobegivenatoll-freenumbertocontactthenewly createdABA-ApprovedAttorneyReferralSystem. Inaddition,WHDwillalsoprovidepromptrelevantinformation anddocumentsonthecasetocomplainantsandrepresenting attorneys. ©2012SeyfarthShawLLP9| DOLTimesheetApp • May9,2011: DOLannounceslaunchofitsfirstapplicationforsmartphones:afree timesheettohelpemployeesindependentlytrackthehourstheywork anddeterminethewagestheyareowed. AvailableinEnglishandSpanish Allowsuserstotrackregularworkhours,breaktimeandanyovertime hoursforoneormoreemployers. “Thisnewtechnologyissignificantbecause,insteadofrelyingontheir employers’records,workersnowcankeeptheirownrecords.This informationcouldproveinvaluableduringaWageandHourDivision investigationwhenanemployerhasfailedtomaintainaccurate employmentrecords.” Currently:iPhoneandiPodTouch.Future:AndroidandBlackBerry Future:otherpayfeaturesincludingtips,commissions,bonuses, deductions,holidaypay,payforweekends,shiftdifferentialsandpay forregulardaysofrest. ©2012SeyfarthShawLLP10| “BigBrother”GoesDigital Yes,there’san“App”forThatWelcometoDOL2.0 Audits ©2012SeyfarthShawLLP12| ReasonstoDoAnAudit • Reasonstodoanexemptstatusaudit Ensureinternallegalcompliance Avoidfuturelawsuits/DOLinvestigations Createa“goodfaithdefense” Knowyourownproblemsbeforetherestoftheworld ©2012SeyfarthShawLLP13| AuditChecklist • WhatToDo? Identifyyourexemptpositions Prioritizepositionstobereviewed Gatherandreviewdocuments Conductinterviews AssessFacts Developcommunicationplan Implementchanges ©2012SeyfarthShawLLP14| SpecialConsiderations • Keepitconfidential! • Getitright • Considerengagingcounsel GoodFaithDefense PrivilegeIssues ©2012SeyfarthShawLLP15| IdentifyExemptPositions • Identifyallexemptpositions Jobtitles Numberofindividualsintheposition Locationsofpositions Departments/Divisions Managers Directreports Degrees Pay Otherinformationtohelpprioritize ©2012SeyfarthShawLLP16| PrioritizePositionstobeReviewed • Identifyclearlyexemptorlow-riskpositions CEO Executives Doctors Lawyers Scientists Engineers Accountants,CPArequiredforposition PeopleManagerswith5+directreports $100,000+,ifstatelawpermits ©2012SeyfarthShawLLP17| PrioritizePositionstobeReviewed • Identifyclearlynon-exemptorhighriskpositions AccountsPayable,AccountsReceivable,Bookkeeping CustomerService InsideSales(non-retailorserviceestablishments) AdministrativeAssistants HelpDesk ©2012SeyfarthShawLLP18| PrioritizePositionstobeReviewed • PrioritizeRemainingPositions Numberofpeopleintheposition Locationofposition RedFlagjobtitlesforDOL Internalconcerns ©2012SeyfarthShawLLP19| AssessPositions • Investigator Whowillconducttheinvestigation? Consistentmessaging Preparetemplateintroduction Preparetemplatequestions ©2012SeyfarthShawLLP20| AssessPositions • FactGathering–SalaryLevelTest $23,660/year($455/week) • FactGathering–SalaryBasisTest Payrollrecords Timesheets Memosreleavepolicies,docking Handbooks ©2012SeyfarthShawLLP21| AssessPositions • FactGathering–DutiesTest Interviews •Supervisors •Employees Observeemployees Reviewdocuments •JobDescriptions •PerformanceReviews •Self-evaluations •Hiringposts ©2012SeyfarthShawLLP22| AssessPositions • FactGathering–DutiesTest ManagementEmployee •Hire/Fireauthority •Departmentsize •Managementduties •Interviewing,selecting,andtrainingemployees •Settingandadjustingpayandworkhours •Maintainingproductionorsalesrecords •Appraisingemployeeproductivityandefficiency •Handlingemployeecomplaintsandgrievances •Discipliningemployees •Planningandapportioningworkamongemployee •AssistantManagers ©2012SeyfarthShawLLP23| AssessPositions • FactGathering–DutiesTest AdministrativeExemptEmployees •Officeornon-manualwork •Salesorproductionwork •Exercisediscretionandindependentjudgment ComputerProfessional •HelpDeskv.Programmers •Exercisediscretionandindependentjudgment ©2012SeyfarthShawLLP24| AssessPositions • FactGathering–DutiesTest OutsideSales •Makingsales •Awayfromthe MotorCarrier •Interstatecommerce •10,001+pounds Otherexemptions ©2012SeyfarthShawLLP25| ReclassificationIssues • Whatifapositionisonthebubble? • Whatifaposition“needstobeexemptforrecruiting purposes”? • Whatiftheemployeewantstobeexempt? ©2012SeyfarthShawLLP26| ReclassificationIssues • Impactonotheremploymentconditions Benefitplans Bonuses Non-MonetaryIssues ©2012SeyfarthShawLLP27| ReclassificationIssues • Communication ExecutiveLeadershipTeam Managersofreclassifiedpositions Individualsinpositions •Whotellsthem •Consistentmessaging •Pointpersonforfollow-upquestions •DevelopresponsestoanticipatedFAQs •Inwritingv.verbal ©2012SeyfarthShawLLP28| ReclassificationIssues • Whyismypositionbeingreclassified? • Whatdothesechangesmeantome? • HowdoIrecordmytime? • Howisovertimecalculated? • WhenwillIbeginreceivingovertimepay? • Howdoesthisimpactmybenefits? • Howdoesthisimpactmybonus/incentivecompensation? • WhocanItalktoaboutfollowupquestions? • AmIbeingdemoted? • WillIreceivelesspay? • So,doesthismeanIcanworkasmuchovertimeasIplease? • WhatifIwouldratherreceivecomptimeinsteadofovertime? ©2012SeyfarthShawLLP29| ReclassificationIssues • Onyourown,withoutbackpay • Onyourown,withbackpay Release Howfarback? LiquidatedDamages? • WithDOL • Duringlitigation Partofsettlement Beforesettlement ©2012SeyfarthShawLLP30| ThankYou! Foradditionalinformation: RebeccaPrattBromet JeremyW.Stewart SeyfarthShawLLP 131SouthDearborn Suite2400 Chicago,IL60603 (312)460-5956or460-5662 rbromet@seyfarth.com jwstewart@seyfarth.com