1.
How to Avoid Costly Wage & Hour Pitfalls
for Construction, Engineering &
Landscaping Employers
Featuring Seyfarth Shaw LLP
©2012 Seyfarth Shaw LLP

2.
Welcome
Today’s Host
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-7512
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©2012 Seyfarth Shaw LLP

3.
EPAY Systems -- designed to meet the
needs of your complex,
distributed workforce
• Reduce your labor
costs by 5% or more
• Keep you in control
and in compliance
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©2012 Seyfarth Shaw LLP

4.
Today’s Discussion
Federal court filings of wage and hour class and
collective actions have increased more than 500%
since 2000.
Are you at risk?
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©2012 Seyfarth Shaw LLP

5.
Our Speakers
Kyle A. Petersen
Associate, Seyfarth Shaw LLP
Labor & Employment
kpetersen@seyfarth.com
(312) 460 -5000
Rebecca P. Bromet
Partner, Seyfarth Shaw LLP
Labor & Employment
rbromet@seyfarth.com
(312) 460 - 5000
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©2012 Seyfarth Shaw LLP

6.
Ask Your Questions
To ask a question, simply type
your question in the “Question”
box on the right side of your
screen.
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©2012 Seyfarth Shaw LLP

7.
Overview: Trends for 2013
• Litigation trends
o Continued aggressive plaintiffs’ bar and agency
• Increased agency enforcement
• Compliance Risks – Surprise!!!
• “Riskiest” times of day.
o Pre & Post Shift
o Meal Times
o Travel time
• Simple Safeguards
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©2012 Seyfarth Shaw LLP

8.
Trends
• Aggressive plaintiffs’ law firms have created
consortiums, jointly filing class/collective suits
• In recent years, plaintiffs’ firms have employed an
industry-specific approach when it comes to wage &
hour litigation
o One firm successfully targets an industry and is
quickly followed by other plaintiffs’ firms who
target other employers in that industry
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©2012 Seyfarth Shaw LLP

9.
Trends Continued
• Aggressive outreach efforts to identify potential plaintiffs
o Outside companies sending email blasts to
employees of target companies
o Ads on Facebook, Twitter
• 7064 lawsuits filed under the Fair Labor Standards Act
(“FLSA”) in 2012
o Record high number
o State wage-and-hour actions raise this number
significantly
o Of all state and federal class or collective actions filed
in the U.S., vast majority are wage and hour claims
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10.
Top 10 Private W&H
Settlements in 2012
1. $99 Million – Novartis (misclassification of pharma sales reps)
2. $40 Million – Merrill Lynch (wage claims related to merger)
3. $35 Million – H&R Block (timeliness of payments)
4. $21 Million – Rite Aid (misclassification of ass’t store mgs)
5. $20 Million – City of New York (misclassification of police sergeants)
6. $19 Million – Robert Half (misclassification of recruiters)
7. $15.6 Million – HSBC Bank (misclassification of
bankers, managers, & specialists)
8. $15.5 Million –Conoco Phillips (failure to provide meal breaks)
9. $14 Million – Family Dollar (misclassification of store managers)
10. $12.9 Million – Spearmint Rhino Cos. Worldwide, Inc. (independent
contractor misclassification)
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©2012 Seyfarth Shaw LLP

11.
FLSA Cases in Federal Court
1993-2012
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©2012 Seyfarth Shaw LLP

12.
WHD Continues To Be Aggressive
• Increase in targeted investigations in low-wage/high risk
industries
• Increase in corporate-wide investigations
• Assessment of liquidated damages, penalties, and other
sanctions
• Grass Roots Campaign:
o Continued push of “Bridge to Justice” and “We Can Help”
 Partnering with community and worker organizations
to increase employee awareness
 Referring certain cases to private attorneys to initiate
litigation
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©2012 Seyfarth Shaw LLP

13.
Increased WHD Enforcement
Capabilities
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©2012 Seyfarth Shaw LLP

14.
Compliance With The FLSA
Is Not Easy
• The Fair Labor Standards Act was enacted in 1938
o Minimum Wage
o Overtime
o Child Labor
• Amended 44 Times
• Well Over 50 Statutory Exemptions
• Over 700 Pages of Regulatory Text
• 14-15 Public Chapters of Field Operations Handbook
• 350+ Opinion Letters Since 2000
• Does Not Preempt State Law
• Generally Cannot Be Overruled by CBA
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©2012 Seyfarth Shaw LLP

15.
Mistake #1
• Employees have to pay for their own uniforms
no matter what.
• Key issues:
o Are the uniforms generic or elaborate?
o Do employees authorize the deduction?
o Does the deduction make their pay fall below
minimum wage?
o Are they responsible for cleaning the
uniform?
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©2012 Seyfarth Shaw LLP

16.
A Few Simple Safeguards
• Receive authorization for the deduction (if required
by state law).
• Do not count a uniform as a credit against wages.
• Make sure that the cost of uniform deductions does
not reduce pay below minimum wage.
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©2012 Seyfarth Shaw LLP

17.
Mistake #2
• Requiring individuals to show up at work and
wait to clock-in.
• Key Issues:
o How long in advance of the shift are they
required to arrive at the job site or central
location?
o Are employees free to use this time for their
own purposes?
o Are they disciplined or prevented from working
if they do not show up at the required time?
o Waiting to work- you don’t have to exert
yourself to be working.
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©2012 Seyfarth Shaw LLP

18.
A Few Simple Safeguards
• Only require people to be at work by their scheduled
start time.
• If employees are required to be at work by a certain
time and employees are there by that time, pay the
employees starting at that time.
• Only discipline individuals who are tardy for their
scheduled start time, not the early arrival
requirement.
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©2012 Seyfarth Shaw LLP

19.
Mistake #3
• Not including all required time in the calculation
of hours worked
• Key issues:
o Pay for pre- and post-shift activities
(loading/unloading; donning & doffing; etc.)
o Is the activity “integral and indispensable” to
employees’ principal work activities (and
therefore compensable)?
o Do the employer’s rules or the nature of the work
require it?
o If an employee continues to work voluntarily after
the end of his shift and the employer knows or
has reason to know, that time is considered
working time
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©2012 Seyfarth Shaw LLP

20.
A Few Simple Safeguards
• Do not let hourly employees start working
until they are on the clock (but don’t require
them to be there before they are allowed to
clock in).
• Pay attention and make sure that people are
not working after they clock out.
• Have employees verify each pay period that
they have been paid for all time worked.
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©2012 Seyfarth Shaw LLP

21.
Mistake #4
• We don’t pay employees to ride in a truck.
• Key issues:
o Home to work, or vice versa, typically is not
compensable
o Between job sites is part of the “continuous workday”
and must be paid
o If you don’t pay it, how do we track the time? Could be
a recordkeeping issue if a lawsuit is filed.
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©2012 Seyfarth Shaw LLP

22.
A Few Simple Safeguards
• Keep track of the job sites
employees are working at each
day.
• Do not stop the clock for travel
between sites, unless there is a
bona fide meal period taken
during the travel time.
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©2012 Seyfarth Shaw LLP

23.
Polling Question
• Do you use an automatic meal period deduction?
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24.
Mistake #5
• Automatically deducting for meal
periods, even if not taken.
• Key issues:
o Do they actually take a break?
o Completely relieved from duty?
o If they get interrupted during their
meal period, are they paid for the
interruption?
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©2012 Seyfarth Shaw LLP

25.
A Few Simple Safeguards
• Implement a policy that only uninterrupted meal
periods are unpaid.
• Implement a system to allow employees to
document if they did not take or did not get their full
meal period.
• Keep records.
• Have employees verify that any time deducted each
pay period is accurate.
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©2012 Seyfarth Shaw LLP

26.
Mistake #6
• Failure to take a strong stand against
off-the-clock work
• Key issues:
o Failure to properly compensate for all hours worked
= most frequently cited violation by WHD (in terms of
numbers of employees affected) in the course of its
investigations
o A number of states have recently enacted anti-wage
theft laws
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©2012 Seyfarth Shaw LLP

27.
A Few Simple Safeguards
• Implement strong policies and set expectations.
• Train managers to look out for and report off the
clock work.
• Train employees on your policies.
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©2012 Seyfarth Shaw LLP

28.
Polling Question
• True/False: All managers are exempt and do not
need to be paid overtime.
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29.
Mistake #7
• We call them “manager” or “foreman,” so
they don’t get overtime.
• Key Issues:
o Recommendations for hiring/firing given
particular weight?
o Too much work like those who are
supervised?
o Sufficient pay distinction between hourly
employees and manager or foreman?
 Easy case to certify as a
collective/class action.
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©2012 Seyfarth Shaw LLP

30.
Mistake #8
• They are “engineers,” so they don’t qualify for
overtime, either.
• Key Issues:
o Performing work requiring advanced
knowledge in science or learning customarily
acquired by prolonged course of study?
o Is the work intellectual? Do they have
independent judgment and discretion?
o Do they have an advanced degree?
Apprenticeships or on the job training doesn’t
cut it.
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©2012 Seyfarth Shaw LLP

31.
Polling Question
• True/False: Employers can avoid all of these
overtime problems simply by using independent
contractors.
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32.
Mistake #9
• Labeling everyone an independent contractor.
• Key issues:
o How much control is there over their work?
o How long have they been working with you?
o Are they providing a special service or skill?
o Does the worker invest in their own equipment
and materials? Provide their own employees?
o Is the work an integral part of your business?
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©2012 Seyfarth Shaw LLP

33.
A Few Simple Safeguards
• Auditing pay practices & exempt status at direction
of counsel.
• Review pay practices.
• Review exempt status classifications.
• Know state laws where you operate.
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©2012 Seyfarth Shaw LLP

34.
Mistake #10
• Paying undocumented workers in cash and off the
books.
• Key issues:
o Under the table payments run afoul of state and
federal recordkeeping and reporting requirements.
o Minimum wage applies.
o All hours worked must be paid, including overtime
pay.
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©2012 Seyfarth Shaw LLP

35.
A Few Simple Safeguards
• Always pay hourly, non-exempt employees at least
minimum wage for all hours worked and time and a
half for overtime.
• Report and keep records of all hours worked and all
wages paid.
• Ensure compliance with all employment-eligibility
laws.
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©2012 Seyfarth Shaw LLP

36.
EPAY Systems
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
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©2012 Seyfarth Shaw LLP

37.
EPAY -- In Time with You
Complex pay rules?
Mobile workforce,
union contracts,
multiple job assignments?
No problem!
Uniquely flexible
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©2012 Seyfarth Shaw LLP

38.
Reduce your labor costs
Eliminate erroneous Reduce costs
pay associated with
calculations, time paper checks. Save
rounding, an average of $2.87
and management per pay period/per
inconsistencies employee.
Eliminate buddy
or more!
punching Reduce
Biometric time clocks administration time
with camera and in preparing payroll
finger print reader
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©2012 Seyfarth Shaw LLP

39.
Minimize Compliance Risk
• Audit Trails
• Overtime
• Meal Breaks
• Pay Differentials
• Privacy and Security
• Reduce Workers
Comp Claims
• Did you have an
accident free day?
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©2012 Seyfarth Shaw LLP

40.
Over 40,000 customer sites
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©2012 Seyfarth Shaw LLP

41.
Easy, Anywhere Time Tracking
Blueforce adapts
to how YOU
do business
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©2012 Seyfarth Shaw LLP

42.
Upcoming Education
• Public Demonstration: Time &
Labor Management for the
Distributed Workforce
o March 14: 10:00 cst
Register at
www.EPAYsystems.com
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©2012 Seyfarth Shaw LLP

43.
Upcoming Education
Compliance Webinar Series with Seyfarth Shaw LLP
• How to Avoid Costly Wage & Hour Pitfalls Employers in the Staffing
and Security Industries. May 8: 12:00 cst
• California Wage & Hour Labor Law--Avoiding Common Pitfalls with
a Distributed Workforce. June 26: 12:00 cst
• How to Avoid Costly Wage & Hour Pitfalls for Healthcare Employers
with a Distributed Workforce. Sept 25: 12:00 cst
• How to Avoid Costly Wage & Hour Pitfalls for Employers in the
Hospitality Industry. Nov 6: 12:00 cst
Register at www.EPAYsystems.com
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©2012 Seyfarth Shaw LLP

44.
Thank You!
Kyle A. Petersen
Associate, Seyfarth Shaw LLP
Labor & Employment
kpetersen@seyfarth.com
(312) 460-5000
Rebecca P. Bromet
Partner, Seyfarth Shaw LLP
Labor & Employment
rbromet@seyfarth.com
(312) 460-5000
44
©2012 Seyfarth Shaw LLP

45.
Connect with us
Bonus!
Receive Seyfarth Shaw’s newly published
report,
Trend Watch: The Savvy Employers’
Guide to Wage & Hour Lawsuits.
Connect with EPAY on:
o LinkedIn – follow our company page at
EPAY Systems
o Twitter -- @EPAYsystems
o Sign up for our e- newsletter at
EPAYsystems.com
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©2012 Seyfarth Shaw LLP

46.
Thank You!
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©2012 Seyfarth Shaw LLP