Wage-and-hour related provisions should include pay details, safe harbor and state law

Employees often sue employers for various FLSA violations, and the U.S. Department of Labor actively investigates employers for noncompliance. Therefore, employers should consider including the following provisions in their handbook, at a minimum.

• Pay and hours. Pay and hour provisions indicating work hours, rest and meal periods, overtime, paychecks and deductions (including garnishments) are recommended. Employers should delineate differences between exempt and nonexempt employees.
• FLSA safe harbor. To protect against having the accidental improper docking of pay of exempt salaried employees jeopardize their FLSA-exempt status, or be the basis of a back wages claim, an employer should include an anti-docking provision that complies with DOL’s safe harbor provisions in 29 C.F.R. §541.603(d). The provision should: (1) state the employer’s policy against the improper docking of pay; (2) require employees to promptly report any improper docking; and (3) provide for the prompt reimbursement of improperly docked employees.
• Overtime notices. The criteria for earning overtime should be specifically stated (for example, 1.5 times the employee’s regular rate after 40 hours in a work week). In addition, employees should be warned that they must obtain supervisor approval for overtime, or otherwise face possible disciplinary action. (Note: Employees must be paid for all overtime work, even if it was unauthorized.)
• Federal and state law. Employers should remember that they have wage and hour obligations under both the FLSA and state law (which may be stricter than the FLSA).

Employee handbooks are frequently reviewed in litigation — be sure your language is proper

Employee handbooks frequently play a role in litigation, and should cover as many areas of the employment relationship as possible. Employers should consider adding provisions related to other federal laws, such as the Americans with Disabilities Act, the National Labor Relations Act and the Family Medical Leave Act.

• Use clear and concise language. Handbook provisions should clearly and accurately describe the employer’s practices and policies and avoid interpretations the employer does not intend. For example, any provisions that do not apply to a certain class of employees otherwise covered by the handbook should clearly indicate which employees are covered, or make other differentiations. For example, many employers do not grant vacation time or other benefits to part-time employees. In such a case, the handbook should state that clearly.
• Include provisions related to major federal laws. In selecting handbook provisions, employers must evaluate whether the provision is needed and desirable given the work environment. For example, all employers should include an anti-harassment policy because it is required by law and supports an employer in defending against discrimination claims. Unionized employers may need provisions addressing which issues are negotiable. Some other provisions to consider:
• An equal employment opportunity policy, stating that you don’t discriminate on the basis of race, class, sex, age, national origin, and other protected categories and that retaliation against employees exercising rights under this provision will not be tolerated. In addition, a growing number of companies are including gay, bisexual and transgender employees in their nondiscrimination policies, even though it is not required by federal law or in most jurisdictions.
• No harassment policy, covering sexual harassment and other discriminatory harassment. The policy should define harassment and unacceptable conduct, and establish procedures for reporting, investigating and addressing claims.
• Family and Medical Leave Act policy, if the employer is covered under the FMLA.

For more information, see the Guide to Employment Law Compliance 8th Edition.

Regardless of whether or not employees are aware, the Department of Labor has started enforcing the law, meaning employers can no longer plead ignorance of the new requirements. In fiscal year 2011, 23 companies were investigated for violations and 15 received citations, according to a DOL spokeswoman. 

 The break time requirement stems from an amendment to the Fair Labor Standards Act buried deep within the sweeping health reforms of 2010. The Patient Protection and Affordable Care Act requires most organizations — public and private — with more than 49 employees to provide break time and a private room for nursing mothers to express milk to take home for their nursing child. Like other FLSA requirements, the provision is enforceable by DOL.

Although the law doesn’t get specific, it requires organizations to allow nursing mothers to take “reasonable” breaks for up to one year after the birth of the nursing child. Employers also must provide nursing mothers with private space, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public.

Breastfeeding advocates, including some business advocates, argue that workplace policies that encourage breastfeeding make good business sense. A brochure developed by the Business Group on Health cites various government and medical sources claiming that one-day absences to care for sick children occur more than twice as often for mothers of formula-feeding infants than for mothers who breastfeed. It also states that for every 1,000 babies not breastfed, there are an extra 2,033 physician visits, 212 days in the hospital and 609 prescriptions.

In addition, organizations with progressive lactation policies tend to get high rankings from workers and repeatedly make it onto lists of the best places to work, which can help improve recruitment, retention and overall employee loyalty, supporters say. 

We will be running a series of posts about the new lactation policy, best practices and industry responses in the next several weeks. Search for posts using the word “lactation.” Subscribers to Thompson’s FLSA library should look to their newsletters for an in depth package about the new policy, including many features that won’t appear on the blog.

Currently, the FLSA provides an exemption from minimum wage and overtime compensation for domestic employees engaged in providing companionship services. In light of significant changes in the home care industry, the DOL is proposing to update regulations, including examining the definition of “companionship services,” the criteria used to judge whether employees qualify as trained personnel who are not exempt companions, and the applicability of the exemption to third party employers.

So far, supportive comments have focused on high domestic caregiver turnover, success seen in those states that provide full employment benefits for caregivers, and the need to give caregivers the proper respect for their profession.

“Home care worker turnover is high because of the untenable financial situation of most of these workers,” one commenter noted. Another added that the cost of providing benefits, which many cite as the biggest reason to oppose the regulation, is manageable, since 15 states guarantee both minimum wage and overtime pay to their homecare workers — and in those states, the homecare businesses “seem to be managing quite well.”

Finally, comments from supportive business people added that the alternative to providing these protections is forcing caregivers to use “social safety nets that are more expensive, less productive, and keep [these] workers and their children in poverty.”

Commenters who oppose the changes have focused on the decreased hours caregivers will work if employers have to pay them overtime and the resulting lack of continuous and familiar care. Comments expressing opposition to the proposal also emphasized that the elderly and/or disabled people who require caregiver services are paying for such care out of pocket, and that the new regulation will only add to the hardships faced by these clients.

According to one comment, this regulation will “force caregivers to lose hours that they are allowed to work and clients will be faced with adapting to new staff members (something that can be traumatic for special needs persons).”

Home caregivers themselves responded with concerns about decreased hours. As one commentator explained, “the cut in hours would mean I would be required to seek employment elsewhere in a failed economy.” Arguing that requiring overtime pay would not actually give these employees overtime pay (since employers would not want to pay higher rates), one commenter agreed that the proposal, if enacted, would force workers “to get another parttime [sic] job and disrupt the lives of the families and consumers” who use caregiver services.

Finally, commentators feared that the proposal would force those people who desire homecare services out of their homes and into healthcare facilities, destroying the “continuity of care so vital for old folks who are desperately trying to continue to live at home.”

The DOL will accept comments to the regulation until March 12, 2012. According to the DOL’s Notice of Proposed Rulemaking, those interested may submit comments identified by RIN 1235-AA05 online through Federal eRulemaking Portal: http://www.regulations.gov. Written submissions must be addressed to Mary Ziegler, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, D.C. 20210. All submissions must include the agency name and Regulatory Information Number (RIN) 1235-AA05.

DOL’s enforcement efforts will include multiple project sites at Fort Bliss. WHD investigators will review employment practices, pay records and possible joint employment circumstances to identify potential violations, the agency said.

Fort Bliss is a 1,700-square-mile Army installation that includes the Fort Bliss Military Reservation, McGregor Range Complex and White Sands Missile Range.

“This enforcement effort focuses on contractors and all levels of subcontractors to determine whether they are complying with federal wage laws, including those requiring the payment of locally prevailing wages and classifying employees properly,” said Cynthia Watson, southwest regional administrator for WHD in a statement.

DOL has signed a number of memorandums of understanding about misclassification of independent contractors with states in recent months as part of a large scale crack-down initiative. A DOL fact sheet about employment relationships can be found here.

Separately, DOL reached an agreement with a German Air Force Tactical Training Center at Hollomon Air Force Base in Alamogordo, N.M., to pay $33,768 in overtime back wages to eight current and former drivers following a WHD investigation.

The investigation found that workers received compensatory time off for hours worked over 40 hours in a workweek, instead of being paid overtime (time and one-half their regular pay rate). Under the FLSA nonexempt workers must be paid at least the federal minimum wage of $7.25 and time and one-half their regular rate for hours worked in excess of 40 per week.

“This employer profited by paying workers less than they were legally due under the Fair Labor Standards Act,” Watson said in a statement about the agreement.

The budget would allocate $6.4 million to hire investigators to enforce the Fair Labor Standards Act and the Family and Medical Leave Act, said Nancy Leppink, acting WHD administrator during a webchat on Monday. The funding would allow for the hiring of 57 investigators focused on FLSA overtime violations and FMLA provisions, according to agency budget documents.

Another $3.8 million would be allocated to hire investigators to increase enforcement related to employee misclassification and to educate employers and employees about their responsibilities and rights. Leppink said 35 investigators would be hired to focus on misclassification investigations. Misclassification has been a priority for the agency recently. It has signed a handful of memorandums of understanding with specific states and established a collaborative effort with the Internal Revenue Service to combat the misclassification of workers.

The Department needs additional money to enforce new FMLA benefits extended to military caregivers and airline flight crew members, according to budget documents.

This is just the beginning of the FY 2013 budget process, but it does give some indications of where Obama’s administration has planted its flag on WHD initiatives.

Related Documents:

Fiscal Year 2013 Budget in Brief (PDF)

Q&A session

Details of the Wage and Hour Division Budget

Prohibitions

• An employer is prohibited from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any FMLA right.
• An employer is prohibited from discriminating or retaliating against an employee or prospective employee for having exercised or attempted to exercise any FMLA right.
• An employer is prohibited from discharging or in any other way discriminating against any person, whether or not an employee, for opposing or complaining about any unlawful practice under the FMLA.
• All persons, whether or not employers, are prohibited from discharging or in any other way discriminating against any person, whether or not an employee, because that person has:

- Filed any charge, has instituted, or caused to be instituted, any proceeding under or related to the FMLA;

- Given, or is about to give, any information in connection with an inquiry or proceeding relating to any right under the FMLA; or

- Testified, or is about to testify, in any inquiry or proceeding relating to a right under the FMLA.

Examples of Prohibited Employer Conduct

• Refusing to authorize FMLA leave for an eligible employee;
• Discouraging an employee from using FMLA leave;
• Manipulating an employee’s work hours to avoid responsibilities under the FMLA;
• Using an employee’s request for or use of FMLA leave as a negative factor in employment actions, such as hiring, promotions or disciplinary actions, or;
• Counting FMLA leave under “no fault” attendance policies.

Released Sept. 2, these are DOL’s first revisions to child farm labor rules in 40 years. Several agricultural groups had requested extra time respond to formulate their responses. Among their concerns, communicated in an Oct. 14 letter:

• youths under 15 years of age could be prohibited from working for any family member other than a parent.
• a prohibition on youth under 15 from working near sexually mature livestock could result in youths not being able to work on certain farms altogether.

Among other things, DOL’s proposed regulations would:

• Strengthen current child labor prohibitions regarding agricultural work with animals in timber operations, manure pits, storage bins and pesticide handling.
• Prohibit hired farm workers under the age of 16 from employment in the cultivation, harvesting and curing of tobacco.
• Prohibit youth in both agricultural and nonagricultural employment from using electronic devices, including communication devices, while operating power-driven equipment.
• Prohibit hired farm workers under the age of 16 from operating almost all power-driven equipment. A similar prohibition has existed as part of the nonagricultural child labor provisions for more than 50 years. A limited exemption would permit some student-learners to operate certain farm implements and tractors (when equipped with proper rollover protection structures and seat belts) under specified conditions.
• Prevent children under 18 years of age from being employed in the storing, marketing and transporting of farm-product raw materials. Prohibited places of employment would include country grain elevators, grain bins, silos, feed lots, stockyards, livestock exchanges and livestock auctions.

More information on the proposed changes can be found online at DOL’s Wage and Hour Divisions web site.

President Obama withdrew the nomination of Leon Rodriguez to be Administrator of the Wage and Hour Division of the U.S. Department of Labor on Aug. 2. Rodriguez was nominated on Dec. 2, 2010, and his nomination has been in limbo ever since.

Rodriguez’s nomination was considered by some to be controversial due to his record in his current position as deputy assistant attorney general for the Civil Rights Division of the U.S. Department of Justice, as well as in his prior work.

The post of WHD Administrator has been vacant during Obama’s entire term. The post’s duties have been taken on by WHD Deputy Administrator Nancy J. Leppink.

The apparent leadership void at WHD “hasn’t stopped DOL from aggressively enforcing employment laws,” including the Fair Labor Standards Act and the Family and Medical Leave Act, noted Shlomo D. Katz, Esq., counsel at the law firm Brown Rudnick LLP. But he wondered if WHD’s apparent reluctance, since June 2010, to issue guidance on how to interpret specific employment laws was related to the empty leadership chair. The last, and only the second, WHD Administrator Interpretation was issued in June 2010, after WHD announced in March 2010 that the AI’s predecessor, the WHD opinion letter, had been eliminated in favor of the AIs. The AIs provide industrywide guidance, instead of public guidance to particular employers about specific questions of interpretation, as the opinion letters had done.

Obama’s bad luck with WHD administrator nominees began with his first nominee, Lorelei Boylan, who withdrew after six months waiting to hear from the U.S. Senate’s Committee on Health, Education, Labor and Pensions to call her before them for a nomination hearing. The committee never did. Her nomination was blemished by her involvement with New York Wage Watch, a New York state program launched by M. Patricia Smith, now Obama’s Solicitor of Labor.

Rodriguez never got a hearing call from the committee either.

That’s likely how many employers feel as they try to deal with conflicting regulatory and judicial opinions on when an employee’s change of clothes (donning and doffing) is compensable under the Fair Labor Standard Act (FLSA).

The whole donning/doffing issue has become quite messy; some might say as messy as Oscar Madison. Courts have been split on this issue, and judges point to DOL’s inconsistent guidance as the cause.

The FLSA language at issue, in Section 203(o), says that time spent “changing clothes or washing at the beginning or end of each workday” is excluded from compensable time under the FLSA if the time is excluded from compensable time pursuant to “the express terms or by custom or practice” under a collective bargaining agreement.

DOL’s Wage and Hour Division (WHD) has repeatedly changed its official position on what constitutes “changing clothes” and whether or not employees should be paid for it.

• 1997 — WHD says clothes don’t  include protective gear, making putting on gear compensable. Opinion Letter Dec. 3, 1997 (1997 WL 998048)
• 2002 — WHD  reverses its opinion, and announces that changing clothes includes  protective gear, so it’s noncompensable. DOL Opinion Letter June 6, 2002
• 2007 —  WHD declines to alter its interpretation  in light of the 9th Circuit’s Alvarez decision DOL Opinion Letter May 14, 2007
• 2010 —  WHD reverts to its previous  interpretation, determining that FLSA Section 203(o) does not extend to  protective equipment worn by employees that is required by law, by the  employer, or due to the nature of the job.

WHD’s flip flopping is so bad that one appellate court recently chose to just ignore the agency’s interpretations on this issue.

In Salazar v. Butterball (10th Cir., July 5, 2011), a case involving a CBA, the 10th Circuit ruled that time spent donning and doffing is noncompensable under the FLSA, and it saw no distinction between regular clothes and protective gear. The court added that differing interpretations of “changing clothes” has left the term ambiguous and that “The Wage and Hour Division has repeatedly shifted its position when asked to interpret the meaning of “changing clothes,” going on to say ”we do not find the agency’s current position particularly well-reasoned.”

Just a few weeks earlier, in a case not involving a CBA, the 4th Circuit found that employees should be paid for time spent changing into required protective gear at a poultry processing plant (because doing so is an “integral and indispensable part of the employee’s principal activities”). See Perez v. Mountainair Farms (4th Cir., June 7, 2011)

See pages 10 and 11 from the Salazar decision for more on DOL’s flip-flopping. See pages 9 and 10 in this 6th Circuit opinion from 2010 for even more.

According to data provided to Smart HR Manager, DOL collected almost $130 million in back wages and overtime pay for almost 219,000 workers in fiscal year 2010. That’s down slightly from the averages for fiscal years 2005-2009, which were $141 million for about 254,000 workers.

On its face, the downturn comes as a surprise, given repeated statements by DOL over the last two years that it intends to boost enforcement of FLSA violations.

However, a DOL spokeswoman told Smart HR Manager that the “impact we have on an industry coming into compliance and therefore the daily lives of workers is not necessarily reflected in the amount of back wages we collect.”

For one thing, the 2010 data do not yet reflect the impact of the 300-plus investigators DOL’s Wage and Hour Division hired over the past couple of years, the DOL spokeswoman said. The agency explained that it takes about two years to train investigators to carry out comprehensive investigations on their own. In addition, time spent by senior investigators mentoring and supporting the new investigators is time they would otherwise have spent in the field performing investigations. The spokeswoman added that the new investigators are first trained to enforce the FLSA, with the second round of training covering the other statutes administered by WHD.

As more of the newly hired investigators are completing their training, DOL noted, WHD enforcement rates already are beginning to rise.

Another significant factor affecting the 2010 data is that WHD’s FLSA enforcement strategy has been changing to “focus on strategic directed investigations,” in contrast to “complaint-based investigations,” said DOL. Directed investigations “have a more significant and broader impact on compliance across industries” than complaint-based investigations, the agency noted, while the latter investigations “are resource intensive and do not always result in changed behavior/business practices.”

WHD uses directed investigations in “high-risk” industries — that is, industries with high numbers of minimum wage and overtime violations — and in industries that employ vulnerable workers, according to DOL’s fiscal 2010 Financial Report.

A third factor affecting WHD enforcement data is the top priority DOL has placed, under Secretary of Labor Hilda Solis, on penalizing the misclassification of employees as independent contractors. Although such misclassification is not itself a violation of the FLSA, employer practices that result in misclassification can lead to violations of the act. Explained DOL: “Because labor and employment rights and benefits generally only apply to employees, misclassification frequently results in employees being denied those rights and benefits.”

In other words, be sure you’re in compliance with the FLSA. DOL is still on the hunt for violations, even if its enforcement numbers are down.