Presented by Robert E. Larkin III [email protected] Allen, Norton & Blue, P.A. (850) 561-3503 July 18, 2013 How FLSA claims arise. How to guard against FLSA claims – proactive steps to defend against these claims. How to Respond to a Department of Labor investigation. How to defend against a private lawsuit. Generally, FLSA Claims arise in two ways: 1. Department of Labor Investigation; or 2. Private Lawsuits Florida District Courts account for 30% of FLSA lawsuits filed nationwide. 2008 2009 2010 2011 44.8% 34.5% 31.7% 32.0%* * As of October 24, 2011 2011 Florida FLSA Lawsuits Minimum Wage, Overtime Pay, Recordkeeping requirements, and Youth employment standards NOTE: FLSA applies to employees in the private sector and in Federal, State, and Local Governments. SELF-AUDITS: Employers should conduct a Self Audit every 2-3 years (coincides with the FLSA statute of limitations period); A comprehensive analysis of all HR and payroll functions, including the strengths and weaknesses that need to be addressed. A thorough review of position classifications, position descriptions, policies (and your actual practices) on breaks, meal periods, time records, on-call time, travel time, employee training, records posting, etc. An audit may serve to identify deficiencies in existing practices, improving HR effectiveness and implementing new changes in law. Audits should be conducted by entities not affiliated with the Public Entity or Company. Why? ◦ Time – It often takes more time than can be devoted by an internal individual. ◦ Objectivity – An independent analysis will provide a more objective review. ◦ Experience – An experienced independent auditor can compare the organization to others and provide a more comprehensive frame of reference. 1. Create/Review the Organizational Chart. 2. Review Wage and Hour Policies and Compliance with Laws. 3. Review General Practices. 4. Review Retention and Disclosure of Records Policies. 1. Review application and hiring process in order to determine whether certain guidelines are being followed 2. Review of Interview process, including questions and guidelines 3. Review of position descriptions for FLSA and ADA compliance 4. Review of pay scales for Equal Pay Act 5. Review of pre-placement medical testing 6. Review of job screening practices, including background checks 7. Review of I-9 procedures and submissions to assure IRCA compliance 8. Review EEO statistics to identify hiring trends 9. Review of past litigation/claims made against the Employer and assessment of remedial measures taken during the postlitigation/claims stage in order to identify problem areas 10. Review of Advertising methods and method of dissemination of information pertaining to the hire of new employees 11. Review policy handbook (i.e., policies on leave, discrimination, harassment, retaliation, whistleblower and the complaint procedures 12. Review record retention policies and retained records There are 2 primary ways employers violate the FLSA: 1. Misclassifying an employee as exempt, when they are not; and 2. Failing to pay non-exempt employees overtime for all hours worked. THE 3 MAIN FLSA WHITE COLLAR EXEMPTIONS ARE: 1. Executive exemption: Generally, those positions occupied by the senior management and department directors - must supervise at least 2 employees and have decision-making authority over them. 2. Professional exemption: Require, at minimum, a college degree in a specialized area of study. These are highly educated (certified) individuals in 2 capacities: 1. Learned Professionals – Drs., Lawyers, Accountants, Engineers, RNs, etc. 2. Creative Professionals - Music, Writing, Acting, Graphic Arts. 3. Administrative exemption: The employee performs non-manual work related to management or general operations of employer, customarily and regularly exercises discretion and independent judgment for a majority of his/her work time (51%) to effectuate binding policy or in matters of significance. Salary Level: must earn more than $455/week; Salary Basis: Regularly receives predetermined compensation. ◦ Compensation cannot be reduced due to variations in quality/quantity of work. ◦ Must be paid full salary for any week in which employee performs any work – unless leave accruals exist. ◦ Need not be paid for any workweek when no work is performed. Job Duties: ◦ Job Title is not determinative ◦ Salary alone is not determinative ◦ Job Duties alone are not determinative Outside Sales – primarily away from company Computer Employees – Programmers and Software engineers Be careful here Highly Compensated Employees - $100k and non-manual work and do some exempt work. NOTE: Police, firefighters, paramedics & other first responders are generally not exempt from the FLSA and must be paid overtime, unless in senior management. FLSA requires all employers subject to any provision of the Act make, keep, and preserve certain records – Private Companies should keep records for at least No particular payroll form that employer must utilize; All that’s required is that information is retained in a “clear and identifiable” manner Time clocks not required 1. Full name 8. Hours worked each workday and total hours worked each workweek 2. Home Address 3. Date of Birth 9. Total daily or weekly straighttime earnings not including overtime compensation 4. Sex 5. Occupation 10. Total overtime compensation not including straight-time earnings 6. Time of day and day of week when employee’s workweek begins (if entire workforce is the same, only one notation necessary) 11. Total additions to or deductions from wages paid each pay period (including dates, amounts, and nature of items which make up the total additions or deductions) 7. Regular hourly rate of pay for any workweek in which overtime compensation is due, explanation of the basis, and the amount and nature of each payment excluded from the regular rate 12. Total wages paid each pay period 13. Date of payment and the pay period covered by the payment Employer should define the “Workweek”; Workweek = 7 consecutive 24-hour periods (168 hours); May begin any day and at any hour, need not coincide with calendar week; Different workweeks may be established for different employees; Averaging hours over two or more weeks is not permitted; Flex schedule does not relieve duty to pay overtime; Overtime pay earned in a particular workweek must be paid on regular pay day for that pay period (Workweek). Work not requested, but “suffered or permitted” to work; Working through lunch is most common! Be careful with “built in” meal and break periods! Voluntary work before and after an employee’s shift; Preliminary and Postliminary activities (i.e., loading and unloading equipment before and after clocking in). On-Call Time; • Placing significant restrictions on an employee’s time off (i.e., geographical restrictions and response times); Training Time: Requiring/mandating the employee to attend training outside normal work time (4 factors must be met to not be compensable): (1) Voluntary attendance; (2) Outside regular working hours; (3) Training cannot benefit employer; (4) No productive work performed during training time. Travel Time: Must compensate employee for . . . “All in a Day’s Work” - travel between job sites as part of principal activity during normal work day; Home to work travel for a one-day special assignment in another city (may exclude time employee normally spends commuting); Travel away from home that cuts across workday or during working hours on non-workday Triggered in one of three ways: 1. Employee Complaint (specific or multiple): ◦ Complaints are confidential. Be careful for Whistleblower complaint if there is any retaliation against complaining employee. 2. Industry Targeting o Ex. DOL does sweep of all restaurants in central Florida and selects 25 for investigation 3. Follow-up/re-visit o Done to determine continued compliance NOTE: Based upon the records requested, you can often determine how the DOL investigation is triggered. If the request if broad, several employment positions generally means it is a targeted investigation! WHAT TO EXPECT: 1. The Wage and Hour Division of the U.S. Department of Labor is tasked with enforcing the FLSA. It has more than 200 offices. ◦ Investigator may call to set up meeting or simply arrive unannounced. ◦ DOL Investigator will present credentials and act similar to a law enforcement officer. Employer reaction should be friendly and cooperative. ◦ DOL Investigator has subpoena power to require employer compliance. ◦ DOL Investigator will conduct 2 types of investigations: Specific Employee Investigation: Investigator is looking to remedy a single violation and requests limited records and to interview only certain individuals. . Wall-to-Wall Investigation: Investigator arrives with multiple employee complaints or targeted industry and requests substantial records and witness interviews. DOL Investigators will generally . . . 1. Request employment and payroll records; 2. Want to meet with Senior Executives and HR first and may want to tour the facility 3. Want to review records he/she has requested; 4. Interview witnesses and may request employees or supervisors execute sworn statements; 5. Follow-up with HR for additional records and interviews; 6. Provide an opportunity to conciliate/settle; 7. If no conciliation/settlement then will forward to Office of Solicitor General for enforcement proceedings. (if enforcement is sought, DOL will generally request Liquidated Damages). HOW TO HANDLE THE INVESTIGATION: 1. Contact labor counsel immediately after learning of DOL investigation. 2. Remain composed and courteous and try to establish a cooperative relationship with the investigator. ◦ During the investigation contact the investigator often to apprise about the status of the records requested or identities of witnesses to be interviewed. 3. After receiving the Investigator’s records request, the Employer should immediately conduct a self-audit of the area(s) in question. 4. Employer should tour the facility prior to DOL arriving to ensure that all proper documents are posted and workplace is free from harassment and discrimination. HOW TO HANDLE THE INVESTIGATION cont’d: 5. Employer/labor counsel should meet with Supervisors and senior management to inform of investigation and potential to interviewed. ◦ Employer may have a representative present for interviews of senior management. 6. Employer/labor counsel should meet with Employees in the classifications requested to inform them of potential for interviews. (Employer may not accompany investigator to these interviews). 7. Employer should take copious notes of any interview which they attend. 8. Employer should inform Employees/Supervisors of their right to review any statement that they are asked to sign. HOW TO HANDLE THE INVESTIGATION cont’d: 9. Provide copies of records to DOL rather than allowing DOL to take records; 10. Review all records requested prior to providing them to DOL. 11. Maintain copies of all records requested and keep a log of what has been provided, including the date(s) and time(s). 12. Maintain a log of all discussions with DOL investigator. DOL FORM WH-56: DOL FORM WH-58: Individual Lawsuit Single Plaintiff alleges violation of FLSA (typically involves a classification error or an hours worked error) Employer should immediately determine if there is any exposure, and if so, consider making an offer of judgment or settling claim immediately. If the plaintiff/employee is successful in a FLSA claim, his/her attorney will recover attorney fees. Collective Actions Several Plaintiffs sue for FLSA violation and attempt to certify a class action. Court will order employer to give Plaintiffs contact information of all current and former employees in the effected position(s) for past two (2) years; Plaintiffs’ attorney then sends a letter asking them to “opt-in” if they believe that they were not paid correctly; If a large number of opt-ins share “commonality” of claims, a class action is certified. If a class is certified, attorneys’ fees will increase exponentially (Ex. $27k in back pay and Attorney/Firm requested $167k in fees). Injunctive Relief (rare except for retaliation cases) Back Wages (not for more than 2 years, or for willful violations 3 years) Liquidated Damages (discretionary where employer cannot show good faith) Prejudgment Interest (not recoverable in 11th Circuit) Attorney’s Fees (reasonable) Fines and Imprisonment (if willful violation proven) THANK YOU Robert E. Larkin, III [email protected] Allen Norton & Blue, P.A.