Presentation on theme: "The Wage and Hour Audits Are Coming: Be Prepared"— Presentation transcript:
1The Wage and Hour Audits Are Coming: Be Prepared Co-Sponsored By:
2Speaker Panel Overview – Harold P. Coxson, Jr. (Washington, D.C.) Wage and Hour Division – Alfred B. Robinson, Jr. (Washington, D.C.)Office of Federal Contract Compliance Programs – Leigh M. Nason (Columbia)Immigration – Jay C. Ruby (Atlanta)Occupational Safety and Health Administration – Stephen C. Yohay (Washington, D.C.)Moderator – James M. McGrew (Atlanta)
3DOL’s Spring 2010 Regulatory Agenda Presented By:Harold P. Coxson, Jr. (Washington, D.C.)
4DOL’s Spring 2010 Regulatory Agenda Department-Wide Regulatory and Enforcement Strategies“Plan/Prevent/Protect”Openness and Transparency
5DOL’s Plan/Prevent/Protect Enforcement Strategy The Labor Department has limited resources to protect America’s workersWith only a few thousand inspectors, the Labor Department is charged with protecting 140 million workers in some 9 million workplaces. Unfortunately, in our current system, Labor Department enforcement personnel must intervene to assure compliance in too many cases. It is a “catch me if you can” system.
6DOL’s Plan/Prevent/Protect Enforcement Strategy Employers and other regulated entities should be encouraged to plan to prevent violations and protect workers, while the Labor Department’s worker protection agencies should create and strategically deploy the tools needed to ensure that employers and other regulated entities that continually fail, or simply refuse, to comply with the law are held accountable.
7DOL’s Plan/Prevent/Protect Enforcement Strategy Employers and others must “find and fix” violations – that is, assure compliance – before a Labor Department investigator arrives at the workplace. Employers and others in the Department’s regulated communities must understand that the burden is on them to obey the law, not on the Labor Department to catch them violating the law. This is the heart of the Labor Department’s new strategy.We are going to replace “catch me if you can” with “Plan/Prevent/Protect.”
8DOL’s Plan/Prevent/Protect Enforcement Strategy “Plan/Prevent/Protect” marks an expansion of * * * more worker protection efforts in the Labor Department. (T)he Occupational Safety and Health Administration (OSHA), MSHA, OFCCP, and the Wage and Hour Division (WHD) will propose regulatory actions that require employers * * * to develop programs to address certain employment law compliance issues within each agency’s portfolio. Although the specifics will vary by law, industry and regulated enterprise, this “Plan/Prevent/Protect” strategy will require all regulated entities to take three steps to ensure safe and secure workplaces and compliance with the law:
9Plan/Prevent/Protect “Plan”: The Department will propose a requirement that employers and other regulated entities create a plan for identifying and remediating risks of legal violations and other risks to workers – for example, a plan to search their workplaces for safety hazards that might injure or kill workers. The employer or other regulated entity would provide their employees with opportunities to participate in the creation of the plans. In addition, the plans would be made available to workers so they can fully understand them and help to monitor their implementation.
10Plan/Prevent/Protect “Prevent”: The Department will propose a requirement that employers and other regulated entities thoroughly and completely implement the plan in a manner that prevents legal violations. The plan cannot be a mere paper process. The employer or other regulated entity cannot draft a plan and then put it on a shelf. The plan must be fully implemented for the employer to comply with the “Plan/Prevent/Protect” compliance strategy.
11Plan/Prevent/Protect “Protect”: The Department will propose a requirement that the employer or other regulated entity ensures that the plan’s objectives are met on a regular basis. Just any plan will not do. The plan must actually protect workers from violations of their workplace rights.
12Plan/Prevent/Protect Employers and other regulated entities who fail to take these steps to address comprehensively the risks, hazards, and inequities in their workplaces will be considered out of compliance with the law and, depending upon the agency and the substantive law it is enforcing, subject to remedial action. But employers, unions, and others who follow the Department’s “Plan/Prevent/Protect” strategy will assure compliance with employment laws before Labor Department enforcement personnel arrive at their doorsteps.
13DOL’s “We Can Help” Campaign: Hotels/Motels in the Cross-Hairs “Today’s event marked the beginning of the “We Can Help” nationwide campaign. The effort, which is being spearheaded by the Department’s Wage and Hour Division, will help connect America’s most vulnerable and low-wage workers with the broad array of services offered by the Department of Labor. The campaign will place a special focus on reaching employees in such industries as construction, janitorial work, hotel/motel services, food services and home health care. It also will address such topics as rights in the workplace and how to file a complaint with the Wage and Hour Division to recover wages owed.”Sec. Hilda Solis (4 /1/10)
14U.S. Department of Labor Enforcement What’s Next and What You Can Do
15Wage and Hour Division Alfred B. Robinson, Jr. (Washington, D.C.) Presented By:Alfred B. Robinson, Jr. (Washington, D.C.)
16Wage & Hour Targets the Hospitality Industry US Department of Labor & Wage and Hour Division (WHD)LeadershipNationalRegionalPrioritiesEnforcement, enforcement, enforcement …Resources
17Wage & Hour Targets the Hospitality Industry WHD Investigations: TypesComplaint CasesInitiatives (Directed Cases)FY 2010FY 2011History with Hospitality Industry
18Wage & Hour Targets the Hospitality Industry WHD Investigations: ProcessAdvance Notice or SchedulingOn-Site: Opening Conference“Desk Audit”Employee InterviewsClosing Conference and Findings
19Wage & Hour Targets the Hospitality Industry WHD InvestigationsCommon FLSA ViolationsMisclassification of Exempt EmployeesRetail Sales (Section 7(i))Off-the-Clock WorkCompensation – Regular RateChild Labor
20Wage & Hour Targets the Hospitality Industry WHD: Plan/Prevent/ProtectSpring 2010 Regulatory AgendaSub-regulatory AgendaAdministrator InterpretationsFact Sheets
21Office of Federal Contract Compliance Programs Presented By:Leigh M. Nason (Columbia)
22Affirmative Action Helps prevent discrimination One aspect of the federal government’s efforts to ensure equal employment opportunityLegally mandated for nonexempt federal contractors and subcontractors – Executive Order 11246, Rehabilitation Act, VEVRAAHelps prevent discriminationTargets outreach to underutilized groups of minorities and womenMeasures good faith efforts in making progress toward goals for minorities and women
23Compliance Basics Are you a federal contractor? Subcontractor? Provide meeting space or lodging for government agencyCatering banquet or function for government agencyYES Do you have a single contract of at least $50,000?YES Do you have 50 employees?YES Written affirmative action programs (AAPs)Subject to OFCCP compliance reviews (“audits”)Subject to sanctions for noncomplianceTechnical violations No $$$$$Discrimination $$$$$ and other obligations
25OFCCP Resources & Priorities 25% budget increase for 2010200+ new compliance officers20% more compliance reviewsCommitted to resolving 77% more discrimination cases (45 80)Priorities include:WagesIndividual and systemic discriminationHiring/TestingCompensationVeterans and disabilities issuesANPRM published July 23Enforcing Executive Order employee notice posting requirement
26Focus on . . . Consistent, well-documented policies and procedures Selection procedures – especially for service workersCompensation decisionsRecordkeeping generally, 2+ yearsHard copy?Electronic?“Affirmative action” efforts
27Focus on . . . Selections Testing and Compensation Know your process and follow it!Data integrity is keyConsistency and documentation is criticalConduct impact ratio analysesJob group OR job title OR requisition?Not just “minority vs. nonminority”Testing and CompensationAdverse impact and recordkeepingTest validation, if necessary
28OFCCP’s Audit Focus Under Active Case Management* 92% of audits with findings of discrimination involve findings of hiring bias8% of audits with findings of discrimination involve findings of discrimination in compensation0% of audits find discrimination in promotions0% of audits find discrimination in terminations*Source: A Review Of OFCCP Enforcement Statistics: A Call For Transparency In OFCCP Reporting, Center for Corporate Equality (March 2009) (Data based on FY 2007 Compliance Evaluations)Let’s focus for just a moment on the 60 or so audits a year in which the OFCCP actually finds discrimination.In more than 9 out of 10 of those audits, the discrimination involves hiring.And virtually every one of those audits involves hiring into entry level blue collar jobsA handful of audits involve alleged discrimination in pay.OFCCP never finds discrimination in promotion or termination.****In reality, then, it ‘s safe to say that the OFCCP’s current focus is hiring discrimination in entry level blue collar jobs.
29Our PredictionsMore audits + more enforcement actions = more $$$$ spent on affirmative action compliance issuesCompliance officers will be handling more cases and will be under more pressure to find violations or close case quicklyIndividual pay claims will be more successful than systemic pay claims
30Our PredictionsSystemic hiring claims will be more successful than individual hiring claimsTests and assessments (and validation or lack thereof) will be prime sources of OFCCP scrutinyDisabled/veterans recruitment will remain a focus
31Defensive Compliance Strategy Consistency of policies and practicesDefensible documentation of actions takenInternal audit – preferably under privilege – of AAP requirementsUpdated AAPsDefensible hiring process? What about tests?Good faith efforts, especially for vets/disabledPersonnel records available (applications, interview notes, assessments, etc.)Ensure that adequate records are maintained for adequate time
33DOL’s New Plan/Prevent/Protect Initiative & H-2B Guest Worker Compliance H-2B worker commonly used to supplement an employer’s normal workforce – i.e., seasonal/peak-load housekeepers. Annual quota for “new” H-2B workers or those out-of-countryNew H-2B regulations (2009) change employer attestations and create new obligations and risks – Wage & Hour Division (WHD) has power to impose wage payments & sanction/debar H-2B employersDOL is taking historic action – with H-2B hospitality employers being the focal point of auditsDOL will pursue corporate-wide compliance and penalties/sanctions to deter violations. Low wage hotel workers are “at risk” for abuses.
34DOL’s New Plan/Prevent/Protect Initiative & H-2B Guest Worker Compliance WHD focus will not only cover resorts/hotels that directly sponsor H-2Bs, but also those that use contractors who employ H-2B workersDOL is currently drafting new H-2B regulations to be released in November 2010Collective FLSA cases brought by H-2B plaintiffs gaining attention of WHDEvents that cause WHD audits: 1) FLSA complaints; 2) Housing deductions; 3) Failure to reimburse for pre-employment travel; 4) Layoffs and failure to offer return transportation; 5) Benching H-2B workers; and 6) Consulate investigation
35New H-2B Regulations and Obligations New Procedure & Forms: DOL & USCISStep 1: Application for Temporary Labor Certification filed with DOLMust request prevailing wage determination from DOLMust perform pre-filing recruitment campaignJob order with State Workforce AgencyTwo-day ad to include a SundayMust include statement attesting/proving temporary needMust include a statement of recruitment detail methods and results as to each applicant (must retain for three years)Contractors need to prove temporary need of hotel client and use hotel’s summarized payroll information and attestation that hotel has not displaced any U.S. workersSteps 2 & 3: USCIS application and consular processing
36New H-2B Regulations and Obligations New Employer Attestations (ETA Form 9142)No recruiter fees paid by H-2B worker (“fees” = any money)If employee has paid fee – employer has reimbursed prior to filing48-hour notice to USCIS if employee is a no-show or absconds or is terminatedNo displacement of U.S. workersSanctions and WHD enforcement for willful violationsDebarment from H-2Bs and other categories (e.g., H-1B, L-1, permanent resident cases)Civil finesH-2B employers have long been required to offer the reasonable return transportation costs to the worker’s home country following an involuntary termination.
37FLSA Collective Actions by H-2B Workers & WHD Position on FLSA Recent trend of FLSA collective actions by H-2B workers alleging payment of visa-related costs and travel to the United States drove wages below required wage level.U.S. Consulates/Embassies now provide handouts to H-2B visa applicants advising them of their wage/hour rightsArriaga v. Florida Pacific Farms, L.L.C, 305 F. 3d 1228 (11th Cir. 2002): FLSA protection extends to payment for transportation of H-2A farm workers to the United States, immigration fees, and pre-employment expenses that primarily benefit the grower and cannot be counted as wage credits pursuant 29 U.S.C. 203(m). Ct: expenses incurred are de facto deductions from cash wages received on first week of work.
38FLSA Collective Actions by H-2B Workers & WHD Position on FLSA Castellanos-Contreras v. Decatur Hotels, L.L.C (5th Cir. 2009)August 2009: DOL Wage & Hour Division Field Assistance Bulletin “Travel and Visa Expenses of H-2B Workers Under the FLSA”: Employer’s obligation
39FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices 1) Perform an internal audit to determine current practice/exposureIdentify properties/locations that employ H-2B workers or use 3rd party contractorsInvestigate existing and potential H-2B recruiters/agentsAre the properties complying with H-2B recordkeeping requirements and obligations? Did DOL/USCIS petitions cover all locations where H-2B workers physically worked?Review/modify contracts with H-2B recruiters/agents. Any recruiter fees being paid by the H-2B employees? Any unauthorized deductions from wages? Reimbursement for pre-employment travel costs to United States?
40FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices 2) Implement an H-2B compliance strategyWork with competent immigration counsel and employment counsel to develop strategy and/or handle/review the H-2B applications.Identify immigration attorney who has a long successful track record of handling H-2Bs in the hospitality industry and a good rapport with DOLRequire properties to select contractors with expert immigration counsel (not many immigration attorneys successfully represent contractors)Develop a recordkeeping compliance program that details the pre-filing recruitment efforts and non-displacement recordsRequire properties that use the H-2B program to offer several housing options or leave housing up to employee
41FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices 2) Implement an H-2B compliance strategy (cont’d)Ensure that properties are not deducting (from H-2B worker wages) more than the fair market value of the housingEnsure that properties pay all costs associated with H-2B process (unless paid by 3rd party contractor)Do not accept “in-country” H-2B workers from recruiters/agents unless the recruiter/agent ensures: a) no fees charged to the workers and b) the labor certification covers the worksiteOffer the return transportation costs (one-way airline ticket) to H-2B workers involuntarily terminated prior to the end of the H-2B termEnsure that properties (if not owned by corporate) file in the name of the true owner (FEIN)
42FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices 3) Offer training so that Human Resources and General Managers understand the new H-2B obligations and risks (including FLSA)
43Occupational Safety and Health Administration Presented By:Stephen C. Yohay (Washington, D.C.)
44Occupational Safety and Health Enforcement in the Lodging Industry OSHA’s “New Sheriff in Town” mentalityAggressive enforcement for all employersHigher penalties; nasty press releases“Regulation by shaming is very effective” says OSHA’s leader, Dr. David MichaelsIntrusive inspections; more “willful” and “repeat” citationsSettlements harder to achieveOSHA pressuring State plans to become more aggressiveToday – OSHA programs that affect lodging
45OSHA in the Lodging Industry The return of ergonomics regulation, but in a new form:OSHA soon to issue new rule requiring employers to record musculoskeletal disorders (MSDs) on OSHA 300 and 301 injury and illness logsDefinition of MSD is vague (e.g., “back pain,” “tingling”)New requirement likely effective January 1, 2011Prepare now for this new requirement:Train those who maintain OSHA logsGet ready to adjust any electronic systems used for recordkeepingPrepare to train employees to report these kinds of conditions
46OSHA in the Lodging Industry OSHA suspects that employers suppress employee reports of injuries, and discourage seeking medical care.In most inspections, OSHA will review 300 and 301 logs for past five yearsYou should now review logs; make necessary correctionsOSHA will interview employees to see if they:Have been told, and know, that they are to report injuries and illnessesKnow they can request medical care, and do not feel inhibitedOSHA skeptical of injury reduction incentive programsInvestigators will interview employees to see if employees are pressured to avoid reporting injuries or illness.
47OSHA in the Lodging Industry In the entertainment sector of lodging industry, new attention to basic safety hazards, such as fall protection and electrical hazardsStagehand fall at Florida resort prompted OSHA’s leader Dr. Michaels to issue statement that agency will enforce rules in this industryStagehand accident at MGM in Las Vegas produced local publicity about OSHA enforcement
48OSHA in the Lodging Industry OSHA educating multi-cultural workforce on OSHA rights“Whistleblower” protectionInjury and illness reportingMulti-lingual training and safety rulesOSHA working with unions in the industry to spread this messageOSHA conducted nationally-publicized Hispanic awareness meeting in Houston (April 2010)
49OSHA in the Lodging Industry Do those in charge of your properties know:What to do if an OSHA Compliance Officer arrives?Who to call in the company?What records must be given to a Compliance Officer, and when?How to ask a Compliance Officer to wait until the company’s safety officer arrives?How to deal with a Compliance Officer’s inspection of operations while hotel guests or others in the public are present?It’s a good time to train your managers on OSHA inspections
50The Wage and Hour Audits Are Coming: Be Prepared Co-Sponsored By: