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The Wage and Hour Audits Are Coming: Be Prepared Co-Sponsored By:

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1 The Wage and Hour Audits Are Coming: Be Prepared Co-Sponsored By:

2 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 2 of 50 Speaker 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)

3 DOLs Spring 2010 Regulatory Agenda Presented By: Harold P. Coxson, Jr. (Washington, D.C.)

4 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 4 of 50 DOLs Spring 2010 Regulatory Agenda Department-Wide Regulatory and Enforcement Strategies Plan/Prevent/Protect Openness and Transparency

5 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 5 of 50 DOLs Plan/Prevent/Protect Enforcement Strategy The Labor Department has limited resources to protect Americas workers With 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.

6 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 6 of 50 Employers and other regulated entities should be encouraged to plan to prevent violations and protect workers, while the Labor Departments 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. DOLs Plan/Prevent/Protect Enforcement Strategy

7 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 7 of 50 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 Departments 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 Departments new strategy. We are going to replace catch me if you can with Plan/Prevent/Protect. DOLs Plan/Prevent/Protect Enforcement Strategy

8 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 8 of 50 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 agencys 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: DOLs Plan/Prevent/Protect Enforcement Strategy

9 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 9 of 50 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. Plan/Prevent/Protect

10 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 10 of 50 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. Plan/Prevent/Protect

11 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 11 of 50 Protect: The Department will propose a requirement that the employer or other regulated entity ensures that the plans 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. Plan/Prevent/Protect

12 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 12 of 50 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 Departments Plan/Prevent/Protect strategy will assure compliance with employment laws before Labor Department enforcement personnel arrive at their doorsteps. Plan/Prevent/Protect

13 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 13 of 50 DOLs We Can Help Campaign: Hotels/Motels in the Cross-Hairs Todays event marked the beginning of the We Can Help nationwide campaign. The effort, which is being spearheaded by the Departments Wage and Hour Division, will help connect Americas 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)

14 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 14 of 50 U.S. Department of Labor Enforcement Whats Next and What You Can Do

15 Wage and Hour Division Presented By: Alfred B. Robinson, Jr. (Washington, D.C.)

16 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 16 of 50 Wage & Hour Targets the Hospitality Industry US Department of Labor & Wage and Hour Division (WHD) Leadership National Regional Priorities Enforcement, enforcement, enforcement … Resources

17 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 17 of 50 WHD Investigations: Types Complaint Cases Initiatives (Directed Cases) FY 2010 FY 2011 History with Hospitality Industry Wage & Hour Targets the Hospitality Industry

18 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 18 of 50 WHD Investigations: Process Advance Notice or Scheduling On-Site: Opening Conference Desk Audit Employee Interviews Closing Conference and Findings Wage & Hour Targets the Hospitality Industry

19 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 19 of 50 WHD Investigations Common FLSA Violations Misclassification of Exempt Employees Retail Sales (Section 7(i)) Off-the-Clock Work Compensation – Regular Rate Child Labor Wage & Hour Targets the Hospitality Industry

20 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 20 of 50 WHD: Plan/Prevent/Protect Spring 2010 Regulatory Agenda Sub-regulatory Agenda Administrator Interpretations Fact Sheets Wage & Hour Targets the Hospitality Industry

21 Office of Federal Contract Compliance Programs Presented By: Leigh M. Nason (Columbia)

22 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 22 of 50 Affirmative Action One aspect of the federal governments efforts to ensure equal employment opportunity Legally mandated for nonexempt federal contractors and subcontractors – Executive Order 11246, Rehabilitation Act, VEVRAA Helps prevent discrimination Targets outreach to underutilized groups of minorities and women Measures good faith efforts in making progress toward goals for minorities and women

23 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 23 of 50 Compliance Basics Are you a federal contractor? Subcontractor? Provide meeting space or lodging for government agency Catering banquet or function for government agency YES 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 noncompliance Technical violations No $$$$$ Discrimination $$$$$ and other obligations

24 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 24 of 50 New Leadership – New Focus Hilda Solis Secretary of Labor Patricia Shiu Director, OFCCP Barack Obama POTUS

25 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 25 of 50 OFCCP Resources & Priorities 25% budget increase for new compliance officers 20% more compliance reviews Committed to resolving 77% more discrimination cases (45 80) Priorities include: Wages Individual and systemic discrimination Hiring/Testing Compensation Veterans and disabilities issues ANPRM published July 23 Enforcing Executive Order employee notice posting requirement

26 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 26 of 50 Focus on... Consistent, well-documented policies and procedures Selection procedures – especially for service workers Compensation decisions Recordkeeping generally, 2+ years Hard copy? Electronic? Affirmative action efforts

27 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 27 of 50 Selections Know your process and follow it! Data integrity is key Consistency and documentation is critical Conduct impact ratio analyses Job group OR job title OR requisition? Not just minority vs. nonminority Testing and Compensation Adverse impact and recordkeeping Test validation, if necessary Focus on...

28 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 28 of 50 OFCCPs Audit Focus Under Active Case Management* 92% of audits with findings of discrimination involve findings of hiring bias 8% of audits with findings of discrimination involve findings of discrimination in compensation 0% of audits find discrimination in promotions 0% 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)

29 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 29 of 50 Our Predictions More audits + more enforcement actions = more $$$$ spent on affirmative action compliance issues Compliance officers will be handling more cases and will be under more pressure to find violations or close case quickly Individual pay claims will be more successful than systemic pay claims

30 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 30 of 50 Systemic hiring claims will be more successful than individual hiring claims Tests and assessments (and validation or lack thereof) will be prime sources of OFCCP scrutiny Disabled/veterans recruitment will remain a focus Our Predictions

31 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 31 of 50 Defensive Compliance Strategy Consistency of policies and practices Defensible documentation of actions taken Internal audit – preferably under privilege – of AAP requirements Updated AAPs Defensible hiring process? What about tests? Good faith efforts, especially for vets/disabled Personnel records available (applications, interview notes, assessments, etc.) Ensure that adequate records are maintained for adequate time

32 Immigration Presented By: Jay C. Ruby (Atlanta)

33 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 33 of 50 DOLs New Plan/Prevent/Protect Initiative & H-2B Guest Worker Compliance H-2B worker commonly used to supplement an employers normal workforce – i.e., seasonal/peak-load housekeepers. Annual quota for new H-2B workers or those out-of-country New 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 employers DOL is taking historic action – with H-2B hospitality employers being the focal point of audits DOL will pursue corporate-wide compliance and penalties/sanctions to deter violations. Low wage hotel workers are at risk for abuses.

34 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 34 of 50 WHD focus will not only cover resorts/hotels that directly sponsor H-2Bs, but also those that use contractors who employ H-2B workers DOL is currently drafting new H-2B regulations to be released in November 2010 Collective FLSA cases brought by H-2B plaintiffs gaining attention of WHD Events 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 DOLs New Plan/Prevent/Protect Initiative & H-2B Guest Worker Compliance

35 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 35 of 50 New H-2B Regulations and Obligations New Procedure & Forms: DOL & USCIS Step 1: Application for Temporary Labor Certification filed with DOL Must request prevailing wage determination from DOL Must perform pre-filing recruitment campaign Job order with State Workforce Agency Two-day ad to include a Sunday Must include statement attesting/proving temporary need Must 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 hotels summarized payroll information and attestation that hotel has not displaced any U.S. workers Steps 2 & 3: USCIS application and consular processing

36 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 36 of 50 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 filing 48-hour notice to USCIS if employee is a no-show or absconds or is terminated No displacement of U.S. workers Sanctions and WHD enforcement for willful violations Debarment from H-2Bs and other categories (e.g., H-1B, L-1, permanent resident cases) Civil fines H-2B employers have long been required to offer the reasonable return transportation costs to the workers home country following an involuntary termination. New H-2B Regulations and Obligations

37 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 37 of 50 FLSA 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 rights Arriaga 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.

38 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 38 of 50 FLSA 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: Employers obligation

39 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 39 of 50 FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices 1) Perform an internal audit to determine current practice/exposure Identify properties/locations that employ H-2B workers or use 3 rd party contractors Investigate existing and potential H-2B recruiters/agents Are 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?

40 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 40 of 50 2) Implement an H-2B compliance strategy Work 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 DOL Require 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 records Require properties that use the H-2B program to offer several housing options or leave housing up to employee FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices

41 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 41 of 50 2) Implement an H-2B compliance strategy (contd) Ensure that properties are not deducting (from H-2B worker wages) more than the fair market value of the housing Ensure that properties pay all costs associated with H-2B process (unless paid by 3 rd 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 worksite Offer the return transportation costs (one-way airline ticket) to H-2B workers involuntarily terminated prior to the end of the H-2B term Ensure that properties (if not owned by corporate) file in the name of the true owner (FEIN) FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices

42 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 42 of 50 3) Offer training so that Human Resources and General Managers understand the new H-2B obligations and risks (including FLSA) FLSA Collective Actions & H-2B Workers: Take Away Lessons & Best Practices

43 Occupational Safety and Health Administration Presented By: Stephen C. Yohay (Washington, D.C.)

44 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 44 of 50 Occupational Safety and Health Enforcement in the Lodging Industry OSHAs New Sheriff in Town mentality Aggressive enforcement for all employers Higher penalties; nasty press releases Regulation by shaming is very effective says OSHAs leader, Dr. David Michaels Intrusive inspections; more willful and repeat citations Settlements harder to achieve OSHA pressuring State plans to become more aggressive Today – OSHA programs that affect lodging

45 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 45 of 50 OSHA 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 logs Definition of MSD is vague (e.g., back pain, tingling) New requirement likely effective January 1, 2011 Prepare now for this new requirement: Train those who maintain OSHA logs Get ready to adjust any electronic systems used for recordkeeping Prepare to train employees to report these kinds of conditions

46 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 46 of 50 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 years You should now review logs; make necessary corrections OSHA will interview employees to see if they: Have been told, and know, that they are to report injuries and illnesses Know they can request medical care, and do not feel inhibited OSHA skeptical of injury reduction incentive programs Investigators will interview employees to see if employees are pressured to avoid reporting injuries or illness. OSHA in the Lodging Industry

47 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 47 of 50 In the entertainment sector of lodging industry, new attention to basic safety hazards, such as fall protection and electrical hazards Stagehand fall at Florida resort prompted OSHAs leader Dr. Michaels to issue statement that agency will enforce rules in this industry Stagehand accident at MGM in Las Vegas produced local publicity about OSHA enforcement OSHA in the Lodging Industry

48 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 48 of 50 OSHA educating multi-cultural workforce on OSHA rights Whistleblower protection Injury and illness reporting Multi-lingual training and safety rules OSHA working with unions in the industry to spread this message OSHA conducted nationally-publicized Hispanic awareness meeting in Houston (April 2010) OSHA in the Lodging Industry

49 EMPLOYERS & LAWYERS, WORKING TOGETHER FIRST CLASS SERVICE, COAST TO COAST 49 of 50 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 companys safety officer arrives? How to deal with a Compliance Officers inspection of operations while hotel guests or others in the public are present? Its a good time to train your managers on OSHA inspections OSHA in the Lodging Industry

50 The Wage and Hour Audits Are Coming: Be Prepared Co-Sponsored By:


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