Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

As we previously reported here, the USDOL is focused on corporate-wide compliance strategies to ensure that employers take active responsibility for their compliance efforts.  In a speech at New York University, Solicitor of Labor M. Patricia Smith touted a recent settlement with Tyson Foods as an example of the DOL’s new approach.    Ms. Smith explained that even though the DOL’s enforcement action was limited to the employer’s Blountsville, Alabama facility, the settlement includes a nationwide injunction which broadly covers other company facilities and workers.  Smith explained “[t]hat’s the type of settlement you will see us entering into more and more in the future….if we find a violation at one facility, it should be corrected at all the company’s facilities.” See Solis v. Tyson Foods Inc., N.D. Ala., No. 02-CV-1174, Docket Entry 521-1 (proposed consent judgment), June 3, 2010.  During the same speech, Ms. Smith reiterated that “the Labor Department is open once again.”  

The business community must recognize the expanded efforts of an increasingly active and ambitious DOL, and review compliance practices to minimize the likelihood that a DOL site investigation will evolve into a nationwide audit and/or litigation.

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On Friday, May 21, 2010, the Department of Labor, Wage and Hour Division held a public Stakeholder Forum, during which key members of the Wage and Hour Division (WHD) discussed WHD's goals and regulatory agenda. Jackson Lewis attended the Forum. 

After welcoming the crowd, Nancy Leppink, the WHD Deputy Administrator pointed out some of WHD's accomplishments over the past year, including hiring 250 new investigators (with plans to hire 100 more in 2010) and starting the “We Can Help” campaign, aimed to reach vulnerable workers who wouldn’t otherwise report violations and non-compliance.

Next, Michael Hancock, WHD's Acting Director of Interpretation and Regulatory Analysis, explained that WHD's performance goals are to: (1) ensure that the most vulnerable workers are employed in compliance with wage and hour laws; (2) make certain that employers, including the most persistent violators, are brought into and maintain compliance with the laws enforced by the WHD; (3) foster a customer-oriented, quality-driven culture with WHD; (4) issue prevailing wage determinations that are current and accurate; and (5) pursue regulatory initiatives that broadly support and advance the Department of Labor’s vision.  Mr. Hancock indicated that to achieve these goals, WHD will:  (1) target industries in which violations are most likely to occur; (2) employ resources-leveraging strategies and technologies to affect compliance; (3) pursue corporate-wide compliance strategies to ensure that employers take on responsibility for their compliance behavior; (4) target public awareness and outreach efforts to workers populations and industries in which workers are reluctant to report violations; (5) use  penalties, sanctions, the FLSA hot goods provision, and similar strategies – as appropriate – to ensure future compliance among violators and to deter violations among other employers; and (6) implement revised Davis-Bacon wage survey processes to improve the quality and timeliness of wage determinations.

Mr. Hancock then turned to WHD’s regulatory agenda and discussed the newly issued regulations for child labor in non-agriculture, previously discussed here.  He also advised that WHD is planning to develop regulations covering the following issues with the goal of better advising both employers of legal obligations and employees of their rights to prevent violations in the first place:

1. Non-displacement of qualified workers under service contracts.  Consistent with President Obama's Executive Order, the regulations would require a covered employer to offer employment to a predecessor's employees;
2. The statutory changes to the FMLA imposed by the expanded rights to leave for active military veterans;
3. Recordkeeping obligations under the FLSA.  Such regulations would potentially require employers to advise all individuals performing services of whether they are classified as employees or contractors and provide an explanation for such determination.  (The pending Employee Misclassification Act seeks to impose similar obligations).  WHD would also like the regulation to codify burden shifting analysis for recordkeeping violations originally stated in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), and clarify record keeping obligations for live-in domestics;
4. Application of the FLSA to domestic services companions; and
5. Child labor in agriculture. 

Employers must recognize that the newly aggressive WHD is focusing on compliance and consider internal or external audits to review wage and hour compliance.  Employers in traditional low wage industries must take special notice of the WHD's initiatives.

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Yesterday the United States Department of Labor (DOL) gave another indication that it is preparing to ramp up enforcement efforts, in the form of its We Can Help campaign. We Can Help is designed to educate workers about their rights under the Fair Labor Standards Act. The campaign includes, among other features, a separate website with links to pages explaining the rights of workers and Public Service Announcements in both English and Spanish by Hollywood stars, including Jimmy Smits and Esai Morales. Hilda Solis (Secretary of Labor) and Dolores Huerta (co-founder of the United Farm Workers of America, AFL-CIO) also recorded PSAs in support of the campaign. 

We Can Help appears to be targeted toward specific industries, i.e., construction, day laborers and farm workers, and clearly reaches out to non-citizens and/or undocumented workers. The campaign’s encouragement of self-action in employee recordkeeping, coupled with the impending media blitz, will likely increase complaints filed with the DOL. To that end, the DOL recently added some 250 additional investigators (a staff increase of approximately 33%), in large part to support this campaign.

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In today’s Wall Street Journal, Melanie Trottman notes that the U.S. Department of Labor has started shifting its focus towards what has long been assumed would be the case:

Labor Secretary Hilda Solis has spent her first few months in office focusing on handing out $46 billion in stimulus money. Now, her department is adding staff and signaling it will soon begin putting in practice the more assertive regulation of business she promised early in her tenure.

Ms. Solis has begun hiring 670 new investigators to enforce labor regulations.

Among the new hires will be some 250 additional enforcement personnel in the Department’s Wage and Hour Division, an increase of 33%. 

The Department's more aggressive enforcement stance, coupled with an increased number of investigators, places employers of all sizes in jeopardy. 

Employers should review their practices and policies now to address possible wage and hour violations in advance of a federal investigation. Investigations by WHD can lead to the payment of back wages, liquidated (double) damages, civil monetary penalties, and, in the case of government contracts, can also lead to debarment from future government contracts. 

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