The Wage and Hour Audits Are Coming: Be Prepared

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

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

• Department-Wide Regulatory and Enforcement
  Strategies
• Plan/Prevent/Protect
• Openness and Transparency

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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.

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DOLs Plan/Prevent/Protect Enforcement Strategy

• 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.

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DOLs 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
  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.

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DOLs 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 agencys portfolio.
  Although the specifics will vary by law, industry
  and regulated enterprise, this Plan/Prevent/Prote
  ct strategy will require all regulated entities
  to take three steps to ensure safe and secure
  workplaces and compliance with the law

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Plan/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.

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Plan/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.

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Plan/Prevent/Protect

• 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.

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Plan/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 Departments
  Plan/Prevent/Protect strategy will assure
  compliance with employment laws before Labor
  Department enforcement personnel arrive at their
  doorsteps.

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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)

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U.S. Department of Labor Enforcement

• Whats Next and What You Can Do

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Wage and Hour Division
Presented By Alfred B. Robinson, Jr.
(Washington, D.C.)
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Wage Hour Targets the Hospitality Industry

• US Department of Labor Wage and Hour Division
  (WHD)
• Leadership
• National
• Regional
• Priorities
• Enforcement, enforcement, enforcement
• Resources

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Wage Hour Targets the Hospitality Industry

• WHD Investigations Types
• Complaint Cases
• Initiatives (Directed Cases)
• FY 2010
• FY 2011
• History with Hospitality Industry

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Wage Hour Targets the Hospitality Industry

• WHD Investigations Process
• Advance Notice or Scheduling
• On-Site Opening Conference
• Desk Audit
• Employee Interviews
• Closing Conference and Findings

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Wage Hour Targets the Hospitality Industry

• WHD Investigations
• Common FLSA Violations
• Misclassification of Exempt Employees
• Retail Sales (Section 7(i))
• Off-the-Clock Work
• Compensation Regular Rate
• Child Labor

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Wage Hour Targets the Hospitality Industry

• WHD Plan/Prevent/Protect
• Spring 2010 Regulatory Agenda
• Sub-regulatory Agenda
• Administrator Interpretations
• Fact Sheets

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

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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

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New Leadership New Focus
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OFCCP Resources Priorities

• 25 budget increase for 2010
• 200 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 13496 employee notice
  posting requirement

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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

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Focus on . . .

• 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

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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)

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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

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Our Predictions

• 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

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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

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Immigration
Presented By Jay C. Ruby (Atlanta)
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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.

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DOLs 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 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

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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

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New 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 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.

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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.

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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

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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 3rd 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?

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FLSA Collective Actions H-2B Workers Take
Away Lessons Best Practices

• 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

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FLSA Collective Actions H-2B Workers Take
Away Lessons Best Practices

• 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 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 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)

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FLSA 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)

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

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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

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OSHA 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 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.

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OSHA in the Lodging Industry

• 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

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OSHA in the Lodging Industry

• 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)

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OSHA 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
  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

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