How to Avoid Costly Wage and Hour Pitfalls for Healthcare Employers with a Distributed Workforce

How to Avoid Costly Wage & Hour Pitfalls for Healthcare Employers with a

Distributed Workforce

Featuring Seyfarth Shaw LLP

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Welcome

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, [email protected]

Today’s Host

EPAY Systems -- designed to meet the needs of your complex,

distributed workforce

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• Reduce your labor costs by 5% or more

• Keep you in control and in compliance

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Today’s Discussion

Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000.

Are you at risk?

©2012 Seyfarth Shaw LLP

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Our Speakers

Alexander J. PassantinoSenior Counsel, Seyfarth Shaw LLPLabor & [email protected](202) 463-2400

Kristin G. McGurnPartner, Seyfarth Shaw LLPLabor & [email protected](617) 946-4800


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Ask Your Questions

To ask a question, simply type your question in the “Question”

box on the right side of your screen.


Today’s Discussion: Are you at risk?FLSA Cases in Federal Court 1993-

2012

©2013 Seyfarth Shaw LLP 7

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Overview: Trends for 2013

• Litigation trendso Aggressive plaintiffs’ bar and agency

• Increased agency enforcement

• Compliance Risks

• “Riskiest” times of dayo Pre & Post Shifto Meal Timeso Travel time


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Trends

• Aggressive plaintiffs’ law firms collaborate; create consortiums to jointly file class/collective suits

• Plaintiffs’ firms employ an industry-specific approach to wage & hour litigationo One firm successfully targets an industry,

quickly followed by other plaintiffs’ firms who target employers in the same industry

o In healthcare, they obtain information from unions and state licensing boards to contact your employees


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=gf0s5nKLmVdHxM&tbnid=RSZ_vkWvANt-7M:&ved=0CAUQjRw&url=http://www.customercentric.info/emerging-customer-experience-management-trends/&ei=HexCUp6AL4PtqQHk64GYCw&bvm=bv.53077864,d.b2I&psig=AFQjCNG1lOAGPNouBpb6grbs1MI8hYzfRA&ust=1380203884222499

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Trends Continued

• Aggressive outreach to identify potential plaintiffso email blasts to employees of targeted companieso ads on Facebook, Twittero contact with employees who self-identify as

healthcare workers


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=-7OESLaZCo3C7M&tbnid=1NUQbUaE7SpuFM:&ved=0CAUQjRw&url=http://www.wallng.com/social-networking-logos-facebook-wwwbirthrightearthorg-hd/&ei=yetCUq1Vw_2rAZ7EgdAG&bvm=bv.53077864,d.b2I&psig=AFQjCNECSnWzrG7BuC6m74_NmVmYgGeHSA&ust=1380203797696696

Sophisticated Outreach

© 2013 Seyfarth Shaw LLP 11

Industry Epidemic

© 2013 Seyfarth Shaw LLP

Anaheim General HospitalKindred Healthcare White Memorial CenterClearlake HospitalThe Fremont-Rideout Health Group Methodist Hospital of Southern CaliforniaChildren’s HospitalValley Presbyterian HospitalTenet HospitalsCollege Health EnterprisesPresbyterian Inter Community HospitalSutter Health St. Vincent Hospital

Prime HealthcareChildren’s Hospital of Orange CountyAlliance Health ServicesKaiser Hospitals Catholic Healthcare West Sharp HealthcareHuntington MemorialAccess NursesAmerican Laser Centers of CaliforniaNorthbay Healthcare Corporation Milwood HealthcareConcentric Healthcare SolutionsLegacy Good Samaritan Hospital

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Kindred HealthcareCareGroupUMass Memorial Health CarePartners Healthcare SystemMediSys Health NetworkThe Nursing Solutions AgencyLong Island Health Network Long Island Jewish Health SystemSt. Joseph’s Hospital

Faxton-St. Luke’s HealthcareThe Bronx- Lebanon Hospital CenterWestchester City Health CareMontefiore Health SystemMount Sinai Medical CenterNYU Hospitals CenterNY Presbyterian Healthcare SystemContinuum Health PartnersMemorial Sloan Kettering Cancer CenterNY City Health and Hospitals CorporationKaleida HealthMercy Health System Bayada NursesThe Trustees of the University of PA

Jefferson Health SystemTenet Health System PhiladelphiaAlbert Einstein Healthcare Genesis Healthcare CorpLehigh Valley Hospital and Health NetworkRevolutionary NursesUniversity of Pittsburgh Medical Center

West Penn Allegheny Health SystemPittsburgh Mercy Health System Temple University Health System

Kindred HealthcareMaxim Healthcare ServicesResurrection Healthcare Jackson Park HospitalNorthwestern Memorial HealthcareThorek Memorial HospitalHeritage Enterprises Petersen Healthcare Children’s Memorial HospitalJackson Park Hospital FoundationSmith Thomas Williams Healthcare

Infinia HealthcareLincoln Park Hospital Psychiatric SolutionsCircle Family HealthCare NetworkHavenwood Nursing Pathways Community HealthcareSt. John HealthVibra HealthcareBest Nurses Too IncCatholic Health Systems

Marion Community HospitalSovereign Healthcare of West Palm BeachHealthcare Plans Inc.The Ritz Community Healthcare Inc.Healthcare Labor Force AssociatesVIP Home Nursing & Rehabilitation ServiceFrontier Healthcare GroupDallas County Hospital District United Healthcare Services Inc.Odyssey Healthcare of HoustonCrouse Health Foundation

Edcare Mgmt Inc.Allied Hospital Services Rehabilitation Associates PCHealthcare Services Group

Center for Rehabilitation and DevelopmentSt Luke’s Rehabilitation Hospital of ShreveportMaxim Healthcare ServicesThe Community Hospital of Brazosport

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Top 10 Private W&H Settlements Last Year

1. $99 Million – misclassification of pharma sales reps 2. $40 Million – wage claims related to financial services merger 3. $35 Million – timeliness of payments in financial service company 4. $21 Million – misclassification of pharmacy ass’t store managers 5. $20 Million – New York City misclassification of police sergeants 6. $19 Million – misclassification of recruiters 7. $15.6 Million – misclassification of bankers, managers, specialists 8. $15.5 Million – failure to provide meal breaks 9. $14 Million – misclassification of retail store managers10. $12.9 Million – independent contractor misclassification


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Increased WHD Enforcement Capabilities

Number of Wage and Hour Division Investigators, 1987 to 2011

951 952970

938

835

804 800809

942 942 938949 945

898

850

788773

751732

865

781

731

893

950

1,006

600

650

700

750

800

850

900

950

1,000

1,050

1,100

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Applied Econom ic Strategies , us ing U.S. Departm ent of Labor, Wage and Hour Divis ion data.


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Increased Agency Enforcement

• DOL targeted healthcare industry

• 250 new investigators

• Studying compliance rates through audits of metropolitan healthcare institutions


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New Rule for Home Care

• Effective January 1, 2015

• Relates to companionship services employment

• Third-Party Employers must pay OT

• Performance of any medically-related service that requires training results in loss of exemption


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Common Claims

• Off-the-Clock Work (pre- or post-shift)• Automatic Meal Period Deductions• Staffing Ratios/Census Allegedly Prevents Meal/Rest• Training• Pagers• Controlled Standby• Regular Rate of Pay Calculations• Independent Contractor Misclassification• Joint Employer within System or with Registry


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Mistake #1

• Employees must pay for their own uniforms

• Key issues:o Are the uniforms generic or elaborate?o Do employees authorize the deduction?o Does the deduction make their pay fall

below minimum wage?o Are they responsible for cleaning the

uniform?


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Simple Safeguards

• Receive authorization for the deduction (if required by state law).

• Do not count a uniform as a credit against wages.

• Make sure that the cost of uniform deductions does not reduce pay below minimum wage.


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Mistake #2

• Employees must show up and wait to clock-in

• Key Issues:o How long in advance of the shift are they

required to arrive at the job site or central location?

o Are employees free to use this time for their own purposes?

o Are they disciplined or prevented from working if they do not show up at the required time?

o Waiting to work- working does not require exertion.


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Simple Safeguards

• Only require people to be at work by their scheduled start time.

• If employees are required to be at work by a certain time and employees are there by that time, pay the employees starting at that time.

• Only discipline individuals who are tardy for their scheduled start time, not the early arrival requirement.


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Mistake #3

• All required time is not included in the calculation of hours worked

• Key issues:o Pay for pre- and post-shift activities (donning &

doffing; charting; patient families)o Is the activity “integral and indispensable” to

employees’ principal work activities (and therefore compensable)?

o Do the employer’s rules or the nature of the work require it?

o If an employee continues to work voluntarily after the end of his shift and the employer knows or has reason to know, that time is considered working time


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Donning and Doffing

“Non-unique” gear, integral, indispensable Typically must take place at work to be

compensable If “first principal activity” may make subsequent

transportation time compensable Custom and usage under CBA Clothes changing regulations


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Simple Safeguards

• Do not let hourly employees start working until they are on the clock (but don’t require them to be there before they are allowed to clock in).

• Pay attention and make sure that people are not working after they clock out.

• Have employees verify each pay period that they have been paid for all time worked.

Facilitate transition between shifts (e.g. adequate staffing, supportive culture, recorded reports)

Delegate functions for which license is not required


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What Else Should We Consider?

• Regular Rate Calculationo Bonuseso Shift, Weekend and Unit Differentials

Proper calculation of OT when employees work at two or more rates

o Standby/On-Call Payo Reporting Pay

Charitable organization exemptions by state law


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• Overtime Calculationo Work Week v. Back-To-Back Work Weeko Proper Use of Creditso Aggregation of Hours at and Travel to Multiple

Network/Center Facilities


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• Time Recordso Feasibility of Employee Affirmation/Certification (paper or

electronic) e.g. I hereby certify that the hours I recorded working today

are complete and accurate … I was authorized and permitted to take meal and rest periods … I accurately recorded all work time

o Open Communicationo Consistent Messagingo Reporting Mechanism for and Prompt Response to Complaintso Recordkeeping Protocols


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Mistake #4

• Employees are not paid for training

• Key issues:o Do you require employees to attend company-

sponsored trainings? Or is it voluntary?o Does the training provide employees with skills that are

transferrable? Or is the training specific to your company?

o If you don’t pay it, how do we track the time? Could be a recordkeeping issue if a lawsuit is filed.


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Simple Safeguards

• If the company-sponsored training is mandatory, pay for it.

• Otherwise, make sure that both managers and employees understand that the training is voluntary.o Policies should clearly state that the

training is voluntary Mandated v. licensure, off shift,

voluntary, unrelated to job, non-work

On the clock for mandatory training


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Polling Question

• Do you use an automatic meal period deduction?


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Mistake #5

• Automatically deducting for meal periods, even if not taken

• Key issues:o Do they actually take a break?o Completely relieved from duty?o If they get interrupted during their

meal period, are they paid for the interruption?


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Meal Periods

o Federal law Short rest periods (usually 20 min or less) count as hours

worked (including smoking breaks) Bona fide meal periods generally need not be compensated

Employee completely relieved from duty Freedom to leave work station Break location away from work station

• Not relieved if required to perform any duties, active or inactive

No private right of action for break per se – agency enforcement

o State Law


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Missed and Interrupted Breaks

• Document Reminders Orientation, departmental procedures, staff meetings

o Schedule Breaks Where Feasibleo Impose Staffing Standards/Requirements to Impact Meal/Rest

Periods; Floating/Covering; Staggered shifts Watch automated deductions, interruptions, standard time card

entries, skipping to make up for tardy, leaving early in lieu of break, no comp time e.g. sign/clock in and out for meal periods – documented

compliance Exceptions for emergencies

o Review of Time Recordso Use of Waivers


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Simple Safeguards

• Implement a policy that only uninterrupted meal periods are unpaid.

• Implement a system to allow employees to document if they did not take or did not get their full meal period.

• Keep records.

• Have employees verify that any time deducted each pay period is accurate.


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• System and Practices that Ensure Accuracy Consistent use of time clocks and/or cards Sufficient number of clocks, located near commencement of

work Documented reinforcement:

Clearly articulated policy regarding beginning/ending work day in accordance with scheduled shifts

Explicit manager approval for work before/after shift Clearly articulated break expectation, exception process,

employee involvement Prohibition on work off the clock

Consistent monitoring by managers with accountability; documented changes; limited authority to change


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Mistake #6

• Failure to take a strong stand against off-the-clock work

• Key issues:o Failure to properly compensate for all hours worked

= most frequently cited violation by WHD (in terms of numbers of employees affected) in the course of its investigations

o A number of states have recently enacted anti-wage theft laws


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=fH5_1cLoCWrJKM&tbnid=wCmIeeh0X2D-RM:&ved=0CAUQjRw&url=http://www.theadp.com/chamber-of-commerce/events-for-pine-belt-young-professionals&ei=8skaUY3UCsXHigK-o4Ew&bvm=bv.42261806,d.aWc&psig=AFQjCNGL16GybtmHWuvy0pjHCn9zGFVmfA&ust=1360796506558529

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Simple Safeguards

• Implement strong policies and set expectations.

• Train managers to look out for and report off the clock work.

• Train employees on your policies.


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Hours Worked

• Hours Workedo Pagers, Blackberries, Cell Phones, and Remote Access

Left behind during break, interruptions reported and break paid Off-site work reported

o Off-Shift Work Weekend/Night Shift Supervision


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Polling Question

• True/False: All managers are exempt and do not need to be paid overtime.


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Mistake #7

• We call them “manager” or “supervisor,” so they don’t get overtime

• Key Issues:o Recommendations for hiring/firing given

particular weight?o Too much work like those who are

supervised?o Sufficient pay distinction between hourly

employees and manager or supervisor? Easy case to certify as a collective/class

action.


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Mistake #8

• The employee didn’t work any overtime for a single employer, so no overtime pay is due

• Key Issues:o All hours worked on behalf of system must be included in

determining hours worked, even if worked in different facilities/employers

o Employees likely to be jointly employed by staffing company and client

o Reimbursement/charge rates and practices have no impact on overtime obligations


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Polling Question

• True/False: Employers can avoid all of these overtime problems simply by using independent contractors.


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Mistake #9

• Everyone’s an independent contractor

• Key issues:o How much control is there over their work?o How long have they been working with you?o Are they providing a special service or skill?o Does the worker invest in their own equipment

and materials? Provide their own employees?o Is the work an integral part of your business?


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Simple Safeguards

• Auditing pay practices & exempt status at direction of counsel.

• Review pay practices.

• Review exempt status classifications.

• Know state laws where you operate.


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Mistake #10

• Not paying separated employees all of their earned “wages.”

• Key issues:o Did the employee use all of his or her earned

vacation time?o Did the employee earn a bonus or commission, or

even a portion of one?o How are vacation days, commissions, and

bonuses “earned”?


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Simple Safeguards

• Your benefit plans should clearly describe how employees earn vacation, commissions, and bonuses.

• In Illinois (and other states), ensure that employees do not forfeit any earned vacation, bonuses, or commissions upon separation.

• Make sure you know the requirements of each state where you have employees, because there are differences.


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EPAY Systems

Michelle Lanter Smith

Chief Marketing OfficerEPAY Systems, Inc.

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EPAY -- In Time with You

Uniquely flexible

Mobile workforce,union contracts, multiple job assignments?

Complex pay rules?

No problem!

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Reduce your labor costs

Eliminate erroneous pay calculations, time rounding, and management inconsistencies

Eliminate buddy punching

Biometric time clocks with camera and finger print reader

Reduce costs associated with paper checks. Save an average of $2.87 per pay period/per employee.

or more!

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• Audit Trails• Overtime• Meal Breaks• Pay Differentials• Privacy and Security• Reduce Workers

Comp Claims• Did you have an

accident free day?

Minimize Compliance Risk

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Connect With Us

Connect with EPAY on:o LinkedIn – follow our company page at

EPAY Systemso Twitter -- @EPAYsystemso Sign up for our e- newsletter at

EPAYsystems.com


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Upcoming Education

Compliance Webinar Series with Seyfarth Shaw LLP

• Understanding the Affordable Care Act: Should You Pay or Play? Oct. 29th: 12:00 cst

• How to Avoid Costly Wage & Hour Pitfalls for Employers in the Hospitality Industry. Nov 6: 12:00 cst

Register at www.EPAYsystems.com


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Thank You!


How to Avoid Costly Wage and Hour Pitfalls for Healthcare Employers with a Distributed Workforce

Health & Medicine