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

The Wage and Hour Audits Are Coming: Be Prepared

Co-Sponsored By:

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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)

DOL’s Spring 2010 Regulatory Agenda

Presented By:

Harold P. Coxson, Jr. (Washington, D.C.)

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DOL’s Spring 2010 Regulatory Agenda

Department-Wide Regulatory and Enforcement Strategies

“Plan/Prevent/Protect”

Openness and Transparency

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DOL’s Plan/Prevent/Protect Enforcement Strategy

The Labor Department has limited resources to protect America’s 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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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.


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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.”


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“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:


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“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

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“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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“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.


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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.


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DOL’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)

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U.S. Department of Labor Enforcement

What’s Next and What You Can Do

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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WHD Investigations: Types Complaint Cases Initiatives (Directed Cases)

FY 2010 FY 2011 History with Hospitality Industry


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WHD Investigations: Process

Advance Notice or Scheduling

On-Site: Opening Conference “Desk Audit” Employee Interviews

Closing Conference and Findings


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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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WHD: Plan/Prevent/Protect Spring 2010 Regulatory Agenda Sub-regulatory Agenda

Administrator Interpretations Fact Sheets


Office of Federal Contract Compliance Programs

Presented By:

Leigh M. Nason (Columbia)

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Affirmative Action

One aspect of the federal government’s 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

Barack ObamaPOTUS

Patricia ShiuDirector, OFCCP

Hilda SolisSecretary of Labor

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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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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 . . .

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OFCCP’s 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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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

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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

Immigration

Presented By:

Jay C. Ruby (Atlanta)

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DOL’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-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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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

DOL’s New Plan/Prevent/Protect Initiative & H-2B Guest Worker Compliance

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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

hotel’s 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 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 worker’s home country following an involuntary termination.

New H-2B Regulations and Obligations

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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”: Employer’s 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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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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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 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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3) Offer training so that Human Resources and General Managers understand the new H-2B obligations and risks (including FLSA)


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

OSHA’s “New Sheriff in Town” mentality Aggressive enforcement for all employers Higher penalties; nasty press releases

“Regulation by shaming is very effective” says OSHA’s 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 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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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 OSHA’s

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 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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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


The Wage and Hour Audits Are Coming: Be Prepared

Co-Sponsored By:

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

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