Employers Beware: The Department of Labor is Out to Get You

Employers often think they understand wage and hour laws, but the fine print is more complicated than they realize and can lead to serious legal and financial exposures.  When the new Secretary of Labor announced that “There’s a new sheriff in town,” she wasn’t kidding.  As Emloyment Law Attorney Rachel Weiss explains, employers would be wise to heed the Secretary’s warnings and get good employment law counsel to review their polices and procedures now, BEFORE the exposure exists. –  Ike

Employers Beware:  The Department of Labor is Out to Get You

 This is not a threat, it’s reality.  The DOL’s focus has shifted from helping employers comply with the Fair Labor Standards Act (FLSA) to nailing those who do not.   

This is also not a secret.  In fact, watch for public service announcements in multiple languages featuring the Secretary of Labor and celebrities urging employees to call their hotline if they believe they are being paid unfairly.  (See for yourselves at http://www.dol.gov/wecanhelp/psa.htm)   Aptly named the “We Can Help” campaign, this initiative was launched just one week after the DOL announced that it is abandoning its practice of publishing Opinion Letters, which historically have provided important guidance to employers.  Reliance on DOL Opinion Letters has also served as a defense to liability for back-wages and other damages.  Instead, broader “Administrator Interpretations” will be issued that will not address the finer points of particular policies and practices, thereby requiring litigation to determine their application to the facts of each case.  

Then there’s the “Plan/Prevent/Protect” initiative, which proposes new regulations that will require employers to audit their pay practices, document how each employee’s exempt status and pay calculations are determined as well as the reasons why certain individuals are categorized as independent contractors and not employees.  Employers would need written plans and be required to track how they are implemented.  The failure to do all of this to the DOL’s satisfaction will be deemed noncompliance and result in sanctions and/or costly litigation.  The pending Employee Misclassification Prevention Act (H.R. 5107, S. 3254) seeks to impose similar obligations. 

If you think I’m trying to scare you, you’re right.  Most employers also don’t realize that once a violation is established in an FLSA lawsuit, the burden is on the employer to prove why double damages should not be awarded, and the employer will be liable for the employee’s legal fees.  Moreover, the owner of the company, or whoever was responsible for the decisions that led to the violation, will be held personally liable along with the company, regardless of laws that limit personal liability in other contexts.  Unlike cases brought under Title VII for discrimination, there are no administrative hoops to jump through before employees can go to court.  And remember, too, that wage and hour claims are not usually covered by insurance. 

Now more than ever, employers need to develop not just a plan for compliance, but a culture of compliance.  Consider conducting an internal or external audit of your employee classifications and pay practices, and seek advice from an employment attorney.  Wage and hour laws are complex and nuanced, and the DOL clearly is not interested in educating you.  If that were the case, it would have created an employer “help desk.”  Instead, it beefed up its enforcement staff with 250 new investigators and got famous people to reach out to employees. 

Lest there be any misunderstanding, I do not mean to imply that the DOL should not be an advocate for employee rights or that employers should be able to shirk their obligations under the FLSA.  Just consider this a public service announcement for the other side.    

Rachel Weiss practices labor and employment law with the law firm of Gammage & Burnham in Phoenix.  If you have questions about wage and hour issues, you can reach her at (602) 256-4448 or rweiss@gblaw.com.

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