Being an employer in America is becoming a more onerous proposition. For an update on employment liability issues and how they are being used against the owners of businesses and medical practices I turned to expert Paul Edwards, CEO of The Center For Employment Dispute Resolution. – Ike Devji
Tool # 1) Free Employee Secret Time Keeping App for smart Phones with “One Tap” access to file DOL complaints against employers.
Tool # 2) ”Bridge to Justice” Campaign automatically provides a toll free number automatically connecting disgruntled employees to a referral network of employment law attorneys.
I’ll sit here for a moment before I continue while you go get the Tums. Also, don’t worry because I have the HR equivalent of antacid for these new workplace issues and we are going to share them here.
If you’ve seen our speakers or have signed up for CEDR’s Free ESS training series (Employers Solutions email series), you’ve heard us discuss the importance of keeping accurate time records and understanding your state and federal rules about wage and hour issues such as bonus pay, travel time, overtime, breaks and meal periods, and seminar attendance. You have also heard us warn of the exponential increase in the number of employment claims being filed each year. Well, the Department of Labor (DOL) has now knocked the threat level up a notch.
There is good news here – There are steps you can take to address the problems that make you vulnerable.
At the end of this article, you will find free and easy to download solutions to the issues we’ve raised, and additional information on a valuable resource for expanding your knowledge about practical employment issues that affect you day to day. We offer a once per month Employer Solution Series, sent via email. Through CEDR’s free employer training series, thousands of dentists take about five minutes to absorb guidance on everything from meeting new threats, to how to hire and fire better. The first in the series is a thorough explanation of At-Will employment, and I’ll bet you’ll learn that it doesn’t mean what you think it does!
The DOL Situation and how it affects you.
ALL EMPLOYERS NEED TO BE AWARE of two new strategies by the DOL which will add fuel to the already blazing employment litigation boom. First, the DOL in May of this year released a free Time Keeping App for iPhones and iPod Touch that is already downloadable at their website (http://www.dol.gov/whd/). This app is designed to allow employees to secretly track – and calculate the wages their owed for – hours worked, including overtime. The app also has other employee-helpful features, such as break time tracking and links to the DOL’s web resources, including their automated claim filing system. However, like most apps, it does have its problems. For instance it does not handle complex overtime calculations such as required for bonuses or shift differential pay, and it does not help with state variations. So, where state rules differ from federal rules (which they do often), the app will not be accurate.
Worse yet, the DOL is encouraging employees to keep their own independent records of their work time, purportedly to assist the department to challenge an employer’s records in the event of a Wage and Hour investigation. We don’t have to think too long to dream up ways this new app will create chaos and conflicts for employers during any type of wage and hour investigation or claim. And where records or stories conflict, the employee’s interpretation will generally win. Guess who else wins when unnecessary conflicts arise? You guessed it – the attorneys.
That leads us to the second new strategy from the DOL which began in December 2010. This initiative, called the “Bridge to Justice” stemmed from what the DOL is calling an “unprecedented collaboration” between the Wage and Hour Division and the American Bar Association. This referral service creates a direct link between disgruntled employees and local attorneys who want to represent them – even when the DOL has passed on pursuing their claim. Need another Tums yet?
In past articles, we’ve reported about the DOL’s zealous campaign to “step up efforts to enforce basic employment protections” by adding hundreds of new investigators and a much bigger budget to pursue even small employers, and even more complaints. The result has been a huge success for the department, with an unprecedented level of claims being filed last year, and millions of dollars in damages and penalties being recovered. Stepping up their technology has already helped with the huge uptick in complaints which (not surprisingly) coincided with the DOL’s new web-based complaint filing system. With these new tools, they are expanding their capabilities in the same direction.
In addition to the evidentiary conflicts that will be created, there is also a strong likelihood that these tools will increase the number of frivolous and unmerited complaints, which unfortunately, can also be quite costly to defend, even if you win. When an employer lets an employee go for a legitimate reason, the employee may with the click of a few key strokes easily file a complaint with the DOL, just to see what happens. And now more than ever, that complaint can pay off.
The threat to employers is not helped by the fact that the wage and hour rules are not easy to understand. Many employers make the honest mistake of thinking their payroll company or accountant has them covered. One recent caller into the CEDR Solution Center had been advised by a nationally recognized payroll service that he need not worry about bonuses affecting overtime because they are not counted. This is patently untrue when the bonus is used as an incentive for performance (which was true for this dentist and about 98% of most practices). So it is important that the one (YOU) that writes the checks (whether for payroll or attorney fees) expand your knowledge on these topics, and get reliable support.
Let’s explore a bit how the new app might impact an audit of your payroll practices. As you can imagine, DOL investigations are burdensome to say the least. When a business gets audited, it is required to produce a kitchen sink full of sensitive information about the business, its employees, and its payroll practices going back up to 3 years for all employees. If you are not retaining all of the records demanded, you are already in trouble if they come knocking, without even having paid anyone incorrectly. That’s right, just keeping the right records is part of the federal requirements for all employers. Here’s a sample of the records that are demanded during an investigation by the DOL. Check below to see if your bases are covered. Better yet, ask for the free guidance and checklists at the end of this article.
1. Legal Name of your business (by the way, the legislators in many states have removed the protection of LLC’s and the like when it comes to pay issues)
2. Address and Phone numbers of all offices and officers
3. Gross revenue statements for the last three years
4. Daily Records of all hours worked including timesheets for all employees for the past 24 months
5. Weekly, biweekly, or semiannual payroll detail journals including all employees who worked during the past 24 months showing hours worked, gross pay, deductions, tips, bonuses and net pay totals
6. List of all employees that performed work during the last two years, addresses and phone numbers, rate of pay and hire date.
7. Names and Titles of Salaried employees considered exempt from overtime
8. Information on Bonus and uncompensated training
9. Names, dates of birth and addresses with telephone numbers of all minors under age of 19 that have worked for you in the past 24 months.
OK, I’ll wait while you pop another Tums.
At best, you lose a considerable amount of production as you and your management team wades through the investigation, and then deals with the negotiation and defense if and when mistakes are inevitably discovered. Next, the DOL’s new “one tap” app which makes it easier for employees to file complaints now also then makes your defense of such claims harder. Why harder? Because now you also have to contend with any discrepancies between the secret time record your employee has been keeping, and the one they were keeping at work.
The DOL states in their news release:
“Users conveniently can track regular work hours, break time, and any overtime hours for one or more employers. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records.” They add: “This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.”
So, yes, the DOL is encouraging employees to keep a separate, non-verifiable record of their time. We already know how hard it is to get employees to clock in and out and to keep track of their time. Imagine an investigation where the employee says, “Well I may not have clocked in and out on their system, but I did use the DOL app and here is the proof that I was at work.”
Now let’s add to the above, the gross effect of the “Bridge to Justice.”
In those 10,000 per year instances where the DOL does not chose to pursue the complaint against the employer, either for lack of evidence or lack of resources, they will automatically refer the employee to this newly formed network of local employment attorneys. Wow, if only a dentist could catch this kind of government sponsored “bridge to dental health” referral!
As many times as I have said this, I feel like it bears mentioning one more time. These are hard times and attorneys are graduating at a rate of 44,000 per year, as compared to the 6500 dentists graduating each year. My point is that lawyers are as under-employed as any class of professionals in the United States and desperate times call for desperate measures. So an employee with a questionable case is more likely in today’s economy to find an attorney that will take a marginal or baseless employment case. And what the DOL has done is create a bridge to them.
So instead of you wasting as much time as I have fuming over these latest developments, which is part of my job, let us take our third Tums together and get down to some solutions. Ready?
Three Critical Steps You Can Take To Protect Your Practice And The Free Download:
It is absolutely critical we address the following and as simple as it seems, these are critical steps you can take right now:
- Employers should consider explicitly telling employees through a written and acknowledged policy in their employee handbook how important it is to keep accurate time records and that falsifying time records will result in termination.
- Employers must also require that employees report any discrepancies, questions about their time worked, or complaints to you promptly, thereby giving you an opportunity to address and correct any mistakes. This is your “safe harbor” clause and provides a valuable defense if the discrepancy is NOT reported and a former or current employee files a complaint.
- When an employee is not properly clocking in and out, you need to address this issue with the employee and do so in writing.
As employers, we not only need to keep time records as required by the Federal Labor Standards Act, we need to keep the most credible, accurate version of the records that is possible for our workplace. If you are interested in learning more about this subject, or in learning whether you’re properly complying with wage and hour regulations, we’ve put together a free wage and hour guide that summarizes what you see here, and includes additional guidance for performing a self check of your pay practices. Sign up for CEDR’s free once per month ESS series designed to expand your knowledge on employment issues (not just legal) and to help you be a more effective employer/manager and also receive the wage and hour guide by going to www.cedrsolutions.com/PDWage.