The SESCO Report – June 2010
DOL Initiates "We Can Help" Campaign — Aimed at Increasing Enforcement
The United States Department of Labor (DOL) provided another indication that it is ramping up enforcement efforts, in the form of its "We Can Help" campaign. "We Can Help" is designed to help educate the American workforce about their rights under the Fair Labor Standards Act (recordkeeping, minimum wage and overtime). The campaign includes, among other features, a web site with links to pages explaining the rights of workers and public service announcements in both English and Spanish by Hollywood stars including Jimmy Smits and Esai Morales.
The campaign's encouragement of self-action in employee recordkeeping, coupled with the impeding media blitz, will certainly increase complaints filed with the Department of Labor. To that end, the Department of Labor recently added 250 additional investigators (a staff increase of approximately 33%).
On April 1, the Secretary of Labor, Hilda Solis, kicked off the campaign in Chicago, Illinois. Excerpts of her remarks include:
"One of the reasons I took this job (Secretary of Labor) was to stand up for hard-working families; to ease their struggles and ensure that all workers are treated fairly. As I said on my first day... there is a new sheriff in town. And, this sheriff believes that workplace enforcement is not only our responsibility (Department of Labor), it's our moral obligation! I have already added 250 investigators in the Wage-Hour Division alone... and I'm not done yet! I have a message for those employers... those who break our nation's labor laws, and prey on vulnerable workers: It ends today! And to every working man and woman in America who has been taken advantage of, but has been too afraid to come forward... know this: the Department of Labor is on your side, and we can help! If someone comes into your house and steals from you, you could and should call the authorities. Your wages are no different. If someone is stealing them, you can and should call us.
"Starting today, my staff will conduct outreach to vulnerable workers in a broad range of industries that include: construction, apparel, manufacturing, restaurant, healthcare, home healthcare, hotels and motels. We're also working with community and faith-based organizations and advocacy groups throughout the country to educate workers on their rights. We will use public service announcements, workers' rights videos, posters, publications and billboard advertisements to get the message out.
"So, my message to all workers today is... the time for being afraid is over. You have rights, and WE CAN AND WILL HELP!"
It's estimated that nearly 70% of employers are in violation of the Fair Labor Standards Act and coupled with the fact that the Department of Labor is now mounting a campaign informing the American workforce about their rights, as well as where to call, it's imperative that employers know, understand and comply with the Fair Labor Standards Act. Compliance is attainable and affordable.
As we have reported in the past based upon our own Wage and Hour representation/case management and auditing of SESCO clients, some of the more common violations/traps include:
· Improper use of the Executive Exemption for managers, assistant managers
· Creating independent contractor relationships that do not meet the IRS, DOL or state agency requirements
· Improper use of the Administrative Exemption based upon confusing "discretion and independent judgment" and use of highly-specialized advanced skills such as positions to include accounting, human resources, purchasing, marketing, business office management and other non-exempt positions
· Not paying for pre-work or post-work
· Automatic deductions for meal and rest periods
· Not calculating compensable time to include travel time, homework, after hours and on-call time
· Not calculating overtime on non-discretionary incentives and bonuses
· Misuse/misunderstanding of partial exemptions (overtime only) coverage to include the Motor Carrier and Retail Exemptions
Key points to remember include:
· The onus is on employers, not employees, to track hours worked by non-exempt employees. The campaign is advising employees to track their hours so that overtime is paid correctly. If there is no official time record, a Wage and Hour investigator will "interview" employees or take at face value the employee's time records. It is then the responsibility of the employer to refute verbal or written allegations regarding time worked. Therefore, employers should have specific policy and requirements as relates to the proper recording of compensable time on a daily basis to be able to defend allegations.
· Conduct a thorough review of all employees/positions pay plans to determine the practical application of their exempt/non-exempt status. Ensure that all positions are properly classified as overtime violations back two (2) or three (3) years for employees being paid on a salary basis who are officially non-exempt can be extremely costly.
· Monitor and edit timecards/time records closely. Ensure that time is edited appropriately to include pre-work, post-work and any deductions for rest periods or meal periods. For any period of time to be unpaid, it must be at least thirty (30) minutes in length and uninterrupted. All breaks less than thirty (30) minutes must be paid.
· Ensure that overtime is computed properly, re: you cannot average workweeks, there is no such thing as "comp time" – re: time off in lieu of overtime (in the private sector), overtime must be computed on all incentives to include commissions, bonuses and spiffs and compensable time includes travel time, after hours work, on-call time and pre-shift work activities and post-shift work activities.
SESCO provides the following Wage and Hour consulting services:
· Represent clients before federal and state Departments of Labor/agencies
· Conduct Wage and Hour audits to include thorough follow-up reports with specific staff recommendations for compliance
· Hotline to support daily or as necessary, questions on Wage and Hour regulations and employee pay practices to ensure compliance
Stepped-Up Enforcement Means More I -9 Audits and Increased Penalties
A former city council member and owner of Pan American Insurance in El Paso, Texas is appealing a $33,000 fine imposed on his insurance company last year by Immigration and Customs Enforcement (ICE).
Inspectors found 31 administrative errors in the company's I-9 forms. Some of the mistakes lacked the signature of the authorized representative of the employer, while others didn't have the hire date or the employee's initials. The fine is not related to the employment of undocumented immigrants but rather the integrity of the employment records.
This is an example how the current administration is using enforcement of existing and new regulations to fine employers who are not in compliance with federal employment laws. The federal government has shown increased interest in auditing I-9 forms and increasing penalties for infractions.
I-9 forms establish a worker's identity and eligibility to work in the United States. All employees must fill out and sign the form within the first three days of employment, and employers are required to retain the forms and make them available for inspection when requested.
Given the high volume of I-9 forensic audits conducted by the U.S. Immigration and Customs Enforcement (ICE) agency of the Department of Homeland Security, employer penalties for serious and technical violations for fiscal year 2010 are projected to far exceed those of fiscal year 2009. The agency is conducting more audits and using auditors trained to find paperwork errors.
Employers of all sizes have been subject to the audits. Some businesses come to the attention of ICE when employees claim their employer has hired illegal aliens. The industries receiving the most attention include: construction, manufacturing, landscaping, hotels, agriculture, food processors, and government contractors.
The government will send an employer a three-day notice of inspection (frequently accompanied by a subpoena) asking for original I-9 forms for all employees and former employees within the I-9 retention period, a list of everyone on the payroll along with their dates of hire and Social Security numbers, IRS quarterly wage reports (941 form), and Social Security Administration no-match letters and responses. After auditors have reviewed the forms, employers will receive notices of any violations. Depending on the nature of the violations, employers might have the opportunity to correct the problems or pay a settlement fine.
The best defense is a good offense. We recommend that you train specific employees to work with the I-9 forms, fix any problems you find, and commission an independent audit of the I-9 processes on a regular basis. The Human Resource Audit provided by SESCO to our retainer clients includes an audit of your company's I-9 process. Non-retainer clients may request audits on a quoted fee basis.
Employee Motivation Becomes More Important Than Skills or Experience
According to new research, organizations are seeking people/applicants who have good motivation and fit within the organization's culture and team. It's apparent that organizations are seeking applicants:
· Who show up on time and want do a good job
· Who are self-motivated/have a good work ethic
· Who are polite, professional and get along with team members
You would think that these basic needs would be easy to find but they are not. The survey included more than 800 senior human resource professionals and other business leaders throughout America to learn what contributes most to performance and organizational success. The results are as follows:
· Organizational culture/motivational fit – 31%
· Interpersonal skills/behavior – 26%
· Critical reasoning/judgment – 21%
· Technical skills – 12%
· Relevant experience – 11%
Organizations can properly and accurately assess motivation, interpersonal behavior, critical reasoning and judgment through the use of pre-employment assessments and tests. These tools are extremely accurate as well as inexpensive. SESCO provides pre-employment assessments and tests. Contact SESCO to discuss tests to match specific position/industry needs or visit our website at www.sescomgt.com . Click on "Employee Testing and Background".
Healthcare Reform Aftermath
As well publicized, on March 23, 2010, President Obama signed into law the "Patient Protection and Affordable Care Act (PPACA)". Less than a week later, Congress passed the Healthcare and Education Tax Credit Reconciliation Act of 2010 – commonly known as the "fixer" bill. SESCO has authored a new white paper entitled, "An Employer's Guide to Healthcare Reform." In addition to providing a detailed timeline of employer responsibilities (literally through January 1, 2018), SESCO also discusses new realities employers will face in the landscape of compliance responsibilities to include:
· Offering vs. non-offering
- Plan costs vs. penalty costs
- Affordability penalties for offering firms
· Plan cost considerations
- Purchasing traditional insurance
- Sending employees to the exchange
· Other benefit considerations
- Long-term care
- Retiree prescription drug plans
- Compensation; salary vs. benefits
- Consumer-directed account options
SESCO's new white paper will be mailed to all SESCO retainer clients at no charge. Non-retainer clients can order this new healthcare reform guide for a fee of $35.00.
Special Thanks to SESCO Clients!
Stonehill Franciscan Services
Town of Big Stone
Big Stone Gap, VA
Bear Creek Nursing Center
Steele Truck Center, Inc.
Ft. Myers, FL
All Heart Home Health Agency
Mary E. Bivins Foundation
Southwest Virginia Emergency Medical Services Council, Inc.
SESCO Client Inquiry – Staff Response
Question: Is the COBRA subsidy still available to terminated employees?
Answer: The COBRA subsidy was established by the American Recovery and Reinvestment Act of 2009 to make continuing health insurance coverage more affordable for individuals who are unemployed due to an involuntary termination. Qualifying individuals only pay 35% of the COBRA monthly premium, with their employer subsidizing the remainder (65%) of the premium. The subsidy is available for up to 15 months following the individual's loss of coverage under a group health plan. The employer is "reimbursed" by claiming credits on its quarterly federal tax report. Eligibility for the subsidy was initially supposed to have expired December 31, 2009. There have been several extensions of the deadline, with the most recent being May 31, 2010.
In early June, Senate Democratic leaders unveiled a revamped tax bill that, like a House-passed measure, omits an extension of the COBRA subsidy. That omission makes it less likely that lawmakers will again extend eligibility for the COBRA subsidy beyond May 31. While the tax bill could be amended on the Senate floor, legislators have grown more leery of approving measures that would boost the federal deficit.