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The SESCO Report – September 2013

Four Wage-Hour Challenges/Misconceptions

Financial liability associated with non-compliance to the Department of Labor's Fair Labor Standards Act as enforced by the Wage-Hour Division continues to be the number one financial liability for employers
outpacing OSHA, Equal Employment/discrimination claims and other labor and employment penalties. There are a number of reasons for this significant increase in not only claims but also non-compliance. Primarily it has been driven by plaintiffs' attorneys and Wage and Hour marketing/communications via the Internet.

Based on SESCO audits throughout the country, the following are four (4) common challenges/misconceptions.

1. Off-Clock Work — Some pre-shift or post-shift activities by an employee, even though not required by the employer, may be compensable if these activities are "an integral and indespensable part of the principal activities." For example, this pre or post-work activity may include:


Work-related phone calls/emails or other communications with supervisors or employees

Mandatory meetings or "voluntary" meetings which the employee perceives that if they miss they will be "penalized."


SESCO recently represented a large call center wherein the Department of Labor determined that employees who voluntarily showed up to work early and subsequently cut on their computer and then went to the break room waiting for their shift to start determined that this time spent was directly related to their job — the computer had to be cut on, up and running so the employee could work at 8:00 a.m.

SESCO Staff Recommendation — To minimize the risk of claims for uncompensated or "off-the-clock work," employers should implement policies and timekeeping systems that require all time to be recorded and inform employees that they may be subject to discipline for failure to follow these policies. Such policies include when an employee should and should not clock in for work, not working overtime unless approved, not clocking in prior to the shift and other policies and procedures. Employers also need to know when this "off-the-clock" work is actually compensable such as required meetings, training or other such work time that benefits the employer.

2. Travel Time — Employers generally do not need to pay for travel time between the employee's home to the first job site (either the main office or the job site such as a separate location) unless the travel time is over and above the normal travel time or commute time. However, travel between job sites, such as construction sites, patient homes or delivery sites is compensable time. In addition, if an employee performs work activities at home, such as paperwork or scheduling activities, home-to-work travel may also become compensable by the operation of the continuous work day rule.

SESCO Staff Recommendation — Employers such as in-home healthcare, construction, retail, sales, delivery, transportation, etc. need to thoroughly understand travel time regulations to include travel during the day and overnight travel.

3. Independent Contractors — Misclassification of employees as independent contractors is of major concern. Many employers feel that utilizing "independent contractors" avoids taxes, healthcare, workers' comp and a number of other costs. However, many employers are in violation in that they misclassify independent contractors who truly are considered employees and thus are subject to these payroll and other related employment costs.

Employers need to know that the misclassification of independent contractors is a major area being targeted by the Department of Labor. And with the reporting of 1099's, there is a mechanism for not only the IRS, but the Department of Labor to target investigations.

SESCO Staff Recommendation
— In determining whether an organization/individual is a true independent contractor, you must consider areas such as:

Degree of control exercised by the employer.

Does the contractor provide tools, equipment, supplies and subsequently invoice for the work?

Is there an opportunity for profit or loss?

Is there permanency or a regular relationship?

Is the work being performed an integral part of the employer's business?

Does the independent contractor offer similar or same services to the business or public at large?

Does the independent contractor promote and market services via yellow pages or other venues?

The fines and penalties can be significant, but also one of the major liabilities lies within workers' compensation or injuries to the worker him or herself, to others in the workplace or to your customers.

SESCO Staff Recommendation - Ensure that all independent contract relationships (any individual/business being paid through payables) is reviewed for compliance by a SESCO staff consultant. Further, ensure that all independent contract relationships are bound with a formal contractor agreement which not only addresses the Department of Labor regulations, but also ensures that the contractor is properly insured and compliant.

4. Employment Liability Insurance Does Not Cover Wage and Hour Violations — One of the biggest surprises an employer gets is when they seek to utilize employment liability insurance to cover Wage and Hour violations/non-compliance and the insurance company denies the claim. Additionally, employers are surprised to learn that severance agreements and releases cannot prevent employees from pursuing the employer for Department of Labor violations to include Family and Medical Leave and Wage-Hour.

The basis of these "surprises" lies in the fact that employees cannot agree to waive their rights under the Fair Labor Standards Act to include overtime or other violations. Even if an employee volunteers that they will waive their overtime, in light of a DOL investigation the Department of Labor will require the employer to forward the back wage liability assessed to the Treasury Department.

SESCO Staff Recommendation
— Audit all pay systems/methods to determine whether or not a position is truly exempt (can be paid on a salary without overtime basis) or nonexempt which requires overtime for hours worked over 40 hours in a workweek (federal). Even if an employee comes to you and requests to be paid on a salaried basis for whatever reason, the employer is still held liable even if the employee requests and/or agrees to a pay plan which is non-compliant. Further, carefully review and consider all employment liability insurance as many agents promote complete and total coverage. Employers need to be aware of what is actually covered and what is not. Many times, policies and deductibles are not worth obtaining. Finally, be sure that your SESCO staff consultant reviews and/or prepares the severance agreement and release to ensure compliance with both federal and state employment regulations.

Nine Needs Employees Want From Their Managers — And Five Things They Do Not

Different employees crave or need different things from their managers. As we know from utilizing the DiSC Personality Profile in screening and hiring as well as in team building, every employee and manager has a unique personality and subsequently a unique relationship.

As such, some employees want a hands-on boss who directs their every move. Other employees want to be left alone and be self-directed. There are no right or wrong profiles but the key is hiring the right person/personality for the job as well as building the proper team relationships. SESCO can assist in helping you match applicants to jobs via the DiSC personality assessment tool.

Outside specific individual personality differences, there are consistent needs from employee to employee that they want from their leadership. Universal employee needs are as follows:

1. Honesty — Ninety percent (90%) of employees say that they want honesty and integrity from their manager. Lies, secrets, isolation are the biggest killers to credibility.

2. Fairness — Eighty-nine percent (89%) want their manager to be fair and to be consistent and to hold all employees accountable to the same standards. As we at SESCO have communicated, the "kiss of death" to employee morale is allowing mediocre or poor behavior to hang around in the workplace — and to compound this by giving across-the-board raises.

3. Trus
t — More than eighty-six (86%) of employees want to trust their leadership and subsequently be trusted by their manager.

4. Respect
— Eighty-four (84%) of employees want to be respected and also want to respect their manager.

5. Dependability — Eighty-one percent (81%) say they want to be able to count on their manager when needed. Is the manager available? Does he or she respond timely? Does he or she provide training/mentoring or other support? — Is the manager going to bat for the employee?

6. Collaboration — Seventy-seven percent (77%) of employees want to be a part of their manager's team and to be asked to contribute ideas and solutions. Shutting employees out (paticularly the younger generations) will shut them up and send them out to another employer.

7. Genuineness — Seventy-six percent (76%) surveyed want their manager to be a true/genuine person. Employees sometimes spend more time with their boss than their families — they don't want a phony, they want someone who is genuinely interested and caring and straightforward.

8. Appreciation — Seventy-four (74%) want their managers to appreciate them for who they are and what they do. As we teach supervisors and managers, employees want MMFA — Make Me Feel Appreciated. When was the last time you as a manager said, "Thank you!" or "Great job!" to employees — especially in front of their peers?

9. Responsiveness — Seventy-four (74%) want their manager to listen, understand and respond.
These are all qualities that a good leader/ manager can and should provide to their employees. And what is so important about these nine (9) qualities is that they don't cost the organization a dime!

Five (5) things that employees don't need:

1. Friendship — Only three percent (3%) want their manager to be a friend. As in parenting, it is more important to be a leader, a mentor, an example — not a buddy. Typically, buddies are not respected.

2. Conversation — Only fourteen percent (14%) want to have interesting conversations with their managers. Small talk, non-work related conversations, etc. are not important and certainly do not solidify your role as a leader/manager.

3. TLC — Twenty-four (24%) said that they want their manager to "care for them." That doesn't mean you should be cold, detached or uninterested, but most employees aren't looking for a best friend in their boss. Compare this "caring" to caring as noted above in that employees want to know that you care about the employee's professional/business success and care about what they think and believe about their job.

4. Emotional Support
— Twenty-five (25%) want emotional support from their manager. Employees typically look for that among co-workers rather than a boss. However, there may be at times employees will come to a well-respected boss for advice. At that time you should be available — but don't seek and/or provide unsolicited emotional support or advice.

5. Cheerfulness — Only twenty-eight percent (28%) want a cheerful or happy manager. They would rather respect you than like you. However, be careful in that the way you treat employees — with respect — is critical and necessary to your credibility. And frankly, a "How are you today?" with a smile and cheerful voice can go a long way. But it does not replace respect.

No one is born knowing how to be a supervisor. No other job can, frankly, prepare you for this challenging assignment. And now you have to worry about not only your performance, but you have to worry about how others perform as well. The bad news is the manager is the most difficult position in any organization. The good news is that managers can be developed and a successful leader is one of the most rewarding and satisfying jobs a person can hold.

SESCO Staff Recommendations — Encourage your employer to provide practical, hands-on management development training. SESCO provides a full line of classroom and online development programs especially designed for the front and mid-line managers/leaders — and it is very inexpensive.


Dish out praise — only when it's due

Lead by example

Engage workers, re: ask them what they think, challenge them with assignments and create opportunities for them to grow and develop.

Conduct employee retention interviews — don't wait for employees to leave before you ask them how things are going. Meet with employees regularly, re: quarterly, no less than twice a year, and seek feedback, compliment high performers and inspire high performers to do more.

Create trust — Employees are happier and work harder when they trust and believe in their leaders. They (not you) decide which leaders that can be trusted based on how their employees, company vendors, customers are all treated. Always ask yourself, "Do I treat people at work with respect?"

Special Thanks to New SESCO Clients!

Powell Valley National Bank
Jonesville, VA

Brenntag Mid-South, Inc.
Henderson, KY

American Subcontractors Association
Alexandria, VA

Mountain Mission School
Grundy, VA

RoseWood Village
Charlottesville, VA

Slocum Adhesives
Lynchburg, VA

Sesco Client Feedback

"SESCO is always very friendly and informative." ~ Emily Baxley — Bryan Honda — Jackson, MS

"SESCO's services were most useful in providing policy and procedures. SESCO is thorough in their work. My overall opinion of SESCO is they are excellent." ~ David Meade — The Health Wagon — Wise, VA

SESCO Client Inquiry — Staff Response

Question: When an employee is terminated, how soon must we provide the final paycheck?

Answer: The requirements for final compensation to a terminated employee vary from state to state. Some states require that a final paycheck be issued on the last day worked, while others allow up to one month for final compensation. In situations where commissions or incentives are part of the compensation, the time requirement is normally extended. Some states make a distinction as to the circumstances for the employee's separation. Generally speaking, the employer may be required to issue final pay sooner to an employee who is discharged, compared to an employee who resigns. Also, be aware that some states require that unused vacation or paid-time-off be included in the final pay. For questions about a specific situation, contact SESCO Management Consultants.

SESCO's hotline is made available through our monthly service agreement.

Special Pricing on Federal/State Posters

Five-in-one (less than 50 employees) (laminated)

Six-in-one (50 or more employees) (laminated)

Federal Posters: $12.95

State Posters: $14.95

SESCO's Fall Seminar Series 2013

Richmond, VA

September 25-26, 2013
Effective Leader/Manager
Virginia Community Healthcare Association

October 9-10, 2013

Human Resources — The Basic Course
Virginia Community Healthcare Association

November 14, 2013
Human Resources — The Advanced Course
Virginia Community Healthcare Association

Bristol, VA

November 7, 2013
Human Resources — The Advanced Course
Courtyard by Marriott

SESCO HR, Leadership, Sales and Customer Service training programs are available for purchase for in-house use. Contact Bill Ford at 423-764-4127 or by email

SESCO Produces Leadership/HR DVD

SESCO's "HR-Leadership" DVD contains four (4) topics:

Wage and Hour Regulations (the basics)
Harassment (required training)
Screening Do's and Don'ts
Coaching/Termination Do's and Don'ts

The DVD is designed for HR executives and frontline, mid-level and top-level managers. The DVD (1 hour) includes training materials (total pages 94).

SESCO Retainer Clients
DVD: $99.00
Printed Bound Handout: $7.00 each
Plus Shipping

SESCO Non-Retainer Clients
DVD: $149.00
Printed Handout: $10.00 each
Plus Shipping

Order by calling SESCO at 423-764-4127, emailing or by clicking HERE