Resolution #1:  I Will Self Audit Our Company’s Wage-Hour Practices

According to its strategic plan, the Wage and Hour Division of the US Department of Labor will continue to aggressively pursue employers who:

• Fail to pay overtime where required
• Improperly consider employees to be exempt from overtime
• Misclassify employees as independent contractors

Being snagged on wage-hour violations hurts, not just because it ends up costing money but also because a vigilant company can discover these types of problems fairly easily. Trying to root out harassment or embezzlement can be difficult because those activities are frequently done surreptitiously.  On the other hand, HR and company management can easily find out if there are wage hour problems by looking at payroll records, employee duties and hours worked.  There is little excuse for being surprised by the findings of a DOL audit.

The idea of a self audit is to do what the DOL would do if it showed up for an audit—but do it yourself now while you have time to correct mistakes or reconsider the risky things you have been doing on purpose. Self audits can be done by your employment attorneys. They can also be done in house –we’ve taught lots of clients how.

For a refresher on the Fair Labor Standards Act, read this booklet and this booklet.  For up to date wage-hour information and developments follow the Fisher & Phillips Wage and Hour Law Blog.

Resolution #2:  I Will Review Our Company’s Social Media Policy

Of course you must first be sure that have a social media policy.   No company can afford to be without one. It does not need to be extensive but it must be carefully written because last year the NLRB issued a number of rulings that create a confusing minefield.  Here is a report issued by the NLRB last year, which summarized the cases decided by the NLRB though the first half of 2012.  Note that at the end of the report there is a social media policy that the General Counsel of the NLRB found to be completely legal!  Resist the urge to simply adopt it verbatim—you should still tailor it to your operation and run it past your labor lawyer.

Resolution #3:  I Will Take Steps to Union Proof Our Company

Unless you have been living under a rock you know that the NLRB, packed with union leaning appointees, last year tried to:

•  Force every employer to post a notice informing its employees of the their right to join a union.
• Change the rules so that employers can be ambushed with a union election on 14 days notice.
• Require all employers to publicly thank unions for all they have done for society (OK maybe the NLRB didn’t actually try to do this but you know they really wanted to).

Meanwhile the DOL tried to amend its regulations to require  your labor attorneys to file reports telling the government how much you paid to them for helping keep you union free.

These initiatives did not come to fruition but expect them to be reintroduced this year.

To begin the union proofing process, start by learning the basics about the law of union organizing by reading this booklet on the union organizing aspects of the National Labor Relations Act. Also read this booklet on unfair labor practice liability under the National Labor Relations Act.

Then perform a union vulnerability audit on your own or with the help of your labor attorney. Start by using this tool.   Many of our clients have made changes based on the audit results and those changes have helped insulate companies from union organizing.

Resolution #4:  I Will Schedule Management Training

When times are tough training budgets are one of the first things to go.  Times are still tough but the aggressive government enforcement agenda makes training too important to continue to ignore.  What to cover?  At a minimum you must conduct a refresher on harassment and discrimination prevention.  In the early years such training lasted several hours.  It still warrants time but you can really cover the basics in less than two hours.  Use that extra time to cover union awareness.  That means you educate supervisors and managers about unions and how to spot the early warning signs of union organizing.  That training must also cover “Management 101”.  In that segment supervisors and managers will learn good communication skills and how to properly use progressive discipline.  It should be everyone’s goal after the training to make the workplace so comfortable that your employees would never even consider bringing in a union.  Bonus:  those same management techniques learned in the training will reduce employment claims and make it easier to successfully defend employment claims.  Do the training in house, use your labor attorney, or use some combination of the two.

Resolution #5:  I Will Eat Less Meat and Dairy and More Fruits and Vegetables

Oops, sorry, this one belongs on a different resolution list.  But while we’re on the topic this resolution has nothing to do with animal rights—just living longer and healthier.  Don’t believe me–check out this documentary.

The Real Resolution #5:  I Will Review the Effects of Obamacare on the Company’s Benefit Plans

You will likely need help with this one.  Here is a basic timeline for compliance with the Affordable Care Act.  We’ve walked many clients through the maze.  Using a qualified law firm is best but a consultant can also work well but you must be careful when the consultant you are relying on also sells or brokers insurance products.  The good vendors will remind you, (usually in the fine print) to check with your own benefits attorney.

I hope this list of resolutions is helpful and I would appreciate it if you could post any of your own suggestions in the comments section.

MYTH #1        “Oh, I’ll just put her on salary then I don’t have to worry about tracking her hours or paying overtime.”

In order to be exempt from overtime an employee needs to be paid on a salary basis but that employee must also perform duties that fit into one of the white-collar exemption categories.  That means the individual must be an executive, an administrator or professional.  Learn the legal requirements here.

MYTH #2        “My pay practice is fine because my employee agreed to voluntarily work overtime hours at straight time.”

Employers must pay non-exempt employees overtime at time and one half for all hours worked over forty in a workweek.  Employees cannot waive the protection of this statute. Even if the employee never complains, when an audited by the United States Department of Labor the employer will be ordered to pay the overtime and possibly liquidated damages and civil money penalties.

MYTH #3      “If a group of my employees start complaining too much about conditions around here I can just fire them—after all they are at-will employees.”

The National Labor Relations Act protects the right of employees to engage in concerted activity.  That concerted activity includes the right to get together as a group and discuss wages, hours and working conditions and complain to the boss about them, (and even go on strike!)  The National Labor Relations Board (NLRB) enforces the National Labor Relations Act and the law even applies to non-union companies. Get familiar with the National Labor Relations Act here.

MYTH #4        “Wage rates are confidential and I can fire anyone who discloses his wage rate to a co-worker.”

See the debunking of MYTH #3 above—employees have the right to discuss among themselves their wages, hours and working conditions.

MYTH #5        “My employee handbook is fine, I got it from a trusted source and I had my regular attorney review it.”

Years ago many attorneys could competently review an employee handbook for employment law compliance.  Now we have an activist NLRB that is declaring illegal certain language contained in most employee handbooks.  Common handbook sections on at-will employment, confidentiality, arbitration, after hour access to company premises, solicitation and distribution are being attacked as being in violation of the National Labor Relations Act.   Be sure an attorney who carefully follows the NLRB and is well versed in labor law reviews your handbook.

1. WATCH HOW YOU PAY PEOPLE

Two different initiatives have converged to make employers who pay improperly prime targets in 2012.

a. The US DOL Is on a Mission—And Has Funding

The Obama Campaign promised to beef up enforcement of employee protections. The President made good on that promise in part by funding increases for the Department of Labor (DOL). That’s the agency that enforces the Fair Labor Standards Act (FLSA). Even with a budget compromise in the works don’t expect that the DOL enforcement budget will suffer much.

Here in Las Vegas the DOL office was a “resident office” that was merely a satellite of the Phoenix District Office and was down to two or three investigators. Now Las Vegas is its own District. That means that we have a District Director, an Assistant District Director and are on track to have eight or more investigators. While the new District Director and Assistant seem like reasonable folks, make no mistake that they are here to enforce the FLSA. Keep in mind that, except for the daily overtime provision, the Nevada Overtime Law has fewer teeth than the FLSA. Therefore on many overtime issues if the couple of DOL investigators had never made it to your company your company had received a pass for many years.

Now you should get ready to have your overtime practices scrutinized. Expect to be questioned about why you consider certain positions to be exempt from overtime. Expect your timekeeping procedures and records to be questioned. Even if you are trying to everything right it is easy to make wage-hour mistakes and many good employers do.

What can you do right now? Perform a wage-hour self audit. The idea is to do what the DOL would do if it showed up for an audit—but do it yourself now while you have time to correct mistakes or reconsider the risky things you have been doing on purpose. Self audits can be done by your employment attorneys. They can also be done in house –we’ve taught lots of clients how. Just don’t ignore the issue.

b. States Lose Employment Tax Money When There Are Fewer Employees

Sure there are fewer employees because companies have done layoffs and are doing more with fewer people. Employers have also turned to outsourcing which can sometimes save money as well. But many employers also use independent contractors instead of employees. The risk is that you might “misclassify” an individual as a contractor when under the law he or she would actually be considered an employee. Whether you have been doing that for years or have just started during the economic crisis, remember that you are potentially at risk. Various Nevada agencies are aggressively auditing employers, including the Employment Security Department (ESD) and the Nevada Labor Commission. Expect the DOL to look at that issue too. When you misclassify an individual as a contractor you are subject to potential tax liability, overtime or minimum wage liability and the entire panoply of roll-ups. Benefits and ERISA claims are not out of the question.

What is your action step now? As discussed above, the wage-hour self audit is your best bet. And for this one be sure to obtain legal help—the test for independent contractor status is tricky and different government agencies use different legal tests.

2. WATCH HOW YOU HANDLE DISCRIMINATON AND HARASSMENT COMPLAINTS AS WELL AS ADA COMPLAINTS

In the last legislature, the Nevada Equal Rights Commission (NERC) faced the end of the road. Its funding was slashed and nearly eliminated. Even well before that happened the US Equal Employment Opportunity Commission (EEOC) opened a resident office here in Las Vegas. It had been well known that the EEOC felt that NERC was not aggressive enough with Nevada employers—especially with the evil casinos. Casinos never got a free pass from NERC, but that story gave the Federal Government a great excuse to spend money on a new EEOC office.

Now every Nevada employer, casino or not, will be hearing from the EEOC. Discrimination charges with merit, and therefore legal exposure, will still need to be dealt with by employers as before. But not long ago there were new regulations released by the EEOC regarding the Americans with Disabilities Act (ADA). Because of those regulations few ADA cases will now be won by employers simply because the plaintiff did not fit the technical legal defination of “disabled”. Therefore expect that the EEOC will take even marginal cases or those with little or no damages and try to make examples of employers who have not done the basics. By the basics I mean:

● Having a comprehensive and up to date discrimination and harassment policy.

● Performing regular and comprehensive training for supervisors on harassment and discrimination prevention.

● Using (and documenting the use of) a formal interactive process to deal with employees requesting an accommodation.

The EEOC must justify its new Las Vegas office—expect to hear from them.

3. ANTICIPATE AND BE READY FOR UNION ORGANIZING

Once again, here there are two converging factors, both of which require you to be vigilant.

a. Unions Are Losing Ground and Need Members Who Will Pay Dues

It’s no secret that unions are at their lowest membership levels ever. Membership has continued to decline, from 12.3% of the workforce to 11.9%. Only 6.9% of private sector employees are now organized.

This means that unions will continue to aggressively attack industries where the jobs cannot be exported: hospitality, health care and government. But note that in the past unions have concentrated on the largest employers. Unions get the largest payoff in dues and generally do better in elections where the bargaining unit is large. But with the crisis now faced by unions even small employers in any industry can be a target and need to be ready.

What can you do right now? There are many things an employer can do to union proof the workforce and I will discuss many of them in future blog posts. At least for now learn the basics about the law of union organizing by reading this booklet on the union organizing aspects of the National Labor Relations Act. Also read this booklet on unfair labor practice liabilty under the National Labor Relations Act.

Also consider performing a union vulnerability audit on your own or with the help of your labor attorney. Start by using this tool.   Many of our clients have made changes based on the audit results and those changes have helped insulate companies from organizing.

b. The Obama Administration Could Not Deliver EFCA To the Unions so Instead Has Delivered the NLRB

You should know by now that the National Labor Relations Board is dominated by labor friendly appointees. And not just garden-variety labor friendly appointees but folks who are dedicated to making it easier for unions organize your company. The NLRB, even without Congress changing a word of the National Labor Relations Act can drastically change the rules that apply to union elections and how unfair labor charges are prosecuted.

Here’s one very recent example. After a union lost an election it filed an objection with the NLRB and asked that the election results be thrown out and a new election held. The objection alleged that the employer committed misconduct during the election. The misconduct? Simply having a couple of rules in the employee handbook that could affect employee rights protected under the National Labor Relations Act. There was no evidence that any of the alleged improper rules were enforced during the union campaign. There was also no evidence that any of the alleged improper rules inhibited any employee activity during the union campaign. Nor was there any evidence that any of the employees even knew about the rules! You can read this crazy NLRB case here.

What can you do now? Have your employee handbook carefully reviewed by a competent labor attorney, not just someone who practices in the general employment field. We have found rules in many of our client’s handbooks that would be considered unlawful by the NLRB but with some minor revisions can be brought into full compliance with current law.

I’ll have more about all of the above topics in future blog posts.