New Initiatives Mean More Employee Complaints, More Employer Burdens

Attorney Patricia Weisberg of the law firm Walter & Haverfield, LLP.
Attorney Patricia Weisberg of the law firm Walter & Haverfield, LLP.

In the mercurial world of employment law, each new calendar year brings new or revamped legislation. It’s the same story in 2010. Among the myriad of various legal changes employers face this year, several new U.S. Department of Labor (DOL) initiatives particularly stand out, namely because of the increased burden of proof they place on employers.

This spring, the DOL rolled out several programs designed to help workers feel less fearful of repercussions about filing grievances in accordance with Fair Labor Standards Act regulations, while putting extra onus on employers – the “We Can Help” campaign, the “Plan/Prevent/Protect” strategy, and more stringent misclassification rules.

Combined, these changes will mean that even the most proactive employers should expect to see an increase in FLSA-related complaints from employees, and that they will also bear the full weight of federal regulatory compliance squarely on their shoulders. The atmosphere is primed to be litigious, to say the least.

“We Can Help”

In April, the Department of Labor announced its “We Can Help” program, which seeks to assist low-income workers by educating them about their rights under the FLSA and to encourage employees and community groups to report possible wage violations without fear of reprisal. The campaign represents an active, vocal effort on the part of the DOL’s Wage/Hour Division to reach out to employees and seek their help in catching employers who violate wage/hour laws. In addition, the DOL has teamed up with employee advocacy groups, such as the AFL-CIO, to further educate employees and publicize their rights.

”We Can Help” has its own website, which includes a catchy “jingle” and bilingual (English and Spanish) public service announcements made by such Hollywood stars as Jimmy Smits of L.A. Law and NYPD Blue fame. This effort is intended to provide workers with information about their rights and educate them on how to seek assistance from the DOL’s Wage/Hour Division when they believe their rights have been violated. The website offers a toll-free number to provide additional assistance in filing grievances.

The DOL anticipates an increase in complaints as a result of this program, so much so that it grew its staff approximately 33 percent by hiring 250 new investigators to help investigate complaints arising from the “We Can Help” initiative.

What is clear is that the department is directing resources toward helping employees cooperate with the DOL in reporting violations rather than concentrating on helping employers comply with the law. It appears that it is now more important to the DOL to catch employers who are violating the law, even if inadvertently, rather than to promote compliance.

Plan/Prevent/Protect

More recently, in May 2010, the DOL announced its “Plan/Prevent/Protect” strategy, which reflects an emphasis on preventing violations of laws that affect workers. This new strategy will require employers to do the following:

  • Have written plans to comply with specific labor laws such as wage and hour statutes
  • Prevent violation of laws by executing the plan and performing an analysis on its effectiveness
  • Protect workers by disclosing a plan to their workforce and their government.

According to U.S. Secretary of Labor Hilda Solis, employers too often take shortcuts affecting workers’ safety and therefore must be required to plan for workplace hazards, prevent them, and protect their employees. If ultimately fully implemented by the DOL, the “Plan/Prevent/Protect” program could have a significant impact on employers by requiring them to invest considerable resources in developing and implementing programs to ensure compliance.

The initiative involves several agencies under the DOL’s auspices, including the Wage and Hour Division, the Occupational Safety and Health Administration (OSHA), the Office of Federal Contract Compliance Programs (OFCCP), the Mine Safety and Health Administration (MSHA) and the Employee Benefits Security Administration (EBSA).

The idea behind this new initiative is that employers must “find and fix” violations before a DOL investigator is called in for one reason or another to investigate a particular matter. The DOL wants employers to understand that the burden is on them to obey the law, rather than on the DOL to catch them violating the law. According to the DOL, they are moving from a “catch me if you can” strategy to a “Plan/Prevent/Protect” strategy.

Each agency is expected to propose rules that require regulated entities (employers covered by FLSA) to develop programs to comply with the law. The programs will include the following elements:

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  • Plan: Regulated entities will be required to create a plan for identifying and remediating risks of legal violations and other risks to workers. For example, they must develop a plan to search workplaces for safety hazards that might injure or kill workers. The regulated entity also will be required to provide its employees with opportunities to participate in the creation of these plans. Further, after the plans have been created, they must be made available to employees so that workers can fully understand them and help to monitor their proper implementation.
  • Prevent: The agencies also will have to include a requirement that employers and other regulated entities thoroughly and completely implement the plan in a manner that prevents legal violation. In other words, the plan cannot be a paper process where it is drafted and then put on a shelf in an administrative office somewhere. The employer actually must take steps to implement the program.
  • Protect: The agencies must also include a requirement that the employer ensure that the plan’s objectives are met on a regular basis. As such, the plan must actually protect workers from violations of their workplace rights. Apparently, the DOL is going to require an employer to demonstrate positive results from implementation of the plan.

Employers will need to implement these plans, submit them to the DOL enforcement agencies, and ensure that the plans accomplish their stated goals. Employers that cannot prove compliance or those who cannot demonstrate how they are achieving their compliance may be subject to penalties even when no substantive violation of the law exists.

Misclassification Rules

The DOL’s Wage and Hour Division also recently published an anticipated proposed rule addressing the misclassification of employees under the FLSA . As a part of the implementation of the “Plan/Protect/Prevent strategy,” the Wage Hour Department’s proposal establishes a requirement that employers provide workers with basic information about their employment, including how their pay is calculated.

Further, any employer that seeks to exclude a worker from the FLSA’s coverage would be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to any Wage/Hour enforcement personnel who might request it.

Specifically, companies that classify workers as independent contractors will have to prepare a written explanation of why these workers should be considered contractors as opposed to employees. These explanations must be provided to the contractors. What isn’t clear is whether this same procedure must be conducted for employees who are classified as exempt from the FLSA’s minimum wage and overtime provisions.

The DOL announced that it plans to issue a formal notice of proposed rule-making for this rule in August. At that time, employers will have opportunities to make comments on the proposed rule.

What Does This Mean For Employers?

The best strategy for employers is to conduct an audit of all employment policies. Employers should be looking at the classification of employees and independent contractors and clearly define what constitutes work time and ensure the proper payment of overtime. It will also be important to audit safety policies and procedures and to implement and update other anti-discrimination policies and procedures.

Considering the onus the DOL is putting on employers through these new measures, employers need to be prepared in the event workers file grievances and if the DOL steps in to investigate. Proactive prevention and planning is a better strategy than being on the defensive end of the situation. Audits might take time upfront but will pay off in the end for employers who wind up embroiled in an investigation.

Patricia F. Weisberg is a partner at Walter & Haverfield, a Cleveland law firm. She assists employers with their obligations under state and federal employment discrimination laws, FLSA, ADA, FMLA, affirmative action, equal opportunity, unemployment, workers' compensation, non-compete agreements and other laws regulating the employment relationship in an effort to minimize potential employment-related litigation. She can be reached at 216-978-2928, or at pweisberg@walterhav.com .

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