Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

By Ilyse Schuman

The Department of Labor’s Wage and Hour Division (WHD) is seeking public comments on the agency’s proposal to collect information “about employment experiences and workers’ knowledge of basic employment laws and rules so as to better understand employees’ experience with worker misclassification.” According to a notice published in the January 11, 2013 edition of the Federal Register, the proposed Worker Classification Survey is intended to “provide critical information to Department policymakers on whether workers have knowledge of their employment classification and whether they understand the implications of their classification status.” A copy of the proposal can be obtained by contacting Karen Livingston, the WHD’s director of the Division of Strategic Planning and Performance, at (202) 693-0023.

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According to a recently-released Field Assistance Bulletin, the Department of Labor’s Wage and Hour Division (WHD) has advised its staff to uniformly enforce a rule that became effective on May 5, 2011 governing ownership of employee tips under the Fair Labor Standards Act (FLSA). In many states employers are permitted to take a “tip credit,” or pay employees less than the minimum wage so long as the employees receive sufficient tip income to make up the difference. The new WHD tip rule stipulates, among other things, that tips are the property of the employee regardless of whether the employer has taken a tip credit under section 3(m) of the FLSA, and that an employer is prohibited from using an employee’s tips for any reason other than as a tip credit or in furtherance of a legitimate tip pool. The bulletin sent to WHD regional administrators and district directors emphasizes that this rule will be enforced in all states, even the nine states under the jurisdiction of the Ninth Circuit. To learn more about the bulletin and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

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The U.S. Department of Labor informed Congress today that the President intends to nominate Leon Rodriguez as Administrator of the Wage and Hour Division.

The top job at DOL’s Wage & Hour Division has been vacant during the Obama Administration. The President’s first nominee, Lorelei Boylan, withdrew from the confirmation process in October 2009. Ms. Boylan’s confirmation was stalled because of the controversy over the nomination of Solicitor of Labor Patricia Smith (confirmed on February 4, 2010); Ms. Boylan worked for Ms. Smith at the New York Department of Labor.

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Beginning on December 13, 2010, the U.S. Department of Labor’s Wage and Hour Division will begin assisting employees to find attorneys, and providing employees and their attorneys with information and documents gathered during investigations.

In the past, the Department of Labor (DOL) has fought tenaciously to limit the information and documents it was required to disclose to the public – often through Freedom of Information Act (FOIA) litigation. The DOL often refused requests by employers for information and documents in investigation files. The DOL’s policy was to refuse disclosure of any information or documents until an investigation was closed. Even after an investigation was closed, the DOL would release investigation files only in response to a FOIA request and only as required by the FOIA. The DOL would withhold and refuse to release, for example, any information or documents that could reveal the identity of the complaining employee or any employee providing a witness statement. The DOL would also protect company confidential and proprietary information from disclosure.

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As we reported last year, the Division of Wage and Hour Compliance at the New Jersey Department of Labor and Workforce Development rejected federal “rounding” rules for enforcement purposes under New Jersey law. Specifically, while the U.S. Department of Labor assesses the impact of rounding “over a period of time” (and allows rounding practices that “average out” over time), the Division announced that it would evaluate the impact of rounding on a week-to-week basis. According to the Division, if an employer rounds, it must be to the benefit of the employee each week in order to comply with New Jersey law.

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In a development that may have significant implications for mortgage lenders and other financial services employers, the Department of Labor has issued a new Administrator's Interpretation finding that mortgage loan officers do not qualify as exempt administrative employees under the FLSA, reversing its prior position and withdrawing previous opinion letters concluding to the contrary. To continue reading about this development, see Littler's ASAP Department of Labor Reverses Course: Mortgage Loan Officers Do Not Meet the Administrative Exemption's Requirements by Robert W. Pritchard, R. Brian Dixon and Andrew J. Voss.

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The federal Department of Labor (DOL) recently announced its intent to revise the regulations governing the recordkeeping requirements imposed on employers by the Fair Labor Standards Act. Specifically, the DOL’s Wage and Hour Division intends to propose revised regulations that would require employers to disclose how many hours were worked in a pay period, how pay has been computed, what deductions are being made, and whether proper time and one-half overtime pay has been included for overtime hours worked for each pay period.

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Employers beware! This is the message emanating loud and clear from the Obama Administration's Department of Labor. Secretary of Labor Hilda Solis recently announced that the Department is dramatically increasing its enforcement of federal employment laws with an additional 250 new wage and hour investigators. This influx of new investigators boosts the departmental investigative staff by a full one third.

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President Obama has chosen Lorelei Boylan as his nominee for Administrator of the Department of Labor’s Wage and Hour Division.  Continue reading on Littler's Washington DC Employment Law Update blog.

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This final segment of our three part series on the Multi State District Office (MODO) focuses on creating informal agreements with your MODO with regards to voluntary compliance.

Of course, most District Offices, in addition to MODO responsibilities, must also conduct and manage its own investigation case load, and tend to have more work than resources. So, if a company has not had multiple investigations, a large investigation covering multiple facilities or a history of non-compliance, the employer will have little (or no) contact with its MODO.

However, MODOs are also tasked with encouraging employers to create voluntary compliance programs and to work with cooperatively with employers who choose to create such programs. Thus, MODOs will welcome an employer interested in developing a cooperative program to maintain compliance.

There are no written or formal agreements between MODOs and employers – and, in most cases, we would not recommend entering a formal agreement. However, it is very beneficial for companies to create informal arrangements with their MODOs. The arrangement usually begins with a meet and greet between the District Director of the MODO and senior company executives (such as the General Counsel and/or Vice President of Human Resources). During this meeting the employer demonstrates their commitment to compliance and designates a contact person who will deal directly with the DOL. In return, the company should ask the MODO to notify the contact person whenever a complaint is filed against the company.

Both the DOL and employers benefit from this relationship. First, the employer’s contact person is able to develop a relationship with the MODO. If a complaint is filed, there is less tension on both sides and the matter is usually resolved quickly and efficiently. Rather than an investigator asking a manager for payroll records, the MODO will call the contact person and obtain the records and set up interviews if necessary. This process helps the employer avoid unreasonable investigators, and if a bad investigator is assigned to investigate the company, the employer can seek relief from the MODO. The process is less disruptive and easier on both parities. Another advantage of working with a MODO is the ability to obtain their assistance when conducting self audits or correcting payroll errors. Finally, the DOL usually will not assess civil money penalties or interest to employers who develop positive working relationships with them.

With increased wage and hour enforcement on the horizon, it is more important then ever to develop a good working relationship with your company’s MODO. Creating a partnership with your MODO now is perhaps the best preventative measure you can take to avoid contentious and unpleasant investigations in the future.

This blog entry was authored by Salvador Simao.

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This second part of our three part series on the Main Office District Office (MODO) focuses on the specific procedures that apply to multi-state enterprises.  A previously reported in Part I:  Who's Your MODO, Littler's Salvador Simao, a former trial attorney with the Department of Labor (DOL), discusses ways in which multi-state employers can effectively partner with the DOL.

Although not generally known by employers, the Wage and Hour Division has procedures to coordinate enforcement efforts for multi-state employers. These procedures are outlined within Chapter 61 of the Wage Hour Field Operations Handbook (FOH), which is not released to the public. The purpose of these procedures is two fold: First, to ensure consistent results when investigating similar issues in different facilities in different geographic locations. Second, to enable the Wage and Hour Division to uncover national, systematic violations.

In general, these procedures assigns each multi-state employer to the District Office (DO) with geographic jurisdiction over the employer’s company headquarters (or Main Office – MO). Thus, the acronym for the multi-state employer process is the MODO process – the Main Office District Office. The goal of the MODO process is to obtain maximum compliance while using DOL resources as efficiently as possible.

Of course, investigators have primary responsibility for conducting a wage-hour investigation in a single facility. Under the MODO process, however, an investigator can recommend that the investigation be expanded to cover additional facilities or even all the facilities of the employer if s/he uncovers a violation that appears to be caused by a company-wide policy or process. The decision to expand the investigation beyond one facility or one state is made by the MODO, who will consider the employer’s overall enforcement history in making that decision.

It is also the MODO’s responsibility to independently monitor the multi-state employers headquartered within its jurisdiction. The MODO will look for similar violations occurring at an employer’s facilities in different states to determine whether a national investigation is warranted. The MODO will create a strategy to ensure the employer comes into and remains in compliance with wage-hour laws. To this end, the MODO will receive reports at the conclusion of every investigation involving the multi-state employers headquartered within its jurisdiction.
These responsibilities of the MODO are generally accomplished using the Wage and Hour Division’s enforcement database, called WHISARD, which contains information regarding every investigation conducted by the Division.

The final segment of our three part series on the Multi State District Office (MODO) will focus on creating informal agreements with your MODO with regards to voluntary compliance.

This blog entry was authored by Salvador Simao.

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In this three-part series, Littler shareholder Salvador Simao, a former trial attorney with the Department of Labor (DOL), discusses ways in which multi-state employers can effectively partner with the DOL. The first part examines the organization of the DOL Wage & Hour Division, and enforcement efforts under new Secretary of Labor Hilda Solis.

In her first public appearance after Senate confirmation, Secretary of Labor Hilda Solis declared to the AFL-CIO Executive Council, “There is a new sheriff in town.” Armed with reports from the Congressional General Accounting Office (GAO) criticizing enforcement efforts by the Wage and Hour Division, Secretary Solis is well positioned to begin changing the culture at DOL.
Already, the Wage and Hour Division is hiring 100 new investigators. Congress gave DOL funding for the new investigators in the stimulus package. Under the Bush administration, although collecting more back wages than the Clinton administration, the number of wage-hour investigators declined from 950 to 750. In short, we can expect to see increased wage-hour enforcement in the near future.

What can employers do to minimize or avoid aggressive enforcement? One way is to seek a cooperative relationship with your company’s Wage and Hour Division MODO. What is a MODO? Read on – we explain it all below.

Organization of the Wage and Hour Division
The DOL’s Wage and Hour Division enforces the Fair Labor Standards Act, Family Medical Leave Act, the Employee Polygraph Protection Act, the Consumer Credit Protection Act, and prevailing wage laws. Generally, the Wage and Hour Division will conduct an investigation of a company if it receives an employee complaint or as part of a targeted initiative (e.g., a survey of child labor compliance in quick service restaurants). At times, follow-up investigations will be done to ensure continued compliance with the laws.

Investigations are performed out of about 50 district offices. Each district office has a District Director (DD), one or two Assistant District Directors (ADD) and, of course, investigators. Some districts are so large that they have satellite offices. For example, in North Carolina the district office is Raleigh, but there is also a “field office” in Charlotte. Field Offices are normally run by an ADD who reports to the DD in the district office.

District Directors report into a regional office, which in turn reports into the national office. The Wage and Hour Division has five regional offices: the Northeast Region in Philadelphia, the Southeast Region in Atlanta, the Southwest Region in Dallas, the Midwest Region in Chicago and the West Region in San Francisco. Each regional office is run by a Regional Administrator and a Deputy Regional Administrator. Employers rarely deal with the regional and national offices, as most investigations are resolved at the district office level.

As is true in any organization, individual investigators have different styles and approaches when it comes to conducting audits. However, there are ways to reduce anxiety and ensure consistency in various audits if your company has locations in multiple states. In the second part of this series, we explain the role of the Main Office District Office (MODO) and the specific procedures that apply to multi-state enterprises.

This blog entry was autored by Salvador Simao.

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