Wage & Hour Audit in California: How to Identify and ...

[Pages:32]Wage & Hour Audit in California: How to Identify and Correct Your

Biggest Compliance Risks

Presented by:

Marc Jacuzzi

Simpson, Garrity, Innes & Jacuzzi, P.C.

Tuesday, July 22, 2014

1:30 p.m. to 3:00 p.m. Eastern 12:30 p.m. to 2:00 p.m. Central 11:30 a.m. to 1:00 p.m. Mountain 10:30 a.m. to 12:00 p.m. Pacific

or For CD and other purchasing information, contact customer service at: 800-274-6774 or E-mail: custserv@

? 2014 BLR ? and HR Hero? --Business & Legal Resources and HR Hero. All rights reserved. These materials may not be reproduced in part or in whole by any process without written permission.

This program has also been approved for MCLE recertification credit.

This program has been approved for 1.5 recertification credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI). This program is also a California-specific continuing education activity for PHR-CA and SPHR-CA recertification. For more information about certification or recertification, please visit the HRCI homepage at . The use of this seal is not an endorsement by HRCI of the quality of the program. It means that this program has met HRCI's criteria to be preapproved for recertification credit.

Wage & Hour Audit in California: How to Identify and Correct Your

Biggest Compliance Risks

Presented by:

Marc L. Jacuzzi

Simpson, Garrity, Innes & Jacuzzi PC

July 22, 2014

Enforcement Trends

Employee Reclassification Initiative for Independent Contractors y 2015 DOL Budget - Nearly $14 million to combat the

misclassification of workers as independent contractors, which deprives them of benefits and protections to which they are legally entitled and disadvantages employers who comply with the law.

Enforcement Trends

y Obama's 2014 fiscal year budget stated: y One of the "funding highlights" listed in the section of the

Budget covering the Department of Labor is to "Maintain support for agencies that protect workers' wages, benefits, health and safety, and invest in preventing and detecting the misclassification of employees as independent contractors." y The Budget includes approximately $14 million to combat misclassification, including $10 million for grants to States to identify misclassification and recover unpaid taxes and $4 million for personnel at WHD [the Wage and Hour Division] to investigate misclassification."

Enforcement Trends

Employee Reclassification Initiative for Independent Contractors.

? 2012 DOL budget included $25 million for a joint Labor-Treasury initiative to strengthen and coordinate federal and state efforts to enforce statutory prohibitions, and to identify and deter misclassification of employees as independent contractors.

The Misclassification Initiative

? This initiative includes $12 million for the WHD to hire 90 new investigators who will specifically target "industries with misclassification characteristics, such as construction."

? In addition, the budget request separately includes a request for $1.6 million and 10 additional attorneys for the Solicitor's Office "to pursue misclassification litigation, including multi-State litigation to coordinate enforcement with States."

The Misclassification Initiative Con't

y In FY 2012, the Department redoubled its efforts to combat worker misclassification by investing $46 million for a multiagency initiative of OFFCP, the Wage and Hour Division, OSHA, the Office of the Solicitor, and the Employment and Training Administration, which funded state grants that address worker misclassification within the context of the unemployment insurance program. In 2012, the Gov't said, "This initiative will help level the playing field for employers who abide by the law and provide employees with their rightful pay and benefits".

Federal Right to Know Rules

In 2010, the DOL's Wage and Hour Division (WHD) announced its plans to update the FLSA recordkeeping requirements.The announcement was made in the 2010 Spring Regulatory Agenda, but the agency has yet to transform its intentions into law.

The proposed rule considered by the DOL would require covered employers to "notify workers of their rights under the FLSA, and to provide information regarding hours worked and wage computation." Employers classifying any employees as exempt would be "required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it." The DOL stated its aim is "to foster openness and transparency, to increase awareness among workers, and to encourage greater compliance by employers." A/k/a Plan, Prevent Protect.

Federal Right to Know Rules

The WHD has delayed the action several times over the last three years.The 2010 Spring Regulatory Agenda stated that proposed recordkeeping rules would be published in August 2010.This was later changed to April 2011, and then again to October 2011. On January 20, 2012, the DOL's the Unified Regulatory Agenda moved the "Right to Know" rules from the category "Proposed Rules Stage" into the "Long-Term Actions" category. "Long-Term Actions" refers to issues for which no regulatory action is expected to occur within a year's time.There was no longer a target date assigned for proposing the rules.

For An Overtime Exemption the Employer Might Be Required To:

y Analyze each exempt job classification as well as each independent contractor position, including in collaboration with individual workers holding those positions;

y Document the employer's justification for finding that the workers are properly classified as exempt or independent contractors, as applicable;

More...

yMaintain records demonstrating the employer's analysis of the classifications;

yProvide records to the employer's workers so that the workers can assess whether they agree with the classification analysis; and

yPerhaps management training.

Pres. Obama's FLSA's "white-collar" exemption ? Changes?

y The initiative is expected to focus on tightening the qualifications for workers to be classified as bona fide executive, administrative, professional and outside sales employees.These so-called white-collar employees are currently exempt from the FLSA's general requirement that workers be paid time and a half for all hours worked in excess of 40 each week.

What to Expect?

y So what's expected to change? Two things: y The minimum salary. Many on Capitol Hill are predicting the DOL

will more than double the minimum salary an employee must be paid in order to be exempt from overtime pay, taking it from $455 to nearly $1,000 per week. Currently, an employee making $455 would earn $23,660 -- and "If you're making $23,000 typically you're not high in management," Obama said,. y The duties test. Heavy modifications are expected for the FLSA's "white collar" duties test, which is used to determine if someone is performing an executive, administrative or professional role that would (along with exceeding the minimum salary threshold) exempt an employee from receiving overtime compensation.

When to Expect It?

y Assuming the proposed rule changes are released this November, it would still be some time before any final changes are enacted.

y Here's a timeline:

y A public comment period ? typically at least 30 days y DOL takes time to consider comments, and y A final draft of the regulations would need to be written and

approved by the Office of Management and Budget's Office of Information and Regulatory Affairs.This can takes months.

y Bottom line: Next spring ? if it moves quickly! spring.

Why Should You Do a Self-Audit Now?

y It is better to have done your audit before you are doing it with employee supervision under DOL, DLSE, IRS, or EDD!

y Doing it now may afford legal shelter ? you can do it under mantle of attorney-client privilege.

y Without mantle of attorney-client privilege ? it can be used against you. No privilege for "self-criticism."

y If you decide there are gray areas, you can make changes to establish more secure legal bases for exemptions or change to non-exempt.

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download