American Conference Institute's 17th National Forum on Wage & Hour Claims and Class Actions will provide you with insights and strategies tailored to defend against newest claims and manage the most complex wage and hour issues. Earn CLE, CLE Ethics credits.

1. American Conference Institute’s 17th National Forum on
Wage & Hour Claims and Class Actions
January 24, 2013 — Miami, Florida
Department of Labor Update:
Responding to Enhanced Enforcement
Initiatives and Aggressive Investigations
Presented by:
Dr. Elizabeth Becker
NERA
Paul DeCamp
ECONOMIC CONSULTING
Jeffrey D. Patton
Glenn G. Patton

2. Leadership Changes at DOL
• Secretary of Labor Hilda L. Solis resigned in early
January 2013. President Obama has not yet nominated
her replacement (as of mid-January 2013).
• There has been no Administrator of the Wage and Hour
Division since December 2007. The second of President
Obama’s two nominees withdrew in August 2011.
• Nancy Leppink resigned as Deputy Administrator in
mid-December 2012.
• Acting Deputy Administrator Mary Beth Maxwell is
currently running the Wage and Hour Division (as of
mid-January 2013).
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3. Semi-Annual Regulatory Agenda
• The Fall 2012 agenda, issued December 24, 2012,
contains five items involving WHD:
– Amendments to the FMLA regulations: NPRM
issued in February 2012, comment period closed in April
2012, and final action projected for March 2013.
– FLSA and domestic service: NPRM issued in
December 2011, comment period closed in March 2012,
and Final Rule projected for April 2013; rule would deny
companionship services exemption for third-party
employment and narrow the scope of exempt duties.
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4. Regulatory Agenda (cont’d)
– FLSA Right to Know: Agenda for first time
acknowledges that this rulemaking contemplates
addressing disclosure to workers of not only “their
status as the employer’s employee or some other
status”, but also “if an employee, how their pay is
computed”; “Next Action Undetermined”.
• Very likely in conjunction with this item, WHD issued a
Proposed Information Collection Request on January 11,
2013, contemplating a 30-month survey to be completed
in March 2014 assessing “employment experiences and
workers’ knowledge of basic employment laws and rules”.
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5. Regulatory Agenda (cont’d)
– FLSA Child Labor Hazardous Occupation
Order No. 7: WHD seeks information regarding its
non-enforcement position as to power-driven
patient/resident lifts in health care establishments;
“Next Action Undetermined”.
– FLSA Child Labor regulations involving
agricultural hazardous occupations: NPRM
issued in September 2011, comment period closed in
December 2011, and proposed regulation withdrawn
in May 2012; regulatory item listed as “completed”.
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6. New Guidance From DOL
• Two new (Deputy) Administrator’s Interpretations:
– AI 2013-1 (Jan. 14, 2013): Addresses several issues
involving meaning of phrase “son or daughter” as
applied to adults incapable of self-care under the FMLA.
– AI 2012-1 (Dec. 12, 2012): Addresses application of
MSPA, FLSA, and OSH Act field sanitation standards to
“raking, gathering, baling, and loading of pine straw
gathered from pine trees grown for commercial timber”.
– First AIs since the three issued in 2010 (two reversing
Bush-era FLSA positions and one involving the FMLA).
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7. DOL Amicus Briefs
• DOL’s web site lists nine amicus briefs filed in
wage and hour cases since January 1, 2012
(through mid-January 2013). All nine briefs
side with the workers.
• Positions taken:
– Transportation and visa expenses for H-2A workers
are primarily for the employer’s benefit. (9th Cir.)
– Arbitration agreements with class action waivers are
unenforceable because they prevent vindication of
FLSA rights. (2d Cir.)
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8. DOL Amicus Briefs (cont’d)
– In treating tips beyond the tip credit as “earnings”
subject to garnishment, the employer violated Title
III of the Consumer Credit Protection Act and the
FLSA’s minimum wage provision. (11th Cir.)
– A contractual waiver of the FLSA’s statute of
limitations is void as against public policy. (6th Cir.)
– Volunteer firefighters are employees under the FLSA
and the FMLA. (6th Cir.)
– Cable installers are employees, not independent
contractors, under the FLSA. (11th Cir.)
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9. DOL Amicus Briefs (cont’d)
– Undocumented workers may sue for FLSA
minimum wage and overtime for hours worked, and
immigration status is irrelevant at trial. (8th Cir.)
– An individual owner of an employer corporation is
personally liable as an employer under the FLSA
based on control. (2d Cir.)
– Two-step collective action certification procedure is
proper under the FLSA, so the court should deny
the employer’s mandamus petition. (5th Cir.)
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10. Enforcement Priorities
• Independent contractor misclassification:
– Memoranda of Understanding with 13 states and the
IRS for information sharing and coordination.
– Focus: workers with no W-2 employer.
– WHD now routinely asks for Form 1040 records.
• Call centers: Pre-shift and post-shift activity.
• Next stop: Challenges to fluctuating workweek
compensation for employees who receive bonuses,
commissions, or other types of non-salary, nonovertime compensation?
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11. Targeted Industries
•
•
•
•
•
•
Restaurants
Health care
Car washes
Janitorial (especially in hotels and motels)
Construction (residential and commercial)
Retail franchisors as joint employers / integrated
enterprises
• Government contracting
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12. Issuance of WH-58 Forms
• Form WH-58 both a receipt and release of future claims.
• Prior to 2008, DOL routinely provided WH-58 forms.
• Since 2008, WH-58 forms not provided unless DOL has
conducted a “full investigation.”
• May not be available in self-disclosure situations.
• DOL also issuing WH-58 forms limited to specific time
periods that may be shorter than 2 years.
• Creates uncertainty about scope of release/waiver.
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13. Liquidated Damages &
rd
3
Year
• Historically, DOL focused on obtaining 2-years of
back wages during investigations.
• DOL investigators now investigating potential
liability during third year where violation(s) may be
willful.
• Asking for liquidated damages as condition to
settlement of investigation.
• Liquidated damages most likely to be pursued in
independent contractor misclassification situations.
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14. Beware of Civil Money Penalties
• CMPs are the DOL’s new secret weapon.
• They’re not just for child labor violations anymore!
• Repeat: Prior notice of violation from Wage and
Hour Division or previous adjudication. 29 CFR §
578.3(b)
• Willful: Employer either knew that its conduct was
prohibited or showed reckless disregard for the
requirements of the Act. 29 CFR § 578.3(c)
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15. Beware of Civil Money Penalties
• Relevant Factors: See 29 CFR § 578.4
– Size of employer;
– Existence of good faith efforts to comply;
– Whether there is bona fide dispute as to violation;
– Previous history of violations;
– Commitment to future compliance;
– Amount of time between violations;
– Number of employees affected; and
– Any pattern to the violations.
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16. Amount of Civil Money Penalties
• CMPs up to $1,100 per violation.
• CMPs up to $5,000 for failure to cooperate.
• Higher penalties for child labor violations ($11,000
per worker).
• DOL has secret formula for valuing CMPs (formula
for repeat violations is lower than willful violations).
• CMPs for OT and minimum wage violations go
back to WHD to fund additional enforcement
efforts!
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17. DOL’s CMP Procedures
• Timing: DOL generally waits to address CMPs
until after agreement is reached on payment of
back wages.
• Objections: Must object to CMPs and request
hearing in writing within 15 days.
• Meeting: DOL may meet to discuss objections.
• Hearing: If no agreement reached, then CMP
assessment goes to ALJ for hearing.
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18. DOL’s CMP Procedures
• Pleadings: DOL’s notice acts as complaint and
employer’s objection serves as the answer.
• Decision: ALJ reviews entire record (hearsay rules
do not apply to prior investigation files) and issues
written opinion.
• Appeal: Employer has 30 days to appeal ALJ
decision to Administrative Review Board.
• Collection: DOL can deduct CMPs from any
amounts owed to employer or file a civil action.
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19. Individual Defendants
• DOL naming owners and senior managers as defendants.
• Employer: “Any person acting directly or indirectly in the
interest of an employer in relation to an employee …” 29
U.S.C. § 203(d).
• Requires showing of “operating control” over employees:
• Power to hire and fire;
• Ability to supervise;
• Power to set or adjust wages; and
• Maintenance of employment records.
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20. Frequency and Types of Claims Brought
by DOL*
• FLSA: Minimum Wage and Overtime – 2,696
• FMLA – 261
• Migrant Seasonal Agricultural Protection Act –
150
• Davis-Bacon and Related Acts – 150
• FLSA: Child Labor – 110
*As of October 2012
http://ogesdw.dol.gov/results.php
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21. Types of Employers
(NAICS Coding)*
•
•
•
•
•
•
Full Service Restaurants – 493
Hotels and Motels – 248
Limited Service Restaurants – 243
Child Day Care Services – 217
Supermarkets and Grocery Stores – 188
Other – 3,553
*As of October 2012
http://ogesdw.dol.gov/results.php
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22. Enforcement Data 2.5
• Online data base – public access to workplacerelated information.
• Multiple agencies report to the same website.
• Non-compliant employers more easily
discoverable from other types of violations.
http://ogesdw.dol.gov/
http://ogesdw.dol.gov/data_catalogs.php
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23. Enforcement Data 2.5:
Wage and Hour Compliance Data
• Contains all concluded WHD compliance actions
since 2007.
• Includes:
–
–
–
–
Whether violations were found;
Back wage amount;
Number of employees due back wage; and
Civil money penalties assessed.
http://ogesdw.dol.gov/
http://ogesdw.dol.gov/data_catalogs.php
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24. Enforcement Data 2.5
Search & Share
http://ogesdw.dol.gov/
http://ogesdw.dol.gov/data_catalogs.php
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25. Enforcement in 2013:
Increased Budget Request
• WHD asked for an additional $10 million from
2012
• Purpose: “[A] continued shift to greater
directed and complaint activity in priority
industries.”
• Shifting funds to increase enforcement of
entities likely to have overtime violations.
http://www.dol.gov/dol/budget/2013/bib.htm#whd
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26. Wage and Hour Case Settlements, 2007 - 2011
120
107
Number of Cases
100
91
92
2009
2010
80
60
40
20
34
20
0
2007
2008
2011

27. Mean Settlement Values by Year, 2007 - 2011
$25,000,000
Settlement Amount
$20,000,000
$15,000,000
Overall Mean:
$8,508,358
$10,000,000
$5,000,000
$2007
2008
2009
2010
2011

28. Settled Wage and Hour Cases by
Settlement Amount, 2007-2011
70
Number of Cases
60
50
40
30
20
10
0

29. Settled Wage and Hour Cases by Average
Settlement Amount Per Employee, 2007-2011
160
140
Number of Cases
120
100
80
60
40
20
0

30. Drivers of Variability in
Wage and Hour Settlements
 Duration of Violation Period
 Number of Employees in Settlement
 Statute (FLSA/State Laws)
 Jurisdiction of Case
 Nature of Allegations
 Industry

31. Settled Wage and Hour Cases by
Number of Employees, 2007-2011
70
66
Number of Cases
60
50
48
41
40
36
30
23
22
20
10
14
7
2
0
4

32. Average Settlement Value Per Employee
2007-2011
$14,000
Average Settlement Value
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$2007
2008
2009
2010
2011

33. Average Settlement Value Per Employee
Per Class Period Year, 2007-2011
$1,600
Average Settlement Value
$1,400
$1,200
$1,000
$800
$600
$400
$200
$2007
2008
2009
2010
2011

34. Settled Cases by Type of Allegation
2011
2007 - 2011
Minimum
Wage, 20
Donning and
Doffing, 27
Minimum
Wage, 9
Tip Pooling,
10
Tip Pooling,
5
Donning and
Doffing, 8
Missed
Meals and
Breaks, 96
Overtime,
244
Missed
Meals and
Breaks, 36
Overtime, 78
Misclassificat
ion, 109
Misclassificat
ion, 28
Off-theClock,
117
Off-theClock, 13

35. Settlement Dollars by Industry, 2007-2011
Healthcare/Healthcare
Services, 4.25%
Manufacturing, 1.54%
Telecommunications/U
tilities, 5.55%
Technology, 7.49%
Other, 12.37%
Retail, 35.17%
Financial
Services/Insurance,
21.44%
Transportation/Shipping,
6.70%
Food & Food Services,
5.49%

36. Thank you!
Questions?
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37. Dr. Elizabeth Becker
NERA Economic Consulting
1166 Avenue of the Americas
29th Floor
New York, NY 10036
212.345.5096
betsy.becker@nera.com
Paul DeCamp
Jackson Lewis LLP
10701 Parkridge Boulevard
Suite 300
Reston, VA 20191
703.483.8305
DeCampP@jacksonlewis.com
Jeffrey D. Patton
Spilman Thomas & Battle, PLLC
110 Oakwood Drive
Suite 500
Winston-Salem, NC 27103
336.725.4491
jpatton@spilmanlaw.com
Glenn G. Patton
Alston + Bird LLP
1201 West Peachtree Street
Atlanta, GA 30309-3424
404.881.7785
glenn.patton@alston.com
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