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Practical Steps to Protect Your Organization Healthcare’s Wage & Hour Claim Challenge: May 3, 2011

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Reid Bowman, Esq. <ul><li>General Counsel of ELT. </li></ul><ul><li>Over 25 years of HR and labor employment law experience, primarily working with multi-state employers. </li></ul><ul><li>Designs strategic ethics, wage & hour, discrimination prevention, and employment law compliance programs. </li></ul>

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Bradley Strawn, Esq. <ul><li>Shareholder, Littler Mendelson. </li></ul><ul><li>Concentrates his practice advising employers in complex class and collective actions involving overtime and other wage-related claims. </li></ul><ul><li>Routinely advises employers on legal compliance and litigation prevention measures relating to wage and hour. </li></ul>

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Agenda <ul><li>The Numbers Tell the Story </li></ul><ul><li>Greater Enforcement by the DOL </li></ul><ul><li>Key Risk Areas </li></ul><ul><li>Practical Compliance Solutions </li></ul><ul><ul><li>Training Solutions that Tangibly Reduce Risk and Deliver a ROI. </li></ul></ul><ul><li>The Numbers Tell the Story </li></ul><ul><li>Healthcare is a Major Target </li></ul><ul><li>Targeted Areas </li></ul><ul><li>Practical Compliance Solutions </li></ul>

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The Numbers Tell the Story

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A Question For You Do you consider wage and hour issues to be the number one employment law risk facing your organization? <ul><li>Yes </li></ul><ul><li>No </li></ul>

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<ul><li>Of the 4,152 employment class action lawsuits filed in federal or state court in 2010, 3,785 (or approx. 91% ) were wage and hour related complaints! </li></ul>Wage & Hour Class/Collective Actions: The Flood Continues

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<ul><li>Non-government wage and hour settlements in 2010 remained high. For the top 10 settlements in 2010: </li></ul><ul><ul><li>Total : $241M </li></ul></ul><ul><ul><li>Average: $22M </li></ul></ul><ul><ul><li>Median: $14.8M </li></ul></ul>Wage & Hour Lawsuits Becoming Stronger Focus for the Plaintiff’s Bar

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The Beat Goes On <ul><ul><li>What does this all mean? </li></ul></ul><ul><ul><li>More class/collective action players for the future. </li></ul></ul><ul><ul><li>* http://www.uscourts.gov/Statistics/JudicialBusiness/JudicialBusiness2010.aspx </li></ul></ul>

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Healthcare is a Major Target New Challenges and Old Problems

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The New DOL <ul><li>Secretary of Labor Hilda Solis: </li></ul><ul><li>“ Make no mistake the DOL is back in the enforcement business.” </li></ul><ul><li>National public awareness campaign: “We Can Help” </li></ul><ul><li>“ Bridge to Justice” Campaign </li></ul>

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DOL’s Enforcement Approach <ul><li>– From 4-26-2010 DOL Regulatory Agenda </li></ul>“ Plan, “Plan, Prevent, and Protect” ” <ul><li>Encourages employers to “find and fix” violations before the DOL Investigators arrive. </li></ul><ul><li>Employers are expected to design and implement plans to avoid violations of workplace laws. </li></ul><ul><li>According to the DOL: &quot;[a]ny employers that seek to exclude workers from the FLSA's coverage will 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.” </li></ul><ul><li>Bottom line : DOL making obligation to “find and fix” an affirmative duty; absence of those action viewed as a compliance failure. </li></ul>

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Targeting Healthcare Employers <ul><li>Focus on industries &quot;known for employing vulnerable workers&quot; </li></ul><ul><ul><li>Healthcare specifically referenced </li></ul></ul><ul><li>February 22, 2010, DOL Press Release: </li></ul><ul><ul><li>66% of healthcare employers investigated by Albany office in last 5 years violated </li></ul></ul><ul><ul><li>Collected more than $2 million in back wages </li></ul></ul><ul><ul><li>Announced major compliance initiative targeting New York healthcare employers </li></ul></ul>

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Heightened Government Enforcement <ul><li>December of 2009: SSM Healthcare pays $1.7 million in back wages to nurses for work done during unpaid meal breaks to settle DOL lawsuit. </li></ul><ul><li>February, 2010 : Missouri hospital pays $280,000 to employees for unpaid pre- and post-shift work, and work during auto-deduct meal periods. </li></ul>

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A Question For You In the past 12 months, has your organization been faced with a wage & hour claim from current or former employees? <ul><li>Yes </li></ul><ul><li>No </li></ul><ul><li>I don’t know </li></ul>

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Health Care Class Actions Are All Over the Map Wage Hour Class/Collective Action Complaints Against Healthcare Organizations Since 1/1/09 NV CA HI AK ID WA OR WY MT CO NM AZ UT SD ND KS OK IA MN MO AR NE TX MI WI IL LA MS AL TN IN OH KY GA SC PA NC FL VA WV NY ME VT NH CT RI MA NJ DE MD D.C. 154 95 52 32 30 14 20 1 12 10 22 4 3 2 4 1 3 3 1 7 1 5 2 1 9 1 2 1 3 1 4 1

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Thomas & Solomon <ul><li>Small law firm in Rochester New York began targeting large health care systems with wage and hour class actions in 2008 </li></ul><ul><li>2008 T&S filed class/collective actions against healthcare systems in Rochester, New York </li></ul><ul><li>Quickly moved to Buffalo and Syracuse, New York </li></ul><ul><li>Spring 2009, filed class/collection actions against Pittsburgh-area healthcare systems </li></ul>

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Thomas & Solomon <ul><li>September 2009 filed actions against 5 Boston healthcare systems </li></ul><ul><li>November 2009 filed actions against 7 Philadelphia-area healthcare systems </li></ul><ul><li>March 2010 filed more than 20 federal and state court cases against almost every major healthcare institution in New York City </li></ul><ul><li>New healthcare employers added to www.hospitalovertime.com website frequently. </li></ul><ul><ul><li>Website lists healthcare employers in 48 states, the District of Columbia, Guam, Philippine Islands, Puerto Rico, and Virgin Islands. </li></ul></ul>

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Modus Operandi <ul><li>Obtain employees’ names and addresses from publicly available directories of healthcare licenses. </li></ul><ul><li>Send “investigatory” letters to employees’ homes to offer assistance in protecting employees’ rights. </li></ul><ul><li>Obtain “consents” through word of mouth, home mailings, and website: hospitalovertime.com . </li></ul><ul><li>Target largest healthcare employers in specific cities. </li></ul>

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Modus Operandi (cont’d ) <ul><li>Simultaneously file actions against largest healthcare employers in target cities. </li></ul><ul><li>Boilerplate complaints with virtually identical claims asserted against all targeted employers. </li></ul><ul><li>Issue press releases to garner media attention. </li></ul><ul><li>Generally file motion for conditional certification with complaint or very soon after filing of complaint. </li></ul><ul><li>Force employees to fight on two fronts by filing claims in state and federal court. </li></ul>

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<ul><li>-----Original Message----- From: Hours Worked [mailto:medrecallnewscl@gmail.com] Sent: Monday, January 04, 2010 3:50 PM To: [INSERT NAME] Subject: You May Not Have Been Paid For All The Time You Were Permitted To Work </li></ul><ul><li>IF YOU WORKED AS AN HOURLY EMPLOYEE FOR A HEALTH CARE FACILITY OR HOSPITAL OUR INVESTIGATION SUGGESTS THAT... </li></ul><ul><li>YOU MAY NOT HAVE BEEN PAID FOR ALL THE TIME YOU WERE PERMITTED TO WORK! </li></ul><ul><li>PROTECT ANY AMOUNT YOU MAY BE OWED BY CALLING NOW. </li></ul><ul><li>(this is not a sales program) </li></ul><ul><li>BECAUSE OF SEVERAL EMPLOYMENT LAWS, EVERY DAY YOU DELAY MAY ELIMINATE YOUR ABILITY TO RECOVER MONEY. </li></ul><ul><li>CALL TOLL-FREE FOR NO OBLIGATION INFORMATION (888) 668-3817 </li></ul>Plaintiffs’ firms are hiring outside companies to send email blasts to employees of target companies. Below is actual text from one such email: What to Expect: Solicitatio n

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<ul><li>Lawyers are using vendors such as “services to lawyers” ( http://servicestolawyers.com/home/ ), traditionally used for medical malpractice, workers compensation claims and car accident cases, to spam employees of hospitals and healthcare providers with this type of information. </li></ul><ul><li>Email addresses can be identified either by: </li></ul><ul><ul><li>Identifying a domain name (____@littlerhospital.org) and obtaining an employee roster </li></ul></ul><ul><ul><li>Obtaining a list of employees (such as nurses) from a professional licensing board </li></ul></ul>What to Expect: Solicitation

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The “Copycat” Problem <ul><li>Major players like Thomas & Solomon have provided a roadmap to other plaintiffs’ firms </li></ul><ul><ul><li>“ Copycat” firms piggyback on the efforts of others by copying publicly available work product and strategies </li></ul></ul><ul><ul><li>Electronic resources facilitate information sharing among Plaintiff’s firms practicing in same industry (i.e. “Pacer” federal court filings readily available to the public) </li></ul></ul><ul><li>Carlson Lynch </li></ul><ul><ul><li>At least two recent auto-deduct class actions against major hospital systems in Illinois </li></ul></ul><ul><ul><li>Also hit healthcare systems in PA & Ohio </li></ul></ul>

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Other Law Firms Now Looking at Healthcare Employers <ul><li>Joseph Sellers of Cohen Milstein </li></ul><ul><ul><li>Lawyer who filed huge gender discrimination class action v. Wal-Mart recently filed wage hour class action against Gentiva </li></ul></ul><ul><li>Klafter Olsen, major class action law firm </li></ul><ul><ul><li>auto-deduct meal break case against Kindred </li></ul></ul><ul><li>Blumenthal, Nordrehaug & Bhowmik, California </li></ul><ul><ul><li>Several class actions against Kaiser—IT misclassification </li></ul></ul><ul><li>Outten & Golden, New York </li></ul><ul><ul><li>Ruggles v. Wellpoint : significant nurses misclassification collective action </li></ul></ul><ul><li>Shavitz Law Group, Florida </li></ul><ul><li>Morgan and Morgan, Florida </li></ul><ul><ul><li>- Shavitz & Morgan – high volume firms targeting smaller employers </li></ul></ul>

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Key Risk Areas

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Pay Practices <ul><li>Auto Deductions for Meal Periods. </li></ul><ul><li>Deductions for Short Meal/Rest Breaks. </li></ul><ul><li>Exception Time Reporting. </li></ul><ul><li>Rounding. </li></ul><ul><li>Early Arrivers and Long Punching. </li></ul>

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Pay Practices (con’t) <ul><li>Pre- and Post-shift Computer Logging and Other Activities. </li></ul><ul><li>Discrepancies Between Time Records and Other Electronic Records. </li></ul><ul><li>Remote Work. </li></ul><ul><li>Garbage In, Garbage Out. </li></ul><ul><li>Failure to Include Bonuses, Incentives, and Commissions in Overtime Calculation. </li></ul><ul><li>Editing Time Records. </li></ul>

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Practical Compliance Solutions

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A Question For You In 2011, my organization is spending more on wage and hour compliance and risk management: <ul><li>Yes </li></ul><ul><li>No </li></ul><ul><li>I don’t know </li></ul>

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The Good News <ul><li>Despite rising number of claims, there are measures employers can take now to strengthen defenses and make themselves a less attractive litigation target. </li></ul><ul><li>Many “preventative steps” can be quickly implemented with little or no cost. </li></ul><ul><li>Most healthcare employers already have the basic compliance structure in place on which a more elaborate wage and hour compliance model can be built. </li></ul>

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Building a Good Faith Defense to Off-the-Clock Claims <ul><li>Key problem for healthcare employers is lack of sufficient evidence to establish proper timekeeping and “good faith” defense to off-the-clock claims. </li></ul><ul><li>Compliance model should be targeted toward building evidence of employer’s good faith efforts to ensure employees accurately report and are paid for all working time. </li></ul>

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Obstacles to Effective Compliance Model <ul><li>Employees and managers have misconception about respective legal obligations and what is compensable working time. </li></ul><ul><li>Employees are often careless timekeepers. </li></ul><ul><li>Some managers may instruct employees to work off-the-clock due to budgetary restrictions. </li></ul><ul><li>Some unscrupulous employees may falsely claim off-the-clock work. </li></ul>

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What is a Faragher/Ellerth Defense? <ul><li>In certain areas of the law, courts have recognized something called the “doctrine of avoidable consequences,” which prevents a party from recovering damages where the injured party could have avoided harm through reasonable efforts. </li></ul>

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What is a Faragher/Ellerth Defense? <ul><li>Used for 10+ years in Title VII matters, following US Supreme Court decisions in Faragher and Kolstad. </li></ul><ul><li>Courts have now started to recognize the validity of this defense in wage and hour actions. </li></ul>

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What if We Don’t Use Preventive Measures? <ul><li>Recent nationwide collective action lawsuit (1/20/10) filed against Northwestern Memorial Healthcare in Illinois alleges that failure to use remedial measures constitutes evidence of employer “bad faith” and “willful” wage and hour violations: </li></ul><ul><ul><li>“ Despite this ‘off-the-clock’ work, defendant did not provide additional compensation to Plaintiff or other class members, nor did it take ameliorative measures to ensure that such ‘off-the-clock’ work ceased occurring.” </li></ul></ul><ul><li>Failure to adopt any remedial measures could be used against a healthcare company in wage and hour litigation. </li></ul>

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<ul><li>Timekeeping policies should appear in handbooks, ethics policies, and collective bargaining agreements. </li></ul><ul><li>Require signed receipt to demonstrate knowledge of policies and procedures. </li></ul>Element 1: Adopt and Publicize Clear Timekeeping Policies and Procedures

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Adopt and Publicize Clear Timekeeping Policies and Procedures <ul><li>Recommend policies should: </li></ul><ul><li>Define working time with examples that target most common misconceptions. </li></ul><ul><li>Address meal periods, and instruct employees on what to do if a meal period is interrupted or missed. </li></ul><ul><li>Prohibit off-the-clock work but advise that in the event work is performed, employees will be paid. </li></ul><ul><ul><li>Require immediate reporting of off-the-clock work within 72 hours of occurrence. </li></ul></ul>Element 1: (cont’d)

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<ul><li>Recommend policies should: </li></ul><ul><ul><li>Provide a mechanism for employees to report off-the-clock work. </li></ul></ul><ul><ul><li>Require advance authorization for overtime except in the event of an emergency. </li></ul></ul><ul><ul><li>Advise employees that no one is authorized to require off-the-clock work. </li></ul></ul><ul><ul><li>Require employees to pursue alternative complaint mechanism by calling 1-800 number if no response received from initial complaint within 5 business days. </li></ul></ul>Element 1: (cont’d) Adopt and Publicize Clear Timekeeping Policies and Procedures

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A Question For You Regarding wage and hour training, in the next 12 months, my organization is: <ul><li>Already conducting training </li></ul><ul><li>Planning to implement training </li></ul><ul><li>Considering training </li></ul><ul><li>I don’t know </li></ul>

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<ul><li>Train both managers and employees regarding FLSA and state law wage and hour requirements and Company timekeeping policies and procedures. </li></ul><ul><li>Training should involve interactive learning model with examples targeted toward common violations (i.e., missed meal periods, improper supervisory instructions, and volunteering). </li></ul>Element 2: Training

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Training ROI <ul><li>Prevent inadvertent federal and state law violations. </li></ul><ul><li>Prevent claims: </li></ul><ul><ul><li>Policies are clear and irrefutable. </li></ul></ul><ul><ul><li>Plaintiff credibility? </li></ul></ul><ul><ul><li>More difficult to certify a class. </li></ul></ul><ul><li>Reduce damage awards and potentially build a good faith defense . </li></ul><ul><li>Build a culture of compliance. </li></ul>

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When To Train <ul><li>Should be integrated into employment relationship. </li></ul><ul><li>Should be done regularly to reinforce policies and understanding: </li></ul><ul><ul><li>Employee orientation. </li></ul></ul><ul><ul><li>New manager training. </li></ul></ul><ul><ul><li>When there are new legal developments or policy changes. </li></ul></ul><ul><ul><li>Every 2 years. </li></ul></ul><ul><ul><li>More often for highly specialized compensation jobs . </li></ul></ul>

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Who Should Be Trained <ul><li>Employee training should focus on the basics, such as: </li></ul><ul><ul><li>Review of key policies. </li></ul></ul><ul><ul><li>Define hours worked. </li></ul></ul><ul><ul><li>No off-the-clock work. </li></ul></ul><ul><ul><li>Meals and rest periods. </li></ul></ul><ul><ul><li>Rules relating to OT. </li></ul></ul><ul><ul><li>Reporting and correcting errors, and misconduct. </li></ul></ul>

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Who Should Be Trained <ul><li>Manager training should focus on employee topics, plus: </li></ul><ul><ul><li>Compliance responsibilities. </li></ul></ul><ul><ul><li>Handling employee complaints. </li></ul></ul><ul><ul><li>Manager misconduct. </li></ul></ul><ul><ul><li>Prohibition against retaliation. </li></ul></ul><ul><ul><li>Good record keeping practices. </li></ul></ul>

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Training Solutions <ul><li>Live Training: </li></ul><ul><ul><li>Instructor led and tailored to audience (i.e., senior leaders). </li></ul></ul><ul><ul><li>When highly customized materials required. </li></ul></ul><ul><li>E-learning: </li></ul><ul><li>40%+ (and growing) of employers today chose e-learning solutions. </li></ul><ul><ul><li>Interactive and engaging – hands on experience. </li></ul></ul><ul><ul><li>Creates electronic records and employee acknowledgments. </li></ul></ul><ul><ul><li>Significant cost savings </li></ul></ul><ul><ul><li>Easy to reach bulk of managers and employees – repeatedly. </li></ul></ul><ul><ul><li>Content can be duplicated for evidentiary purposes. </li></ul></ul><ul><ul><li>Ensures exposure to policies </li></ul></ul>

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Online Training Advantage <ul><li>Online training is consistent and repeatable. </li></ul><ul><li>As a result, can be presented to a jury or mediator exactly the way learner saw it. </li></ul><ul><li>Clearly demonstrates that if after training employee violated policies, it was NOT because of lack of understanding, but deliberate attempt to circumvent employer’s pay rules. </li></ul>

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Online Training Certification Page <ul><li>Employees must certify that they </li></ul><ul><li>Have completed the course; </li></ul><ul><li>Have reviewed your wage & hour and payroll policies and will abide by them; and </li></ul><ul><li>Know who to call with any questions or concerns </li></ul>

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<ul><li>Require non-exempt employees to review time records. </li></ul><ul><li>Daily review is ideal but something less frequent can be used provided employees have the opportunity to review actual records. </li></ul><ul><li>Provided records are correct, require employee certification as to accuracy. </li></ul>Element 3: Certification of Time Records

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Certification of Time Records <ul><li>If records are not correct, require employee to identify any inaccuracies to permit immediate correction. </li></ul><ul><li>Require employees to review accuracy of paycheck and, if systems permit, certify secondary review. On-line tools make this level of review more available. </li></ul><ul><li>Certification should cover off-the-clock work and meal periods. </li></ul>Element 3:

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<ul><li>Most employers already have some type of complaint mechanism in place…..but </li></ul><ul><li>Existing complaint mechanisms often do not specifically reference wage and hour issues. </li></ul><ul><li>Revise existing complaint mechanism to ensure it specifically addresses wage and hour issues. </li></ul><ul><li>Publicize complaint mechanism in handbooks, open door policies, collective bargaining agreements, ethics handbooks, and other employee communication channels. </li></ul>Element 4: Adopt a Robust Complaint Mechanism

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<ul><li>Train managers and payroll personnel to be alert to payroll concerns and treat any complaints with same level of attention as other employee relations complaints (i.e., sexual harassment). </li></ul><ul><li>Promptly investigate payroll concerns using same techniques and controls as other types of internal complaints. </li></ul><ul><li>If determined to be appropriate, take prompt and effective remedial steps. </li></ul><ul><li>Effective remediation may require payment of back wages. </li></ul>Element 4: (cont’d) Adopt a Robust Complaint Mechanism

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<ul><li>Adopt an audit protocol to ensure employees and managers are following policies and procedures. </li></ul><ul><li>Audit protocol should be designed to be discoverable in the event of future litigation as part of Company's good faith defense. </li></ul><ul><li>Promptly investigate and remediate any discovered violations. </li></ul><ul><li>Implement appropriate discipline for managers and employees in the event of violations. </li></ul>Element 5: Audit Time Records for Compliance

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<ul><li>In some reported cases, employers have been criticized for quickly disciplining employees for timekeeping violations but not doing so for manager violations. </li></ul><ul><li>Manager misconduct is increasingly being characterized as “wage theft”. </li></ul><ul><li>Promptly address Manager misconduct. Where confirmed, consider it a serious violation of the Company's most important policies. </li></ul>Element 6: Impose Appropriate Discipline for Policy Violations by Employees and Managers

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<ul><li>Timekeeping policies and procedures should be reinforced through available communication means. </li></ul><ul><li>Annual letter to all employees. </li></ul><ul><li>Newsletters. </li></ul><ul><li>Ethics alerts </li></ul><ul><li>Postings. </li></ul><ul><li>Refresher training. </li></ul>Element 7: Periodic Reminders

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A Question for You… If your organization may be interested in purchasing ELT’s online training solutions, and you would like an ELT Sales Executive to follow up with you, type &quot;YES&quot; in the box below. If your organization may be interested in purchasing ELT’s online training solutions, and you would like an ELT Sales Executive to follow up with you, type &quot;YES&quot; in the box below.

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<ul><li>Interested in our solutions? </li></ul><ul><li>[email_address] </li></ul><ul><li>www.elt.com │ 877.358.4621 </li></ul><ul><li> Additional substantive questions? </li></ul><ul><li>[email_address] </li></ul><ul><li>[email_address] </li></ul>