Wage and Hour Law: Your Company’s Not Exempt From Litigation

Speaker: Toni Locklear, Ph.D. Industrial Psychologist and Managing Director APTMetrics, Inc.

Robert Lewis, Ph.D. Industrial Psychologist and Vice President APTMetrics, Inc

Moderator: Mike Prokopeak Vice President, Editorial DIrector Talent Management magazine

#TMwebinar

Wage and Hour Law: Your Company’s Not Exempt From Litigation

Tools You Can Use •  Q&A

–  Click on the Q&A icon on your floating toolbar in the bottom right corner.

–  Type in your question in the space at the bottom.

–  Click on “Send.”

#TMwebinar

Tools You Can Use •  Polling

– Polling question will appear in the “Polling” panel.

– Select your response and click on “Submit.”

#TMwebinar

Frequently Asked Questions

1. Will I receive a copy of the slides after the webinar? YES

2. Will I receive a copy of the recording after the webinar?

YES

Please allow up to 2 business days to receive these materials.

#TMwebinar

#TMwebinar

Mike Prokopeak Vice President, Editorial Director Talent Management magazine


#TMwebinar


Robert Lewis, Ph.D. Industrial Psychologist and Vice President APTMetrics, Inc. Toni Locklear, Ph.D. Industrial Psychologist and Managing Director APTMetrics, Inc.

2011 APTMetrics, Inc.

Wage and Hour Law:

Your Company’s Not Exempt from Litigation

Presented by Robert E. Lewis, Ph.D. and Toni S. Locklear, Ph.D.

September 13, 2011

8 Privileged and Confidential

Agenda

•  Introduction to wage-‐hour law

• Why care about wage-‐hour laws?

• Difficulties implementing wage-‐hour laws

• How to limit risks associated with wage-‐hour laws

How to Reset Your Wage and Hour Practices to Avoid Litigation A Wage-‐Hour eBook from

© 20011 APTMetrics, Inc.


Introduction to Wage-‐Hour Law

• What is regulated by wage-‐hour law? •  Federal law:

•  overtime pay •  minimum wage •  child labor •  record-‐keeping requirements

•  State law: •  meal and rest breaks •  discharge notices •  pay upon discharge


Introduction to Wage-‐Hour Law

• Key issue in wage-‐hour litigation: Exemption •  Exempt—not subject to overtime pay regulations

•  Non-‐exempt—subject to overtime pay regulations


Exemption Standards

• Based on the work as it is done •  Individual determination •  Exemption types:

•  Executive •  Administrative •  Professional •  Computer Professional •  Outside Sales


Exemption Standards

• Key work tests: •  Salary level test •  Duties test

•  Discretion •  Independent judgment •  Authority •  Hire/fire authority •  Prolonged course of specialized instruction


Polling Question

1.  What percent of jobs in your company are classified as exempt from federal and state wage-‐hour laws? a.  Less than 20% b.  20 – 40% c.  41 – 60% d.  61 – 80% e.  81 -‐ 100% f.  I don’t know


Little Known Facts

•  Classifying jobs as exempt is voluntary •  No requirement to claim exemption for any job

•  Employers bear the burden of proof when claiming exemption

•  The Department of Labor estimates 70 percent of employers are not in compliance with the FLSA in some way


Wage-‐hour Issues are Important

•  Lawsuits are on the rise •  Wage hour suits outpace others (e.g., discrimination) •  77 percent rise in lawsuits filed between 2004

and 2009 •  Multi-‐million dollar settlements—

•  $1.77 billion in settlements in 2007-‐2010 •  Average settlement of $12.8 million per case

•  Damages •  Back pay for lost wages, interest,

liquidated damages, and attorneys’ fees •  Treble damages in some states

•  Changing exemption status can create litigation risk


Difficulties Implementing Wage-‐hour Laws

• Wage-‐hour administration crosses organizational lines •  The HR, finance, legal functions generally have some responsibility •  Little coordination among them •  Key players: legal and HR

• Work is changing •  Leaner staffing levels require managers to do more

“non-‐managerial” work

•  Laws require interpretation •  What is “work time”? •  When is doing non-‐management work “essential” to doing

management work?


Polling Question

2.  Which jobs do you wrestle with most regarding wage-‐hour issues? a.  Assistant managers/team leaders b.  Computer technicians c.  Accountants d.  Project managers e.  Other


Key Wage-‐hour Concerns

•  Employees working off the clock

•  Ensuring that employees take meal breaks

• Determining a job’s exemption status


Reactions to Wage-‐hour Challenges

•  Delegate wage-‐hour compliance to field/district management

•  Conduct compensation/market analyses •  Empower Staffing to make exemption

decisions at hire •  Create policy manual section on wage-‐

hour compliance •  Regular audits of wage-‐hour policies/

implications •  Train managers on managing meal

breaks and overtime •  Conduct job analysis

Leve

l of E

ffect

iven

ess


Case study – Guinup v. Petr-‐All Petroleum

Are retail store managers entitled to overtime pay? •  The Plaintiff’s Claim -‐-‐ the company misclassified all of its store

managers as exempt from both the FLSA and state wage-‐hour law •  Plaintiff managed a convenience store/gas station in NY state

•  Plaintiff spent: •  80% of her time on nonexempt duties such as counting

cigarettes and verifying gas readings •  20% of her time on exempt duties such as scheduling,

supervising, and evaluating employees

•  Most of her day free from supervision; the regional manager was generally not in the store

• 


Limiting the Risk of Wage-‐hour Issues

•  Knowing the work that is done is the number one way to limit wage-‐hour risk

•  Job Analysis is the preferred method for documenting work requirements •  Structured •  Defensible •  Drives coordination •  Documents critical job components

•  Frequency and importance of work activities •  Entry requirements for knowledge, skills and abilities •  Level of discretion and autonomy •  Policy creation versus enforcement versus execution



•  Job analysis process •  Determine jobs that present risk •  Collect structured, verifiable data

•  Develop a comprehensive work activity and knowledge/skill/ability list with job experts

•  With your employment attorney, decide which activities are exempt •  Identify the ratings you need based on your state (importance, time

spent, level of autonomy, etc.) •  Administer the survey to the entire population

•  Analyze the data, including for exemption implications •  Means and standard deviations •  Illustrate the findings using visuals to facilitate comparing jobs

on relevant dimensions



Job Analysis Results

•  How important are these job activities for the Manager job? •  3 – Critically important– this activity has significant impact on profit, performance, or safety •  2– Important-‐-‐ poor performance on this activity hinders performance •  1-‐-‐ Minor Importance– this activity must be done but has little impact on profit, performance or safety •  0– Not Applicable– this activity is not performed in this job



Job Analysis Results

•  Including both exempt and non-‐exempt activities allows you to assess the degree to which job respondents meet exemption criteria



• Develop job descriptions based on the job analysis

•  Key activities and responsibilities

•  Key and required KSAs

•  Minimum and preferred qualifications


Job Profiles


Job Profiles


Job Profiles



• HR Audit •  Policies—are wage-‐hour considerations reflected in policies?

•  Use of pagers and smartphones for email access •  On-‐call duty for computer operators/technicians •  Use of company-‐owned vehicles

•  Practices—are processes in effect for managing issues on an ongoing basis?

•  Grievance process for work time complaints •  Active training program for managers to understand their

responsibilities •  Cross-‐functional committee responsible for wage-‐hour

issues that meets regularly •  Regular employee survey to determine how employees

spend their time in important work activities


Summary

• Wage-‐hour issues require cross-‐functional management •  Typically from Legal, HR and Finance

• Knowing the job is your best proactive and defensive measure •  A job analysis is a court-‐tested method of determining status •  Changing an employee’s exemption status without knowing and

changing activities/skills is a recipe for litigation

• Audit your policies and practices to ensure coordination and proactive measurement •  Policies to ensure guidance •  Practices to ensure execution

Questions and Answers

#TMwebinar

Robert Lewis, Ph.D. Industrial Psychologist and Vice President APTMetrics, Inc. Toni Locklear, Ph.D. Industrial Psychologist and Managing Director APTMetrics, Inc.

Join Our Next TM Webinar

Connecting L&D With Integrated Talent Management

Tuesday, Sept. 20, 2011 • 

TM Webinars start at 2 p.m. Eastern / 11 a.m. Pacific

Register for upcoming TM Webinars at www.talentmgt.com/events

Join the Talent Management magazine Network

http://network.talentmgt.com/

#TMwebinar

Business

Wage and Hour Law: Your Company’s Not Exempt From Litigation