Wage & Hour Defense Blog : Wage & Hour Lawyer & Attorney : Epstein Becker Green Law Firm : DOL Enforcement, FLSA Coverage

by Kara M. Maciel

The healthcare industry continues to be the main target in the onslaught of wage and hour claims asserting violations of unpaid overtime and missed meal periods. These claims often result in millions of dollars being paid out to settle lawsuits and government investigations. 

As recently reported by the New York Times, the Obama Administration and the Department of Labor continue to focus on the healthcare industry over its pay practices. Armed with significant financial resources and additional investigators, the DOL has increased its enforcement efforts across the country, with notable results. For example, the DOL recovered more than $2.7 million from a Boston hospital system for 700 employees in overtime back wages. Similarly, in St. Louis, a healthcare employer recently settled with the DOL for $1.7 million for over 4,000 employees. Residential nursing homes and assisted-living centers are facing similar investigations.    

Many of the cases focus on overtime violations as a result of missed meal breaks. Under the federal Fair Labor Standards Act, an employee is entitled to a bona fide meal period during which the employee must be completely relieved from duty. If an employee is called back to work or is otherwise performing some patient tasks during the meal break, then the entire break period becomes compensable work time. Often, employers set their time clocks to automatically deduct 30 minutes per day in accordance with their policy that employees are required to take a full meal break during their shift. If an employee fails to report to his manager or to accounting that he worked during all or part of his meal break, the employer inadvertently could fail to pay the employee for all time worked.  For hospitals and other healthcare employers, monitoring duty-free meal breaks is especially difficult considering the importance of patient care which complicates regular, set schedules. Also, these claims are difficult to defend because the employer does not have complete and accurate records of when the employee worked during the meal break.   

The explosion of wage and hour actions against healthcare employers is due in large part because it is one segment of the economy that is growing and expanding its workforce, especially now with the enactment of health reform. Plaintiffs’ attorneys are also becoming much more aggressive in their efforts to target vulnerable employers. No longer waiting for a disgruntled employee to make a complaint, plaintiffs’ attorneys are using the ease of the internet to identify potential class members and highlight their investigations against susceptible hospitals and healthcare providers.   

In response to the renewed attention by the government and plaintiffs’ counsel, all healthcare employers must be on alert and understand that they are increasingly the focus for a government investigation or a class action lawsuit. The tidal wave of claims is not receding and employers must be vigilant in their compliance with federal and state wage hour laws. Employers should ensure that they have compliance programs in place with a strategic plan for handling potential audits and enforcement actions. Additionally, establishing a defensive game plan in the event a lawsuit is filed is essential to limiting exposure to liability early in the case. If a comprehensive payroll practices compliance audit has not been performed yet this year, now is the time to spot potential vulnerabilities and implement corrective solutions. Areas to check include time spent before or after scheduled shifts, missed meal breaks, travel time spent between patients’ homes, recordkeeping and proper classification of exempt employees. Spending the time and effort proactively reviewing pay practices can pay off significantly in the event the government knocks on the door or a class action lawsuit is filed.        

By Betsy Johnson

President Obama just celebrated his first year in office and his Administration has been busy! Employers of all sizes are starting to see the effects of the Obama Administration’s workplace agenda; especially at the Department of Labor (DOL). The watchword for all employers in the wage/hour arena for 2010 is “compliance.”  The DOL is slated to receive a substantial budget increase this year and it is going on a hiring spree to increase the number of investigators and enforcement personnel. 

The DOL’s agenda includes increased audit and enforcement proceedings related to “off the clock” work and the misclassification of employees as “exempt” under the Fair Labor Standards Act (FLSA). In addition, the DOL (in cooperation with the IRS) will focus its audit and enforcement proceeding on employers who misclassify individuals as independent contractors.  Now, more than ever, employers must have programs in place to ensure compliance with the myriad of wage/hour laws and regulations, and implement a clear strategy for handling government audits and enforcement actions. While the thought of conducting a comprehensive payroll practices compliance audit can be daunting, employers can efficiently conduct “spot” audits of particular areas where they may be vulnerable. 

As an initial matter, employers should determine who will conduct the audits. Utilizing internal resources such as the Human Resources and/or Payroll Departments and/or the company’s General Counsel will help keep the costs down. However, using internal resources may not guarantee that the results will be protected by the attorney-client privilege should the company become involved in litigation regarding the subject matter of the audit. As such, employers may wish to seek assistance of outside counsel to conduct the audit and analyze the results.

The purpose of these “spot” audits is to: 1) identify areas of non-compliance; 2) identify policies, procedures and/or practices that can be improved; 3) develop a plan for improvement; and 4) implement the plan. The areas where most employers are vulnerable to government actions and employee claims in the wage/hour area are:

•         Overtime calculation and payment

•         Off the clock work

•         “Donning and doffing” issues

•         Classification of employees (exempt v. non-exempt)

•         Time keeping

•         Recordkeeping

•         Proper classification of independent contractors

In planning a “spot” audit, employers should determine: 1) the scope and depth of the audit; 2) what data needs to be collected; 3) what documents need to be reviewed; 4) which managers should be interviewed to obtain relevant information; and 5) whether the employees should be surveyed for relevant information. On a cautionary note, if the employer believes there may be too many “skeletons in the closet” that may be exposed in an audit, consideration should be given to retaining outside counsel to assist in the audit so that the process and the results can be protected by the attorney-client privilege.

Finally, employers must decide what to do with the results of the audit. Some things to consider are: 1) who will be apprised of the results and how (written or verbal); 2) will the person who conducted the audit make recommendations regarding problem areas; 3) what, if anything, is going to be done about any problems; 4) how should any changes be implemented (a “spin doctor” may be needed); and 5) how is the employer going to address employee questions and challenges.

In the short-term, the exercise of conducting internal audits may be viewed as a distraction from an employer’s business purpose. In the long run, however, getting the company’s “house in order” before a government agency knocks on the door will save time, attorneys’ fees and the intangible costs of being embroiled in administrative or civil litigation. Remember the old adage: “An ounce of prevention is worth a pound of cure.”