Transcript Slide 1

Some things you should know:
Wage and Hour
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Copyright 2012©
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Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR
Insurance Community Center, LLC
Director of Education
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Wage and Hour defined
Statutory issues and concerns
Litigation trends
Reduction of risk exposures
Insurance coverage marketplace
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Wage and Hour Defined
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The FSLA was enacted to regulate
minimum standards
• Hours allowed per week / per
month
• Minimum wage payment
• Applicability of overtime
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Minimum wage $7.25 /hour
Under age 20
$4.25/hour first 90 days of employment
Tipped employees
$2.13 per hour if they claim a tip credit
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Note that state laws can increase
these minimums, but cannot be
lower than federal statutes
Example: California is $8.00/hour minimum
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FSLA does not limit either
daily or weekly hours
worked
A workweek is determined
using 168 hours – not
necessarily a calendar week
• Except employees under
age 16
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Hours is excess of 40/week must be paid at 1 ½
times pay rate
• Certain employees can be exempt
• Overtime is not automatically required for
Saturdays, Sundays, holidays or regular rest
days
Overtime is not limited
Paying a fixed salary does not discharge
overtime obligations
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Required to remain
on call at employer
premises is working
On-Call Time
An employee on call
while at home is not
working
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Rest and Meal Periods
• Rest periods of short duration, usually 20
minutes or less, must be counted as hours
worked.
• Lunch breaks are not counted as hours
worked
• Must be completely relieved from duties
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Sleeping Time and Certain Other Activities
• If required to be on duty for 24 hours or more may agree
with employer to exclude 8 hours of sleeping periods
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Lectures, Meetings and Training
Programs
• Attendance need not be counted if 4 criteria
are met
• Outside normal hours
• Voluntary, not required
• Not job related
• No other work is concurrently performed
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Travel Time
• Determined based upon kind of travel
• To and from specific job location is
not work time
• Additional time to travel to another
town to work for one day is work
time
• To and from job site is work time
• Travel away from home is work time
(not including air, train, boat, bus,
auto)
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Executive, administrative,
professional, outside sales
and certain computer jobs
Job titles do not
determine exempt status
Exempt if certain tests are
met
It is the duties that
determine exempt or nonexempt status
Apply to “white collar”
employees
Salary must be at least
$455/week
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Executive
Exemption
• Salaried
• Management of the
enterprise or a
specific department
or subdivision
• Direct two or more
full-time employees
• Must have authority
to hire or fire or
provide suggestions
for hiring, firing,
advancement,
promotion of other
employees
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Administrative
Exemptions
• Salaried
• Office or nonmanual work
• Management or
general operations
of employer or
customers
• Exercise
independent
discretion or
judgment
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Professional
Exemption
• Work must involve
advanced knowledge and
include work requiring
exercise of discretion and
judgment
• Must be in a field or
science or learning
• Advanced knowledge
must be acquired by
prolonged, specialized,
intellectual instruction
• Sub-category or creative
professional must
involve invention,
imagination, originality
or talent
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Computer Employee Exemption
 Salaried or at least $27.63 /hour
 Systems analyst, programmer, software engineer
or similar skilled worker in computer field
▪ Application of systems analysis techniques and
procedures
▪ Design, development, documentation, analysis,
creation, testing or modification of computer systems or
programs, including prototypes, based on and related to
user or system design specifications or a combination of
above
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Outside Sales
Exemption
Primary duty
must be making
sales or obtaining
contracts
Regularly
engaged away
from employers
place of business
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Highly Compensated Employees
• Performing office or non-manual work
• Compensation of $100,000 or more
• Must perform one or more duties as
outlined in executive, administrative,
professional categories
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Blue Collar Workers
• The exemptions do not apply to manual
laborers or other “blue collar” workers
who perform work involving repetitive
operations with their hands, physical skill
and energy
• Rate of pay or salary status is irrelevant
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From 2001 to 2006, federal court wage and hour class
action filings doubled and the pace has continued to
accelerate.
90% of all state and federal class action suits in the US
are wage and hour
• 2010 – 6,825 federal wage and hour cases
Average settlement $34,000,000
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Lawyers tend to employ industry-specific
approach
• One successfully sues – others follow
Increase largely due to plaintiff attorney’s
• DOL encourages the filing of claims on claimant’s behalf
and is highly engaged in labor code enforcement
• Data suggests that up to 70% of all employers are not in
compliance
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Two main claims
Unpaid work time
Misclassification
• Not accounting for
all of the time
worked
• Categorizing an
employee as exempt
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Five main subsets for unpaid work
time litigation
• Deductions for meal periods
• Rounding
• Remote work
• Off-the-clock work
• Regular rate issues
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Some companies
automatically
deduct meal periods
without a method to
verify whether
employee worked
all or part of the
meal break
This is not illegal,
but can be very
difficult to monitor
• Stop this practice
• Implement
timekeeping software
and monitor
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DOL established a rounding regulation originally because of
employees standing in line to clock in
Lawyers often use this to
Employee time was always
argue that rounding is more
about saving the employer
rounded down, not up
money
New automation software has largely removed this situation
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Work performed outside the visual
observation of the employer
• Logging onto computers from home
• Using Ipads, telephones to access email at all
hours
• Driving for work-related purposes
• Reviewing work or files at home
• Taking phone calls after hours
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Employee works on
premises but does not
clock in
• Exposures include
arriving early, skipping
lunch, working late
Enforcement of written
policy
• Require employees to
submit accurate,
complete and signed
time records
• Prohibit off-the-clock
work (train managers to
not even suggest this is
acceptable)
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Errors in factoring the value of bonuses and
commissions for hourly employees who work overtime
Non-discretionary bonuses must be calculated
retroactively and include overtime in that calculation
Use flat percentage of pay
Use software specific for this purpose
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Insurers have excluded FSLA claims since the
beginning of EPLI coverage in the 1990’s
Some policies issued in the past 10 years have
also excluded unfair business practices
In the past several years, those exclusions
were augmented with a specific wage and
hour exclusion
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Virtually all EPL coverage forms exclude
wage and hour claims today
Sample exclusion:
 This insurance does not apply to… any loss
alleging violation of responsibilities, duties or
obligations imposed under any Wage and Hour
statute or regulation or any alleged unfair
business practices act.
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Since the policies include defense costs
within the definition of “loss”, the policy
responds for neither defense nor indemnity
of these claims
Many insurers will not extend coverage for
either defense or indemnity
Endorsement may be “automatically”
included
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Coverage may be included as a sublimit
Defense
only
Defense and damages
25,000, $50,000,
$100,000, $150,000,
or $250,000 sublimit
Separate deductible
may apply
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The policy will also apply restrictive
language that will remove coverage for
any claims of which management is
aware prior to the inception of the
policy
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Train employees and managers regarding
hours worked
HR should create written procedures and
implement protocols to review and audit
employee practices
 Create specific employee reporting process about
timekeeping or payroll inaccuracy
 Require employee certification of their records
and payroll checks
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Three distinct means of identifying concerns
 Employee complaint
 Manager’s report
 Audit results
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Watch and correct employee habits such as
taking work home, working during lunch
breaks or arriving early to work
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The agent must search ALL available markets
for this coverage
 If none offer – advise in writing and obtain dated
signature
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If coverage is available, even if the premium
for the policy is higher than the competition,
offer all, describe coverage, obtain dated
signature
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Implementation of wage and hour
compliance program can reduce exposure to
suits
Ongoing audits, enforcement and training is
required
Supplement these risk reduction techniques
with available insurance
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
Laurie Infantino
 [email protected]
 714 803 5830

Marjorie Segale
 [email protected]
 714 206 9583
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