The U.S. Department of Labor’s (DOL) wage and hour enforcement under the Obama administration has become markedly more hostile toward employers, according to Paul DeCamp, former administrator of the Wage and Hour Division under President George W. Bush and an attorney at Jackson Lewis’ Washington, D.C., regional office.
Speaking at the 2012 Jackson Lewis Corporate Counsel Conference in Washington, D.C. on May 11, 2012, DeCamp said the division’s investigators are being instructed to seek civil penalties even in a first investigation of a site. He described this as unusual, saying it used to be that penalties were only for second or third violations.
DeCamp said he’s also seeing a broader effort to resolve claims on an enterprisewide basis. It used to be that an investigation would be resolved at a site. Now if there is a violation at a site, a companywide investigation may follow.
Liquidated damages are the “new normal,” even at the administrative stage, he said. It used to be that just back pay would be recovered at the administrative stage, not back pay and liquidated damages. He described this change as “daring employers to litigate.”
There are 50 percent more federal wage and hour investigators now than in 2008, he said, noting that in its 2013 requested budget, the DOL sought 1,839 full-time investigators. In 2008, there were just 1,208 investigators.
Wage and hour claims continue to grow. DeCamp said that from April 1, 2010, through March 31, 2011, plaintiffs filed 7,008 Fair Labor Standards Act (FLSA) cases in federal courts, which was an increase of more than 15 percent over the prior year. Plaintiffs today bring more than three and a half times as many FLSA cases as they did 10 years ago, when the annual filings for the year ending March 31, 2001, totaled 1,961 cases.
Industries targeted in FLSA class actions and Wage and Hour Division investigations include:
Construction, specifically residential construction.
Hospitality, specifically food/beverage and housekeeping.
Home health care.
Increasingly, class-action wage and hour complaints name individual officers, such as vice presidents of HR, and managers as defendants, DeCamp noted. Courts have been reluctant to dismiss claims against individuals who arguably had some role in setting or implementing the policies at issue, particularly where there is an ownership interest, he noted.
Exempt Positions Scrutinized More Closely
Positions receiving particular scrutiny in the professional exemption include accountants, engineers and information technology. “There is a lot of activity with the professional exemption,” DeCamp remarked.
The executive exemption hasn’t seen as much attention, he said, but there have been challenges to the classification of retail and restaurant store managers and assistant managers under this exemption as well as construction superintendents.
The amorphous administrative exemption is the hardest exemption to satisfy, he said, noting that mortgage underwriters, mortgage loan officers and “everybody else” who tries to fit in this exemption are being targeted by the DOL and plaintiffs’ attorneys.
And under the outside sales exemption, there is litigation over whether pharmaceutical sales employees and account reps should be exempt, including one case before the U.S. Supreme Court, Christopher v. SmithKline Beecham Corp.
DeCamp highlighted timekeeping practices that can lead to class actions, including:
Automatic meal deductions.
Supervisors editing employee time.
Required early arrival.
Off-the-clock pre-shift meetings.
Off-the-clock shift exchange.
The automatic meal deduction is only unlawful if a meal is not taken, but often the DOL will conclude it has not, particularly in the health care industry, he noted.
In addition to complying with the FLSA and state wage and hour laws, Decamp recommended that employers tell employees that if their time records are not accurate, they should let employers know immediately.
Allen Smith, J.D., is manager, workplace law content, for SHRM.
Supreme Court Weighs Whether Pharmaceutical Sales Reps Are Entitled to Overtime Pay, SHRM Online Legal Issues, April 2012