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Wage and Hour Law

Hefty suits, DOL crackdowns encourage FLSA compliance audit

 Those of you still looking for a New Year’s resolution may wish to look carefully at wage and hour compliance in the coming year.  Though it’s always a good idea to audit your legal compliance in any area of employment law, 2010 seems to be a particularly good time to get those wage and hour ducks in a row.  Here’s why.

That’s billion with a “b”


For some, the stakes are simply getting too high.  AT&T began 2010 under the weight of not one but two wage and hour lawsuits, together seeking a total of $1 billion in damages and back pay for 5,000 current and former employees.

The suits, filed separately in Georgia and California courts, allege that employees were denied overtime pay by being improperly classified as exempt managers.  The employees, all “level one” managers within the company, argue that the level one management role is the lowest in the company’s management tier, involving only minimal supervisory work that doesn’t meet the federal standard for exemption from the Fair Labor Standards Act (FLSA).

The employees claim they were asked to work far more hours than a typical 40-hour workweek.  Some claim they racked up more than 100 hours of work time that should have been compensated at the higher overtime rate.

Similarly, retail giant Wal-Mart Stores Inc. recently settled another in a string of wage and hour class-action suits, agreeing to pay $40 million to Massachusetts employees who claimed the company violated state and federal law in denying rest and meal breaks, refusing to pay overtime and altering timecards.  The settlement, which was the largest in Massachusetts history, came even after the company agreed to pay up to $640 million to settle 63 outstanding federal and state class-action wage and hour suits in late 2008.

DOL’s enforcement agenda for 2010


Then there’s federal government enforcement.  The U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) had a somewhat embarrassing year in 2009, starting the year off with a massive backlog of opinion letters and then later being the subject of a scathing investigative report by the Government Accountability Office (GAO).  The GAO report revealed extraordinary inefficiencies in the WHD’s response to complaints, intake process and conciliation attempts, leaving many victims of wage violations without recourse.  In response, Secretary of Labor Hilda Solis issued a written statement noting that the WHD had already begun the process of rectifying the inefficiencies found in the department.

Further communication from Solis indicates that 2010 may certainly prove to be a year of ramped-up labor enforcement from the WHD.  For example, a November 19, 2009, press release announced the hiring of an additional 250 wage and hour investigators as well as plans for a public awareness campaign on worker rights that is expected to launch in 2010.  The hiring effort at the WHD represents a staff increase of more than one-third, a move intended to bring about more timely responses to employee complaints of wage violations and more targeted enforcement in industries such as agriculture, food service, janitorial and construction.

Further, in a series of live Web chats hosted by the WHD in December, Solis announced the DOL’s regulatory agenda for 2010 and outlined her priorities for the year.  Among the priorities, she indicated that new regulations on employer record keeping under the FLSA should be expected in August 2010.  The regulations are expected to require employers’ payroll records to be more open and available to employees to demonstrate compliance with minimum wage and overtime requirements.


Getting in shape for the new year

Solis has sent a clear message to employers, recently stating that the DOL “will not rest until the law is followed by every employer and each worker is treated and compensated fairly.” 

Audits in the following areas can provide a helpful review of your wage and hour situation:

  1. Job classifications.  Review classifications to ensure employees are properly classified as exempt or nonexempt.
  2. Payroll deductions.  Assess payroll deductions to make certain they are in compliance with both federal and state law.
  3. Working time.  Evaluate payroll practices to determine whether working time is appropriately compensated (e.g., on-call time, travel time, interrupted meal breaks).
  4. Overtime calculation.  Audit overtime calculations to ensure all required compensation is included in determining an employee’s regular rate of pay.
  5. Furloughs and reduced-hour schedules.  Examine implemented cost-saving measures, such as furloughs or reduced-hour schedules, to make certain they comply with the law.
  6. Child labor.  If you have any minors working for you, confirm that they are working in permitted positions and during permitted hours.
  7. Record-keeping requirements.  Inspect payroll records to ensure they are accurate and maintained in accordance with the law.

This article is reprinted with permission from
Kentucky Employment Law Letter, which is published by M. Lee Smith Publishers LLC.


If you have questions regarding Federal or State wage and hour law, please contact any member of Greenebaum’s Labor and Employment Practice Group.

Even though the content of the above Greenebaum Doll & McDonald e-bulletin is primarily informative, state and federal law obligates us to inform you that this is an advertisement. You have received this advisory because you are a client or friend of the firm.

About Greenebaum Doll & McDonald PLLC
Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 170 professionals in five offices, serving local, national and international clients in virtually every industry. A forward-thinking business law firm, Greenebaum is committed to the practice of Breakthrough Law®. 

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