Mr. Castleton is a former Department of Labor, Wage and Hour Division (WHD) Investigator. His experience as a WHD Investigator has helped business clients defend against WHD investigations throughout the country. If you have additional questions, please feel free to contact Mr. Castleton at (219) 769-1313 and review his article on WHD investigations by clicking here.
UPDATE: THIS BLOG POST HAS BEEN UPDATED BASED ON SEVERAL AMENDMENTS MADE TO THE LAW.
There has been a lot of press about the “right to work” legislation which has now been signed into law by Governor Mitch Daniels. While the official law has not yet been published, the bills were the Indiana House Bill No. 1001 and Indiana Senate Bill No. 269.
The new law is divisive. Unions suggest that it undermines their cause and weakens workers’ rights. Others suggest that it protects an employee’s right to choose how to spend his or her own paycheck. No matter what your opinion, the most important thing is to understand what the law does now that it has been signed into law, and what the penalties are for violating the law.
Coverage: With some exceptions, the Right to Work law applies to employers with one (1) or more employees working in Indiana.
Effective Date & Retroactivity: The Right to Work law applies to all contracts that are entered into, modified, renewed, or extended after March 14, 2012. The law is not retroactive.
Important Provisions: The Right to Work law’s primary provision that will impact employers and unions is Section 8. Section 8 prohibits employers or unions from requiring an individual to pay union dues or contribute an equal or pro rata share of union dues or fees to a charitable organization.
Section 8 states, “A person may not require an individual to: (1) become or remain a member of a labor organization; (2) pay dues, fees, assessments, or other charges of any kind or amount to a labor organization; or (3) pay to a charity or third party an amount that is equivalent to or a pro rata part of dues, fees, assessments, or other charges required of members of a labor organization; as a condition of employment or continuation of employment.”
Section 9 goes on to state that any “contract, agreement, or practice, written or oral, express or implied” that violates section 8 between a labor organization and an employer is unlawful and void.
Available Remedies & Possible Damages: Section 10 makes it a Class A misdemeanor if a person knowingly or intentionally, directly or indirectly, violates Secion 8.
Section 11 grants certain state agencies and officials with the right to investigate complaints and enforce compliance. However, the law does not require that an individual complaining of a violation file with the state agency or official.
Section 12 of the Right to Work Law also provides a private right of action to an individual if the individual suffers an injury as a result of the law being violated, or from a threatened violation. The law provides that an individual may be awarded:
Actual and consequential damages, or liquidated damages of not more than one thousand dollars (whichever is greater);
Reasonable attorney’s fees, litigation expenses, and costs;
Declaratory or equitable relief, including injunctive relief; and/or
Other relief considered proper by the court.
Action Items: The Right to Work Law, and legislation on similar topics in other states if you are a multi-state employer, may have a real impact on your business. Employers should:
Stay up to date on developments related to this proposed legislation;
Review your current Collective Bargaining Agreements and other contracts relating to employment to determine if changes may be needed moving forward; and
Contact an attorney if you feel action is necessary.
Please contact us if you have any questions regarding these matters.
The Indiana State Senate passed the Bill (28 votes for, 22 votes against) largely along party lines on January 23, 2012. (Click here for legislative history and updates.)
The House has yet to pass the Bill. Stay tuned for additional updates.
Indiana has become the first Right to Work state in the Rust Belt. Governor Mitch Daniels signed the Right to Work law today, Wednesday, February 1, 2012.
Employers and unions should review their contracts and policies to ensure they comply with the new law moving forward.
A recent decision of a U.S. District Court reminded me of some of the lesser-known legal principles that expand an employer’s legal liability. This particular decision involved the Family and Medical Leave Act (FMLA) and an employer who uses a Professional Employer Organization (PEO) as a way of outsourcing some of its Human Resource (HR) functions. This is a relatively common practice in a variety of industries.
PEOs recruit, do payroll, administer benefits, hire, fire, and or perform other human resource functions. Hiring a PEO may result in cost savings, but employers should do their due diligence before signing on. Consider the case Kuhn v. Comfort Hospice Care, LLC.
Facts: Comfort Hospice Care, LLC (CHC) had thirty-six (36) employees working at locations in Nevada and Utah. CHC had an agreement with a PEO in which the PEO did a variety of administrative HR tasks. CHC retained the right to hire, fire, and control the daily tasks of employees.
A CHC employee requested FMLA leave, but was denied. The employee sued alleging that CHC has interfered with her ability to take leave under the FMLA, and had retaliated against her for requesting leave.
FMLA Coverage: CHC moved to dismiss the lawsuit arguing that that CHC was not subject to FMLA requirements because CHC did not have the requisite fifty (50) employees to be covered by the FMLA. The Court agreed and dismissed the case.
But the court offered a reminder to employers to be careful about joint employment. The Court stated, “It could be argued … that [CHC] is a joint employer with [the PEO], thus presumably placing [CHC] above the 50 employee threshold.” The employee did not argue that CHC and the PEO were joint employers, and the court stated that there was no joint employment relationship in this case.
Joint Employment: So what is joint employment? Generally speaking, joint employment is when two or more separate entities are considered one entity as it relates to coverage and liability under the FMLA. The primary issue in determining whether there is joint employment is control. Courts look to who has the right to hire, fire, assign, direct, or control the work of employees. If the entities share control, it is likely that they will be considered joint employers. Performing administrative tasks alone usually does not result in a joint employment relationship.
If joint employment exists, employers that do not meet FMLA coverage requirements alone may be liable for violations of the FMLA as joint employers. This has serious practical implications for an employer, including providing leave to eligible employees and other possible liability for past denials of leave.
Action Items: Employers should:
Identify any relationships employers have with PEOs or other similar organizations;
Carefully analyze those relationships to determine if a joint employment relationship exists; and
Take proactive action to ensure that they are compliant with the FMLA.
For our last post on the topic of coverage under Federal and Indiana state employment laws, we turn to Indiana employment laws. Like many states, Indiana tries to fill in gaps where Federal Laws have failed to provide employees protection. But in some cases, Indiana defers to federal law by exempting employers from compliance if federal law already applies.
Indiana Civil Rights Law: The Indiana Civil Rights Law (ICRL) prohibits discrimination on the basis of race, religion, color, sex, age, disability, national origin, or ancestry. The ICRL generally applies to employers with six (6) or more employees.
The exception is age discrimination. Employers with one (1) or more employees may not discriminate on the basis of age. The ICRL prohibits age discrimination against employees between the ages of forty (40) and seventy-five (75) years old. If the employer is subject to the Age Discrimination in Employment Act (ADEA), it is exempt from the ICRL requirements regarding age discrimination.
Indiana Minimum Wage Law - Equal Pay Provision: The Indiana Minimum Wage Law (IMWL) prohibits employers with two (2) or more employees from discriminating on the basis of sex in regards to compensation for equal work. If the employer is subject to the Fair Labor Standards Act (FLSA), it is exempt from the requirements of this IMWL provisions.
Indiana Minimum Wage Law: The IMWL applies to employers with two (2) or more employees. It requires employers to pay a minimum wage of at least $7.25 per hour and overtime after forty (40) hours in a single workweek. If the employer is subject to the FLSA, it is exempt from the IMWL provisions.
Indiana Wage Claim Statute: The Indiana Wage Claim Statute (IWCS) applies to any employer who employs at least one (1) employee. Under the IWCS, employers must pay an employee his or her earned wages on the next regular pay date following termination, with some limited exceptions.
Child Labor: Indiana regulates the employment of children under the age of eighteen (18), with some limited exceptions. The law restricts the time of day, hours, and type of work performed by minor employees ages eighteen (18) and under. Restrictions vary depending on the age of the child.
Indiana Common Construction Wage Act: The Indiana Common Construction Wage Act (ICCWA) applies to most state and local public construction projects where the cost of construction is $150,000.00 or more. The coverage threshold increases to $250,000.00 on January 1, 2012, and $350,000.00 on January 1, 2013. Employers subject to the ICCWA must pay the prevailing wage applicable to the work performed under the contract.
Action Items: The beginning of a new year is a great time to make changes to employment policies, particularly where past practice does not comply with current legal requirements. Employers should:
Carefully review current employment policies and payroll practices;
Review the requirements of state and federal employment laws; and
Revise employment policies and correct practices to comply with state and federal requirements.
Dana Rifai | Wednesday, November 16, 2011 at 9:16AM
As an employer, having an outstanding workforce is essential to a successful business. If an employer finds an exceptional individual or applicant of foreign nationality, the employer can add this individual to its workforce provided the immigration status of the employee is in order. When contemplating hiring a foreign national, there are many different possible scenarios. I will address the some of the most common scenarios here.
Green Cards: A potential employee, who is a permanent resident and holding a green card, may be hired at once.
Permanent Visas: A permanent visa allows a foreign national permanent residency in the United States if he or she has a unique skill set or is offered a job that will not displace a U.S. worker. This determination is made by the Department of Labor through the labor certification process. The advantage of a permanent visa is the employee will maintain their position permanently by their ability to remain in the U.S. On the other hand, a permanent visa application takes a long time as the labor certification process is comprehensive and once approved, a waiting period may exist until permanent residency can be obtained by the employee.
Temporary Visas: A temporary visa can be simpler and quicker to acquire for a foreign national employee. An employer must apply for a temporary visa specific to the type of work the employee is doing. The U.S. does limit the amount of temporary visas issued each year depending on the type of visa requested, so employers should plan ahead whenever possible. Most temporary visas are just that, they are only for a limited time, depending on the visa obtained.
Other Considerations: Both permanent and temporary visas permit the foreign national to bring along his or her qualified dependants, spouse and children.
Whether temporary or permanent, an employer must find the right visa for their worthwhile foreign national employee. Factors to consider in any employment immigration petition process is how fast an employer can obtain a visa for an employee, how long will the visa last, which visa would the employee qualify for, and what is the expense of the immigration process.
An employer must keep in mind that the costs of the immigration sponsorship of an employee are by law paid for by the employer. A verification record of any foreign national employee’s immigration status must also be maintained by the employer immediately upon the foreign national’s employment.
An employer looking to hire a foreign national should establish the best employment immigration option for their employee and ensure employment of the foreign national is legally sound.
Action Items: An employer should:
Make sure to check a potential employee’s citizenship status before hiring,
Carefully assess whether the immigration laws apply to the individual being hired (you may wish to consult with a qualified immigration attorney),
Explore visa options for the individual based on the needs of your business.
Continuing with the theme of employment law coverage, let’s turn our focus to federal laws regarding equal employment opportunity and reductions in force.
Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act of 1964 applies to employers with fifteen (15) or more employees who worked for the employer for at least twenty (20) calendar weeks in the current or preceding calendar year. Title VII prohibits employers from discriminating on the basis of race, color, religion, sex (including pregnancy), and national origin.
Americans with Disabilities Act: The Americans with Disabilities Act (ADA) applies to employers with fifteen (15) or more employees who worked for the employer for at least twenty (20) calendar weeks in the current or preceding calendar year. The ADA prohibits employers from discriminating on the basis of disability.
Genetic Information Nondiscrimination Act: The Genetic Information Nondiscrimination Act (GINA) applies to employers with fifteen (15) or more employees who worked for the employer for at least twenty (20) calendar weeks in the current or preceding calendar year. GINA prohibits discrimination on the basis of genetic information of the employee or the employee’s family members.
Age Discrimination in Employment Act: The Age Discrimination in Employment Act (ADEA) applies to employers with twenty (20) or more employees who worked for the company at least twenty (20) calendar weeks in the current or preceding calendar year. The ADEA prohibits discrimination on the basis of age against employees who are over forty (40) years old, with some very limited exceptions.
Older Works Benefit Protection Act: The Older Workers Benefit Protection Act (OWBPA) amended the ADEA to prohibit employers from denying benefits to older employees. In connection with an exit incentive program or other employment termination program, the OWBPA requires employers to provide specified information and census data in an understandable format to employees participating in the program.
Workers Adjustment and Retraining Notification Act: And finally, the Workers Adjustment and Retraining Notification Act (WARN Act) applies to employers with one hundred (100) or more employees (not counting certain specified employees per the statute). The WARN Act requires that employers conducting certain types and sizes of layoffs provide notice at least sixty (60) days in advance to employees and appropriate agencies.
Remember that (1) state and local governments may prohibit discrimination on additional classifications, including, for example, gender identity, sexual orientation, family status, and others; and (2) this is not a comprehensive list of federal employment laws.
Next week we will turn our focus to Indiana state employment laws.
Action Items: Moving forward, employers should:
Carefully assess whether these laws apply to your business (you may wish to consult with a qualified employment attorney);
Explore any possible exemptions or exceptions that may apply to your business; and
Draft and implement policies that are compliant with the laws to prevent violations.
Please contact us with any questions or concerns you may have regarding these issues.
A lot of my recent reading has reminded me of the ever-expanding number and scope of federal and state employment laws. Requirements and coverage are so varied that I think it is valuable to provide a check-up checklist, if you will, over the next several posts of some of the most prominent employment laws. It can be used to do a basic review of your business to determine whether you must comply with these laws.
Today the focus is Federal Wage and Hour laws. Next post we will review Equal Employment Opportunity laws. Please note that these lists are not exhaustive and many of the laws contain exceptions and exemptions.
Davis Bacon & Related Acts: The Davis Bacon and Related Acts (DBRA) apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works.
Fair Labor Standards Act: The Fair Labor Standards Act (FLSA) applies to hospitals; institutions primarily engaged in the care of the sick, aged, mentally, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state, and local government agencies regardless of their gross revenues.
The Fair Labor Standards Act also applies to enterprises with (1) at least $500,000 in annual gross revenues, and (2) have employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods or materials that have moved in or are produced for interstate commerce.
Finally, the Fair Labor Standards Act applies to individual employees who are engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.
Family and Medical Leave Act: The Family and Medical Leave Act (FMLA) applies to public agencies and local education agencies regardless of their size.
The Family and Medical Leave Act applies to employers who have at least fifty (50) employees each working day during at least twenty (20) calendar weeks in the current or preceding year. Note that while the FMLA may apply to your business, employees must satisfy eligibility requirements before they qualify for leave.
Service Contract Act: The Service Contract Act (SCA) applies to contracts and bid specifications, with some exceptions, in excess of $2,500 entered into by federal or District of Columbia agencies where the purpose of the contract is to furnish services through the use of service employees.
Action Items: Moving forward, employers should:
Carefully assess whether these laws apply to your business (you may wish to consult with a qualified employment attorney);
Explore any possible exemptions or exceptions that may apply to your business; and
Draft and implement policies that are compliant with the laws to prevent violations.
Please contact us with any questions or concerns you may have regarding these issues.
During 2009 and 2010, the Wage and Hour Division (“WHD”) of the U.S. Department of Labor saw significant growth in staff, budget, and investigations. While the budget for the 2012 fiscal year looks to trim most government agency budgets, employers should remember that agencies will continue to investigate complaints. Understanding the anatomy of an investigation can help an employer calmly prepare and deal with a wage and hour investigation.
Initial Conference: The wage and hour investigation begins with an initial conference. The investigator usually sets up an appointment with the owner or upper-level manager to ask questions about the business, including the nature of the business, the employees, the wages, and other general questions.
Records Review: After collecting basic information, the wage and hour investigator will review payroll and other relevant records. The investigator will look for signs of inaccurate recordkeeping, incorrect payment of overtime, alterations to records, and other red flags indicating that there may be violations. If the investigator finds these red flags, the investigator will conduct a thorough review of at least two years of records.
Employee Interviews: Wage and hour investigators interview employees regarding their duties, hours, wages, other employees, and other relevant topics. Most interviews are confidential and are conducted without the presence of the employer or the employer’s representative. However, upper-level managers should never be interviewed without representation as their comments bind the company.
Back Wages: After collecting data, the wage and hour investigator will calculate back wages. Employers should be aware that the WHD and Circuit Courts may have different interpretations of the FLSA. These differences may have significant impacts on the amount of back wages owed.
Final Conference: After computing back wages, the wage and hour investigator will meet with the owner or upper-level manager again to discuss the findings of the investigation. The employer will be invited to come into compliance with the law. If the employer agrees, the investigator will disclose the back wages owed as well as if there are possible civil money penalties (CMPs). If an employer disagrees with the findings, they employer may refuse to pay back wages resulting from the alleged violation. If this happens, the employer will likely be referred to the investigator’s manager for further discussions and negotiations.
Industry Violations: Employers should know that certain industries have a history of violations. For example, nursing homes often fail to compensate employees for all hours worked; construction companies often pay overtime incorrectly; and restaurants rarely calculate overtime and tip credit correctly. Wage and hour investigators will generally focus on common industry violations when approaching different industries.
Action Items: Moving forward, employers should:
Carefully review their current payroll practices;
Review the requirements of wage and hour laws, including the FLSA, FMLA, SCA, and others; and
Take proactive steps to ensure compliance to avoid potential future liability and possible CMPs.
Please contact us with any questions or concerns you may have regarding these issues.
Update on Friday, February 10, 2012 at 9:07PM by
Bcclegal
The following video was created after writing this article…
Social media has become a double-edged sword for employers. It represents great marketing potential and threats to confidential business matters at the same time. The evolving nature of social media complicates an employer’s ability to draft adequate policies to address both sides. And employees often fail to realize that posting negative remarks about an employer to thousands of “friends” can have a material effect on a company.
As a result, employer social media employment policies on the topic vary widely. Some restrict communications; others encourage employees to promote the company or its products; while some attempt to do both. Whatever the company’s position, employers must consider several important factors when drafting social media policies.
Prohibiting Communications: Restricting employee communications through social media outlets (e.g., social networking sites) has been a target for the National Labor Relations Board (NLRB). The NLRB has responded to employer social media policies and actions pursuant to those employment policies with a critical eye in press releases and decisions. Generally, the fact pattern that concerns the NLRB is as follows. An employee uses social media to post negative remarks about the employer. Other employees and individuals comment on the post. The employer discovers the post and disciplines the employee(s).
The NLRB’s responses usually include two main points. First, the NLRB believes that an employee’s complaints and comments about work (what an employer would likely consider disparaging comments with no constructive purpose) are protected under the National Labor Relation Act (NLRA). Second, social media employment policies broadly prohibiting employees from posting disparaging remarks about the employer are invalid under the NLRA. The NLRB considers these employment policies and corresponding disciplinary actions to be a violation of the NLRA.
Encouraging Use of Social Media: Employers who encourage the use of social media to promote the company and its products should ensure that their policy complies with Federal Trade Commission (FTC) regulations. These regulations specifically address the use of social media in advertising and and require certain disclosures. Employers who violate these regulations may be required to take certain remedial action.
Additional Considerations: While social media has been fertile ground for government agency to find violations, employers should not shy away from implementing social media employment policies to protect their interests. Employers have the right to prohibit certain communications (e.g., disclosure of intellectual property; harassment of employees and customers), and in some instances they are obligated to do so (e.g., under the Health Insurance Portability and Accountability Act (HIPAA)).
Action Items: Moving forward, employers should:
Establish a clear vision of the use of social media in all aspects of the business (e.g., hiring, marketing, disclosures, etc.);
Identify any policies currently in place that relate to or address social media;
Carefully review the legal requirements associated with the company’s position and policies;
Identify any deficiencies in the current policies; and
Draft a comprehensive social media policy that protects the employer’s interests.
Please feel free to contact us if you have any questions or concerns regarding these issues.
The Fair Labor Standards Act (FLSA) generally requires employers to pay employees minimum wage for all hours worked, and time and one half the regular rate for all overtime hours worked. But the FLSA includes many exceptions and exemptions that can cause significant confusion among employers. Where misused, employers may be subject to significant back wage liability.
Widely considered to be the most problematic of the “white collar exemptions,” the Administrative Exemption lets an employer pay a salary to an administrative employee without having to pay overtime. But employers are almost guaranteed to have misclassified at least one of these employees as a result of misunderstanding the exemption’s requirements.
Administrative Exemption Elements: The Administrative Exemption applies if the employee:
Is paid on a salary or fee basis of at least $455.00 per week;
Performs office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
Exercises discretion and independent judgment with respect to matters of significance.
DOL Interpretation & Guidance: The U.S. Department of Labor’s (DOL) general policy is that coverage is broad and exemptions are narrow. This is particularly true for the Administrative Exemption because of the relatively undefined, subjective requirements. DOL investigators are instructed that it is likely easier to identify nonexempt duties rather than exempt duties performed by alleged administratively exempt employees first. This training can give investigators a cynical view of the administrative exemption as they first seek nonexempt duties.
DOL guidance has a similar tone. The DOL shocked the banking industry when it issued guidance in 2010 stating that the exemption did not apply to mortgage loan officers (See DOL Guidance Here). The DOL stated that mortgage loan officers were engaged in selling loan products to customers, which the DOL analogized to the production operations of a factory or sales in a retail establishment. Such duties are not considered to be related to business operations under the regulations.
Potential Penalties: Whether an employer is subject to a DOL investigation or lawsuit involving the Administrative Exemption, employers should be aware that liability may be significant if there are systemic misclassification issues. Back wages in the form of unpaid overtime usually result from a DOL investigation. Additional fines, including civil money penalties, may also be assessed depending on the circumstances. In a lawsuit, back wages and liquidated damages are almost guaranteed where violations are found. Employers should be proactive in reviewing and analyzing administrative positions to ensure continued compliance, particularly where the classification has been in place for many years and/or job descriptions and duties have changed.
Action Items: Moving forward, employers should:
Identify all employees and positions that are currently classified as administratively exempt;
Review and make necessary updates to job descriptions and duties;
Carefully review the elements of the exemption to determine if the employee satisfies the exemption; and
Reclassify positions that do not meet the requirements of the exemption.
Please do not hesitate to contact us if you have any questions or concerns regarding these issues.
Richard W. Castleton | 
