I’m told the Chinese consider the wish, “May you live in interesting times,” to be a curse. As we near the end of 2010, many employers may feel they’ve been living in “interesting times,” at least as far as wage and hour compliance is concerned.

Looking Back at 2010

In our Outlook report last year we predicted two major trends for 2010:

  • Greater emphasis on enforcement of wage and hour laws.
  • Further increases in litigation.

All indications are these predictions came true.

In particular, lunch and break deductions have come under intense scrutiny by both regulators and plaintiffs’ attorneys. As we reported in a blog article entitled The Dangers of Automatic Meal Deductions, employers who automatically deducted for meals or breaks in 2010 were playing with fire.

In addition, new wage and hour laws were passed in 2010 in several states, potentially opening more employers up to liability. For instance, in September New York State enacted the “Domestic Workers’ Bill of Rights.” This law extended minimum wage protections and overtime pay to nannies, housekeepers and other domestic help employed by families and individuals.

This issue is not confined to the state level. As we previously reported, in April the US Department of Labor (DOL) released a Semiannual Regulatory Agenda. Among other things, the Agenda announced a review of the federal rules related to minimum wage and overtime for “home companions.”

In 2010, cash-strapped states also began taking a much closer look at worker classification. Suspecting they are losing significant amounts of tax revenue related to employees misclassified as “independent contractors,” several states announced enforcement initiatives or created task forces to address the issue. Others substantially increased employer penalties for misclassification.

What to Expect in 2011

Compliance & Enforcement

We expect the trend of increased enforcement to continue into 2011. US Secretary of Labor Hilda Solis has reiterated her commitment to strong DOL enforcement of wage and hour laws. We anticipate the states will also keep up the pressure.

  • If you haven’t recently conducted a wage and hour audit, now is the time to do so. Pleading ignorance of the rules won’t do you any good when the DOL or state labor department come knocking. However, documentation that you’ve put forth a “good faith” effort to comply with the rules might help. If the audit reveals any issues, correct them, quickly. This is not the time to try to sweep problems under the rug.

Continued Uncertainty

The issue of “donning and doffing” of protective gear has once again reared its head in several lawsuits. Unfortunately, rulings from the various courts have been inconsistent, leaving employers without clear guidance. We anticipate confusion to continue for some time in this area, at least until the various appellate courts can agree on standards.

  • If you employ workers who wear protective gear at work, check regularly with your employment law attorney to make sure you’re in compliance with the latest rulings covering your jurisdiction. This is also a good time to review your timekeeping policies. Even if it appears you are not required to compensate employees for donning and doffing, tracking this time can protect you from overpaying in the event a court later rules you should pay for all or part of the time.

Worker Classification

In the latest Semiannual Regulatory Agenda, the DOL indicated they intend to amend the regulations related to worker classification as independent contractors. Specifically, they will likely soon be requiring employers to document the specific criteria they used to determine worker classification, furnish this analysis to the workers and maintain a copy on file for the DOL and state auditors to review on request.

We believe this issue will also continue to be a hot-button item with the states, as they seek additional tax revenue.

  • If you employ independent contractors, carefully document and be prepared to justify your classification of those workers for both state and federal auditors. This is particularly important if you are in the construction industry, which has been specifically targeted for stepped-up enforcement by several states. Be sure to track hours worked even for those you classify as contractors. This will ensure you don’t overpay if an audit reclassifies them as employees and you become liable for minimum wage and overtime pay.

Lunch Breaks

According to the Society for Human Resource Management and various news reports, plaintiffs’ lawyers have targeted dozens of large health care organizations with lawsuits. These suits allege the hospitals deducted for meal breaks when employees were actually working through lunch. We anticipate this trend will continue to spread across the country and may branch out into smaller employers and other industries with similar payroll practices.

  • If your time and attendance system is configured to automatically deduct for meal periods, consider instead having your employees clock out when they actually go to lunch, and clock in when they return. This is especially important if you are in the health care industry or otherwise have relatively large numbers of employees who may be called upon to work through all or part of their lunch.

The Bottom Line

In an environment of stepped-up enforcement and aggressive litigation, prudent employers will consult regularly with their employment law attorney to ensure their policies and procedures are in line with current regulations.

We also advise you to track work time for all employees, regardless of status or classification. Accurate time records can prove invaluable to your defense in the event of a lawsuit or wage and hour audit.

Don’t risk your business! Now is the time to upgrade your time tracking solution. We invite you to review the selection of time and attendance products offered by Acroprint Time Recorder Company. With choices ranging from heavy-duty punch clocks to sophisticated web-based hosted solutions, we can accommodate most business requirements. If you have any questions, please contact us or find a local dealer who can help you make the right choice for your business.

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