© 2009 Jackson Lewis LLP

NORTH DAKOTA HOSPITAL ASSOCIATION

THE SHIFTING LEGAL LANDSCAPE: 

CRITICAL CHANGES IMPACTINGHEALTH CARE REFORM,

IMMIGRATION, WAGE AND HOUR LITIGATION, AND THE NLRB

 OCTOBER 12, 2011

Presented by:

Christopher E. Hoyme

Jackson Lewis LLP

10050 Regency Circle, Suite 400

Omaha, NE 68114

402-827-4232

www.jacksonlewis.comHoymeC@jacksonlewis.com

Today’s Agenda

• FLSA Workplace Audit

• Protected Concerted Activity and the NLRB

• Immigration

• Health Care Reform Legislation

The Changed Face of the Department of Labor and FLSA Suits: Wage

and Hour Issues

New Administration, New Focus

• President Obama has proposed $13.3 billion for the

DOL, an increase of 4.7 percent.

• Department of Labor’s Wage and Hour Division has

begun the process of hiring 250 new field

investigators.

FLSA Basics

• Congress enacted the Fair Labor Standards Act in

1938 to address general economic conditions

prevailing during the Great Depression

• Four key components:

• Minimum wage

• OT for hours worked beyond 40 in a workweek

• Recordkeeping requirements

• “Oppressive child labor” prohibited

LET THE REVIEW BEGIN

…

Ask The Right Questions: Minimum Wage• Do all employees receive at least the current

minimum wage for every hour worked?

• Do you have casual laborers and, if so, are they

earning minimum wage?

• Are employees being paid for time spent on starting

or ending activities (booting up computer, changing

clothes, clocking in / out)

• Are lunch periods for non-exempt workers fully

undisturbed and 30 minutes or more?

• Are commission-only employees earning at least

minimum wage?

Ask The Right Questions: Overtime• Are all hourly workers receiving at least time and

one-half for all hours worked over 40 in a workweek?

• Are bonuses and commissions paid and, if so, are

they being used to calculate the hourly overtime

rate?

• Are actual hours worked – as opposed to scheduled

hours – being recorded?

• What mechanisms are in place to ensure no “off the

clock” work? Who is Responsible?

Ask The Right Questions: Exemptions

PRIMARY EXEMPTIONS UNDER FLSA

Executive

Administrative

Professional

Computer Professional

Learned Professional

Creative Professional

Ask The Right Questions: Other Exemptions

Outside Sales

Seasonal Amusement or

Recreational Establishment

Agricultural

Motor Carrier Exceptions

Domestic Workers

Police, Firefighter, and Public Safety

Communication

Commissioned Sales

Exemption Requirements

Under federal law, employee must meet 2 requirements:

1) salary basis test - the salary basis test is not

applicable to outside sales and certain computer

professionals.

AND

2) Have duties that are categorized as executive,

administrative, professional, computer or outside

sales under the FLSA

(Note: Most states generally track FLSA.)

Executive Exemption

• Primary duty is management of the enterprise in

which the employee is employed or of a customarily

recognized department or subdivision thereof.

• Customarily and regularly directs the work of two or

more other full-time employees.

• Has the authority to hire or fire other employees or

whose suggestions and recommendations as to the

hiring, firing, advancement, promotion or any other

change of status of other employees are given

particular weight.

Administrative Exemption

• Primary duty is the performance of office or non-

manual work directly related to the management or

general business operations of the employer or the

employer's customers.

• Primary duty includes the exercise of discretion and

independent judgment with respect to matters of

significance.

Exempt Administrative Employees Should Meet at Least 2 or 3 of These Factors● Has authority to formulate, affect, interpret, or

implement policies/practices.● Carries out major assignments in conducting the

operations of the business.● Performs work that affects business operations to a

substantial degree, even if employee’s assignments are related to a particular segment of the business.

● Has authority to commit Company in matters that have significant financial impact.

● Has authority to waive or deviate from established policies/procedures without prior approval.

● Has authority to negotiate and bind Company on significant matters.

● Provides consultation or expert advice to management.● Involvement in planning long- or short-term business

objectives.● Investigates and resolves matters of significance on

behalf of management.● Represents Company in handling complaints, arbitrating

disputes, or resolving grievances.

Professional Exemptions

• Two types:

1. Learned Professionals

The employee’s primary duty must be the

performance of work requiring advanced

knowledge.

In a field of science or learning.

Customarily acquired by a prolonged course of

specialized intellectual instruction.

2. Creative Professionals

The employee’s primary duty must be the

performance of work requiring invention,

imagination, originality or talent in a

recognized field of artistic or creative

endeavor.

Outside Sales Exemption

• Primary duty of making sales or of obtaining orders

or contracts for services; or for the use of facilities

for which a consideration will be paid by the client or

customer; and,

• Customarily and regularly engaged away from the

employer’s place or places of business; customary

and regular typically done weekly

• [No Salary Basis Requirement!]

“Computer Professional” Exemption• Primary duty of (A) application of systems analysis

techniques and procedures, including consulting with

users, to determine hardware, software or system

functional applications; or (B) 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 (C) design,

documentation, testing, creation or modification of

computer programs related to machine operating

systems; or (D) a combination of duties described in

(A), (B) and (C), the performance of which requires

the same level of skills; or;

• Employed as a computer systems analyst, computer

programmer, software engineer, or other similarly

skilled worker in the computer field.

● [$455 per week or $27.63 per hour]

Job Descriptions Should Be Accurate and Support Exempt Status

• Audits of employee job descriptions are important

to ensure that they accurately reflect what the

employee is doing.

• Exempt employees’ job descriptions should not

indicate ministerial tasks.

MISCLASSIFYING EMPLOYEES AS INDEPENDENT CONTRACTORS

• Employment status is defined by law, not by the

parties’ agreement

• Most significant factor is whether the putative

employer has control or the right to control the

worker, both as to the work done and the manner in

which it is performed

• Case-by-case analysis

• “Factors” to determine status issued by IRS and

EEOC

Ask The Right Questions: Independent Contractors

Factors to Consider:

• Right to Control Work

•  Tools and Equipment

•  Level of Skill/Expertise

•  Parties’ Understanding

• Ability to Discharge Employee

• Tax Treatment

• Benefits

• Employee's Occupation or Business

•  Regular Business of Employer

•  Assistants or other Workers

Ask The Right Questions: Independent Contractors

• Payment

• Hours of Work and Duration of Job

• Length of Relationship between Employer and

Employee

• Location of Work

• Opportunity for Profit

• Risk of Loss

• Exclusivity

• Costs Incurred

• Custom in Industry

• Right to Delegate

Incorrect Rounding of Employee Work Time (29 C.F.R. § 785.48)

• Time clocks are not mandatory

• Employer may record starting and stopping times to

the nearest:

• Five minute;

• One-tenth of an hour

• Quarter of an hour

• Employer must round up and down uniformly.

Employer cannot always "round down”

Incorrect Treatment of Breaks and Meal Periods

REST PERIODS

• Not required by FLSA

FLSA - (§785.18)

• Rest periods/coffee breaks from 5-20 minutes are

compensable working time

Incorrect Treatment of Breaks and Meal Periods Cont.

MEAL PERIODS

• Not required by FLSA

FLSA (§ 785.19)

• Meal periods are considered non-working time if:

• at least 30 minutes in duration; and,

• employee is completely relieved of duties

• Meal periods are compensable if the employee is

frequently interrupted.

Calculation of “Hours Worked” Under the FLSA (29 C.F.R. PART 785)

Compensable Working Time Includes . . .

• Time spent in primary work activities;

• Idle or stand-by time controlled or requested by

employer;

• Time spent by an employee outside normal hours

“required, suffered or permitted to work”.

Calculation of “Hours Worked” Under the FLSA, Cont.

When Is “On Call” Time Compensable?

(29 C.F.R. § 785.17)

• An employee who is required to remain on-call on the

employer’s premises or so close thereto that he/she

cannot use the time effectively for his/her own

purposes is working while “on-call.”

• An employee who is not required to remain on the

premises but is merely required to leave word at

his/her home or with company officials where he/she

may be reached is not working while on-call.

Calculation of “Hours Worked” Under the FLSA, Cont.

When Is Travel Time Compensable? (§§ 785.33-

785.41)

• Home-to-work and work-to-home travel is commuting

time and ordinarily not compensable working time;

• Travel time in a company vehicle is ordinarily

compensable working time;

• Travel time during the working day is compensable,

e.g., driving between patients, customers or sites;

Calculation of “Hours Worked” Under the FLSA, Cont.

When Is Overnight Travel Time Compensable?

• Travel time during employee's normal working hours

is compensable; and,

• Travel time on Saturdays, Sundays and holidays

which corresponds to an employee's normal working

hours is compensable; but,

• Travel time outside employee's normal working hours

on a public conveyance is ordinarily not

compensable.

Ask the Right Questions: Recordkeeping• Are non-exempt time entries and other payroll

records being kept for at least 3 years?

• Does your state require retention of records for

longer than 3 years and, if so, have you timely

retained all pay records under state law?

• Are your rounding practices lawful?

• Are all required posters up and current?

• Do your records contain all information required by

state and federal law?

• Who has authority to adjust time entries and how is

it monitored?

Insufficient Recordkeeping

FLSA (29 C.F.R. Part 516) Employers must maintain the following information for all exempt and non-exempt

employees:• Name and address

• Date of birth (if 18 years old or younger)

• Sex and occupation

• Total weekly earnings

• Dates of wage payments

• Dates of pay periods

• Deductions or additions to pay

• Wage basis, i.e., hourly or salary

Insufficient Recordkeeping, Cont.Employers also must maintain the following Additional information for all non-exempt employees:

• Regular hourly rate

• Total hours worked per week

• Straight time earnings for the first 40 hours worked

per week

• Payments excluded from the regular rate of pay

• Weekly overtime payments

Posting Requirements

• Employers are required to post a notice explaining

the FLSA in a conspicuous place.

• Notice must list minimum wage and other

relevant provisions.

• Notice must advise that discrimination/retaliation

against those who seek relief under the FLSA is

prohibited.

• Consequences for failing to post can be severe, as

seen in Ke v. Saigon Grill, 07 Civ. 2329 (MHD)

(S.D.N.Y. Oct. 20, 2008) (defendants’ failure to

post any FLSA notices resulted in a suspension of

the statute of limitations until the plaintiffs

received notice of their rights). Class of food

delivery persons awarded more than $4.6 million

in back pay and damages.

• Additional state posting laws.

Summary: Common Errors To Avoid

• Assuming that paying a salary makes an employee

“exempt.”

• Failing to pay for all hours an employee is “suffered or

permitted” to work.

• Directing staff to “get the job done” but ignoring the

time it takes to complete the task.

• Failure to pay for pre or post shift work activities.

• Thinking that the business is not covered by “Federal”

law or ignoring state law.

• Improperly applying an overtime exemption.

• Failure to properly calculate an employee’s regular

rate.

Summary: Common Errors To Avoid

• Deducting 15 or 20 minute rest breaks from work

hours.

• The “clock rule syndrome” [Auto-deduct ½ hour for

meal periods; rounding up to scheduled start but

deduct one minute at end if employee clocked out

early].

• Employee does work at home but the hours are not

recorded, thus, not paid.

• Treating an employee as an independent contractor.

• Taking partial day deductions from salary – may cause

it to appear hourly based.

• Making improper deductions from hourly wages –

such as register shortages, drive offs, damage, tools,

uniforms, etc.

Preventive Steps And Practice Development

• Ensure accurate timesheets and pay registers.

• Ensure no unauthorized off-the-clock work.

• Ensure bonuses and commissions are not wrongly

excluded from overtime.

Preventive Steps And Practice Development

Building “Good Faith” Defense to FLSA Claims.

• Sound policies

• Reporting mechanism for alleged violations

• Review and certification of payroll records

• Safe Harbor Policy

• Audit for compliance

Protected Concerted Activity and the NLRB

Section 7 of the NLRA Says:

“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

38

• NLRA prohibits employers from engaging in the following unfair labor practices:• Interfering with, restraining, or coercing employees

in the exercise of their right to organize or to bargain collectively

• Dominating or interfering with the information or administration of any labor organization

• Encouraging or discouraging membership in any labor organization by discriminating with regard to hiring, tenure, or conditions of employment

• Discharging or otherwise discriminating against any employee because he or she filed charges or gave testimony under the Act

• Refusing to bargain collectively with representatives of the employees

Unfair Labor Practices

39

CONCERTED

PROTECTED

TWO PART TEST

Protected Concerted Activity

40

• Dangerous Working Conditions• Wages• Benefits• Terms and Conditions• Lawsuits• Administrative Charges• Legislators• News Media

What Is Protected?

41

• Sit Down Strikes

• Partial Strikes

• Slowing Down on the Job

• Intermittent Strikes

What Is Not Protected?

• Comments to third parties critical of the company which make no reference to a labor controversy

• Comments to third parties critical of the company made recklessly or which are maliciously untrue

• Deliberately or maliciously false or inaccurate allegations about the company made in connection with appeals or complaints to government agencies or elsewhere

What Is Not Protected?

Examples:1. Two or more employees addressing employer about

improving working conditions and pay2. One employee speaking to his/her employer on

behalf of him/herself and one or more co-workers about improving workplace conditions

3. Two or more employees discussing pay or other work-related issues with each other

Concerted Activities

Scrutinized Policies

• Confidentiality Provisions

• Premises Rules

• Chain of Command Rules

• Solicitation and Distribution

• Fraternization Rules

• Social Media

“Employees may not discuss wages with co-

workers.”

“Office business is not a matter for discussion with

spouses, families or friends.”

“Company trade secrets and proprietary

information are confidential. Disclosure of such

information is prohibited.”

“Employees may not discuss confidential

proprietary information with competitors.”

NOT OK

NOT OK

OK

Confidentiality Rules

OK

“Employees must leave company premises when not working.”

“Employees may not remain in the warehouse when not scheduled for work or engaged in work.”

OK

Premises Rules

“Employees may not discuss confidential proprietary information with competitors.”

NOT OK

Solicitation

Distribution

Work AreasNon-Work Areas

Not OK, unlessall employees

involved are on non-work time

Not OK, unless all employees

involved are on non-work time X

Not OK, unless all employees involved are on non-work time X

X

Patient Care/

Cust. Serv. Areas

LAWFUL RULES FOR EMPLOYEES

Solicitation/Distribution Rules

Solicitation by one employee of another employee is prohibited while either employee is on his or her working time. Working time is that time when employees are expected to be working and does not include time before work, breaks, meal periods, or time after work. Solicitation by employees is prohibited at any time in [patient care and patient treatment] [customer service] areas.

Example of A Lawful Solicitation/Distribution Rule

The Current NLRB

• Aggressive stance

• Recent activity

• Posting requirements

• Property rights-bannering

50

Early Warning Signs

• Employees in work areas they do not normally visit.

• Avoidance of supervision.

• Groups form that include individuals who do not

normally associate with each other.

• Argumentative questions being asked in department

meetings.

• Nature/Frequency of employee complaints changes.

• Complaints are made by delegations, not by single

employees.

• Any other factor which appears to be out of the

ordinary which separates management from the

work force.

What Your Organization Should Do To Prepare

• Conduct A Vulnerability Assessment By:• Evaluating the effectiveness of:

• Orientation programs• Discipline/Discharge policies• Solicitation/Distribution Rules• Dispute resolution procedures• Front-line supervisors

• Recommit to Issue-Free Workplace• Evaluating safety and working conditions

10 Proactive Measures to Maintain Employees Right to Choose Union-Free Status1. Publicize a Positive Employee Relations Union-Free

Philosophy

• Pro-employee; not anti-union

• Mention the “U” word

2. Conduct supervisory/ management education

• Responsibility for creating/maintaining an

“issue-free” environment

• NLRB free speech rights

• Policies

• “Early” warning signs

10 Proactive Measures to Maintain Employees Right to Choose Union-Free Status3. Conduct employee education

• Your positive employee relations, union-free

philosophy

• The significance of signing a union authorization

card

• Union motivation for organizing

• The inherent risks of collective bargaining

10 Proactive Measures to Maintain Employees Right to Choose Union-Free Status4. Promote your positive employee relations, union-

free philosophy in orientation

5. Implement an employee relations communication

plan

6. Review/revise relevant policies/practices for legality

and optimization of legal rights

7. Conduct potential bargaining unit analysis

8. Assess internal/external vulnerabilities

9. Establish a “Rapid Response” team/individual

10. Consider alternative dispute resolution

Immigration Audit

Immigration & Customs Enforcement Worksite Enforcement

FISCAL YEARS 2008-2010

 

WORKSITE ENFORCEMENT FY08 FY09

FY10

Cases Initiated 1,191 1,461 2,748

Administrative Arrests 5,184 1,644

1,216

Total Criminal Arrests 1,103 410 442

Criminal Arrests (Employees) 968 296 446

Criminal Arrests (Employers) 135 114 196

Indictments 900 376 387

Convictions 908 338 305

I-9 Inspections 503 1,444 2,196

Final Orders 18 52 237

$ Amount for Final Orders $675,209 $1,033,291

$6,956,026

Fine Schedule

Substantive/Uncorrected Technical Violation Fine

Schedule

 Substantive Verification 1st Offense 2nd Offense 3rd

Offense

Violations $110-$1100 $110-$1100

+$110-$1100

 

 0%-9% $110 $550 $1,100

 

10%-19% $275 $650 $1,100

 

20%-29% $440 $750 $1,100

 

30%-39% $605 $850 $1,100

 

40%-49% $770 $950 $1,100

 

50% or more $935 $1,100 $1,100

Factors For Fines

Other Factors for Fines:

 

1. Size of the Business

2. Seriousness of the violations

a. Failure to complete an I-9 is the most serious

b. Failure of an employer to complete the attestation is

also serious

3. Whether the employees are unauthorized aliens and history

of previous violations by the company

4. Good faith of the employer

5. External factors

a. The Economy

b. Company’s ability to pay the fine

c. Employment rate

d. Analysis of the above factors looks at whether the

company will need to lay off workers in order to pay the

fine

Most Current I-9

Anti-Discriminati

on

Section 1:

Employee

Translator/ Preparer

Timing Issues

Attention -

Perjury!!

Sign/Date

Most Current I-9 (Cont’d)

Certification:

Perjury!!

Section 2:

Employer

Section 3: Reverificati

on

Expiration

Most Current List A, B, C

+

U.S.

New:All

documents must be unexpired

!

CANNOT HAVE

“TAG” LINE

No hospital certificates!

Do Not confuse

with List A I-766

I-9 Challenge

Take the I-9 Challenge:

 

Desk Audit: Have a professional review a representative

sample of the I-9’s

 

The average is a 50-75% error rate.

 

Can you beat the odds?

Health Care Reform Legislation

Health Care Reform Overview

Grandfathered Plans

• Health Plans in existence on March 23, 2010, must comply with far fewer mandates than non-grandfathered plans

• Changes to a health plan can cause loss of grandfathered status

Health Care Reform Overview

Health Care Reform Provisions Effective Plan Years Beginning After September 23, 2010, Applicable to Both Grandfathered and Non-Grandfathered Plans

• No lifetime dollar limits on the value of “essential benefits”

• No annual dollar limits

• Cannot rescind coverage except for fraud or material misrepresentation by the participant

• Must cover children up to age 26 (if not eligible for other coverage for grandfathered plans)

• No pre-existing condition exclusion for enrollees under age 19

Health Care Reform Overview

Rules Immediately Affecting Non-Grandfathered Plans Only

• Certain preventive care must be covered with no cost sharing, e.g., immunizations and screenings

• Insured plans cannot discriminate in favor of highly compensated employees. Extended effective date to Plan Years beginning after regulations issued. Regulations are expected in 2011

• Emergency services must be provided without prior certification and allow out-of-network expenses under the same cost structure applicable to in-network emergency services

• Provide “essential benefits” without any cost sharing for those benefits

Health Care Reform Overview

Effective 2012

Must comply with standardized summary of benefit disclosure rules to be developed

• 60-day notice of material change

• Quality reporting to HHS and participants

Health Care Reform Overview

Effective 2013

Medicare portion of employee’s FICA tax increases to 2.35% (from 1.45%) for earnings over $200,000

Employer’s with more than 200 employees must automatically enroll employees in health plan

• Employees can opt out; waiting period can apply

• Notice requirement

Health FSA contribution must be capped at $2,500

• Subject to inflation adjustments

Employer must pay $2 per participant per plan year to help fund “Patient-Centered Outcomes Research Trust Fund”

Health Care Reform Overview

Effective 2014

If minimum essential coverage is not offered to each full-time employee and dependents and one or more full-time employee obtains subsidized Exchange coverage, employer must pay penalty equal to:

• $2,000 per full-time employee (excluding first 30)

If minimum essential coverage is offered but one or more full-time employee obtains subsidized Exchange coverage, employer must pay penalty equal to lesser of:

• $3,000 x number of full-time employees who decline employer coverage and receive subsidized Exchange coverage or

• $2,000 x number of total full-time employees

Health Care Reform Overview

Effective 2014 (cont’d)

Each “offering employer” must provide “free choice voucher” to each “qualified employee”

• Offering employer is one who offers and contributes to cost of minimum essential coverage

• Qualified employee is one who has income below 400% of family poverty level, whose required contribution for the employer coverage would be more than 8% (but less than 9.8%) of household income, and who enrolls in Exchange coverage

• Employee uses voucher to purchase Exchange coverage

• Voucher is equal to highest employer contribution for employer provided coverage and would offset the pay or play penalty

Health Care Reform Overview

Effective 2014

All of the following apply to Grandfathered Plans:

• Eliminate waiting periods over 90 days

• Eliminate annual limits on essential benefits (already subject to restrictions for 2011)

• Eliminate all pre-existing condition exclusions (already eliminated for children in 2011)

• Delayed effective date for collectively bargained plans until last-to-expire Collective Bargaining Agreement

Health Care Reform Overview

Effective 2018

“Cadillac Plan” Tax:

• 40 % excise tax to extent coverage value exceeds $10,200/$27,500 (HSA contributions count)

• Higher limits for “high risk” occupations and early retirees (age 55-64)

• Excludes dental-only and vision-only

• Insurer pays if insured; employer pays if self-funded

Health Care Reform Overview

Critical Employer Sizes

• Less than 25 full-time equivalent employees (FTE’s) – tax credit may be available

• 25 - 49 FTE’s – less mandates apply to these employees

• 50 or more FTE’s – must offer sufficient health coverage or pay a penalty

• 200 FTE’s – auto enroll in 2013 applies only to these employees

Presented by:

Christopher E. Hoyme

HoymeC@jacksonlewis.com

10050 Regency Circle, Suite 400

Omaha, Nebraska 68114

(402) 391-1991

(402) 827-4232 Direct

www.jacksonlewis.com