Labor Dept. Expands Enforcement Of Wage Violations

Hi all:  Just wanted to share this news release from The AP.  I will comment later this week-but didn't want to delay in getting this out to you all.

Labor Dept. Expands Enforcement Of Wage Violations 

by THE ASSOCIATED PRESS

WASHINGTON September 19, 2011, 04:18 pm ET

WASHINGTON (AP) — The Labor Department is signing agreements to share information with nearly a dozen states and the Internal Revenue Service as it gets more aggressive in its program to crack down on businesses that cheat workers out of their wages.

The information will help Labor officials target businesses that improperly label workers as independent contractors or as non-employees to deprive workers of minimum wage and overtime pay. Misclassifying workers also lets companies avoid paying workers compensation, unemployment insurance and federal taxes.

Patricia Smith, the Labor Department's top lawyer, said sharing information between state and federal agencies could subject businesses to multiple fines.

"There's more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased," Smith said in an interview.

In the past, Smith said, a company might pay a single fine to a state agency for not making proper unemployment insurance payments. Under the new agreements, a state can share the information with the Labor Department, which also can seek fines and penalties for federal wage violations.

The violation also would be reported to the IRS, which can go after the company for unpaid taxes, Smith said.

States that have agreed to work with the Labor Department so far include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington. Labor officials from New York and Illinois plan to sign up in the near future.

Labor Secretary Hilda Solis has made increased enforcement of federal wage-and-hour laws a top priority since she took office in 2009. The department has focused on industries where so-called "wage theft" is considered a problem, including the hotel, restaurant, janitorial, health care and day care industries.

Last month, the agency began targeting large U.S. homebuilders to see if they failed to pay workers the minimum wage or overtime.

"The urgency of addressing this issue has become more pronounced because we're seeing these illegal business practices used by more and more industries, like restaurants," said Nancy Leppink, head of the department's Wage and Hour Division.

Earlier this year, for example, the department recovered over $219,000 in back wages for 44 Boston-area restaurant workers who were misclassified as independent contractors by two restaurants. The restaurants had failed to pay them overtime and also weren't paying their payroll taxes.

Scott DeFife, a vice president for policy and government affairs at the National Restaurant Association, said his group works closely with members to navigate the "increasingly complex" federal and state rules governing wage and hour issues.

"We support 100 percent compliance with the law," he said.

Leppink said employers who do follow the law are finding it difficult to compete against those businesses that are misclassifying their workers.

In 2010, the Labor Department collected nearly $4 million in back wages on behalf of about 6,500 employees who had been misclassified, a 400 percent increase over the amount collected in 2008. The department has hired about 300 additional investigators to probe wage theft complaints.

Leppink said getting more referrals from states would help the agency increase enforcement efforts. IRS officials said they could take case referrals from the Labor Department, but would not refer individual cases to any agency.

COBRA subsidies for jobless expires

Today, one of the stimulus package items comes to an end.   COBRA is the program set up under federal law that allows people who lose their jobs to keep the employer-provided insurance, typically for 18 months, if they pay for the premium plus a small percentage for administrative fees-generally around two percent.

In February 2009, Congress approved a 65 percent subsidy for COBRA premiums to help those who had been laid off starting in September 2008.

Congress extended the COBRA subsidy three times to cover workers who lost their jobs through May 2010.  The subsidy lasted for up to 15 months.

Here are two good sources of info:

DOL fact sheet :

http://www.dol.gov/ebsa/newsroom/fsCOBRApremiumreduction.html

and a good article by benefits pro

http://www.benefitspro.com/2011/08/30/6-faqs-about-end-of-cobra-subsidy

Employers told me, in the past year,  that workers would not take job offers because the health care premium they would be would be higher than the subsidized amount.

It will interesting to see what happens now.

New Poster again! The NLRB in 11x17 and on your intranet!

The National Labor Relations Board has issued a final rule requiring most private-sector employers to notify employees of their rights under the National Labor Relations Act by posting a notice. The rule was placed of the Federal Register on August 25. It is scheduled to be posted in the Federal Register on August 30 and will take effect 75 days later.

The posting requirement, which takes effect on November 14, 2011 is intended to inform employees - both unionized and non-unionized - of their NLRA rights and is patterned after other required postings.

The rule will not apply to non-NLRA employers, including employers of railroad, airline, and agricultural workers. Federal contractors will also be required to post this NLRB notice as well as others.

Employers must post an 11-by-17 inch poster in the workplace and requires covered employers to post the notice on an internet or intranet site, if HR rules and policies are genrerally posted there. However, employers will not be required to distribute the posting by emails. 

The poster will be on the NLRB website for download and available at no charge in hard copy form at NLRB regional offices.  Posters will available by November 1, 2011.

Don't follow the posting requirements?  You may have earned an unfair labor practice.

Employers failing to post the notice may get a break as the NLRB recognizes that employers may be unaware of the new rule. In those cases, the Board may not seek penalties as long as the employer posts the notice right away.

Here is the link to the info: http://nlrb.gov/news/board-issues-final-rule-require-posting-nlra-rights

A fact sheet published bythe NLRB is here: http://nlrb.gov/news-media/fact-sheets/final-rule-notification-employee-rights

Isn't this special? An app from the Dept of Labor-for your employees.

The Department of Labor has issued a press relase about its new app for smartphones. Workers have always been able to keep their own hours--just now it will be tied into the Department of Labor!

Here's the notice right from the DOL and the handy link:  http://www.dol.gov/whd/Hightlights/archived.htm#May9_2011
"May 9, 2011

The U.S. Department of Labor today announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.

The free app is currently compatible with the iPhone and iPod Touch. The Labor Department will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

For workers without a smartphone, the Wage and Hour Division has a printable work hours calendar in English and Spanish to track rate of pay, work start and stop times, and arrival and departure times. The calendar also includes easy-to-understand information about workers’ rights and how to file a wage violation complaint."

Are your contractors really independent?

Is your business a little busier than last year? There are reports all around that business is growing. Yet, some businesses are skittish about hiring.

In these times, a business may decide to hire an independent contractor – aka a freelancer/1099er – rather than an employee. This can be effective but can also be a landmine of issues if not done properly.

It is important.

As part of a national research project on employment taxes, the IRS is auditing 6,000 randomly selected companies ranging from large to small firms and even non-profits. The goal of the program, which is scheduled to last from 2010 to 2012, is to create a scoring system for employment taxes.

The audits are focusing on failure to file; fringe benefit issues; executive compensation, including stock options; and employees misclassified as independent contractors. The IRS has noted that there is no defined time period of years that will be covered during the audit.

The federal government estimates it will raise billions of dollars through tighter enforcement.

There are clear guidelines for what determines independent contractor status. These are right from the IRS web site:

Common law rules

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Facts that provide evidence of the degree of control and independence fall into three categories:

•Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

•Financial: Are the business aspects of the worker's job controlled by the payer? These include things like how the worker is paid, whether expenses are reimbursed and who provides tools or supplies.

•Type of Relationship: Are there written contracts or employee type benefits, such as pension plan, insurance or vacation pay? Will the relationship continue and is the work performed a key aspect of the business?

So what happens?

If you have misclassified an employee as an independent contractor you need to be aware of the implications. You may find yourself responsible for employment taxes and penalties, as well for various benefits for which the misclassified employee may be eligible. These include vacation, sick pay, retirement plans, worker's compensation, health insurance and unemployment.

What can you do to protect yourself?

Employers can conduct their own audit to determine if independent contractors are properly classified. Also, there are experts who can help you to ensure that classifications are consistent with applicable law. A self audit should, at a minimum, include the following steps:

•Identify all independent contractors.

•Review written agreements to determine how the contractor relationship is structured.

•Review in detail the documentation related to how the contractor is paid.

•Consider the type of services performed by the contractor and whether employees perform similar services.

•Determine how the contractor performs the services, e.g., on company premises; with company provided necessary equipment; does the company direct when, where, and how the services are performed.

•Consider how long the contractor has performed services for the company and whether the contractor was engaged for a specific project or is performing services.

Employers should develop a formal procedure for the lawful hiring of independent contractors, establish guidelines for hiring contractors, and develop a written independent contractor agreement.

Many companies utilize 1099 contractors to supplement traditional W-2 employee workforces. If done correctly, this can be a useful method for controlling labor costs and engaging needed expertise.

Companies, however, either negligently or intentionally violate the law by misclassifying workers as contractors instead of employees. Be sure your independent contractors are truly independent.