A reporter with Bloomberg’s called the other day to ask what I thought about the Wage and Hour Divisions “numbers”, noting a downturn in back wage collection and wondering what the reasons for the statistic might be and if it revealed anything of import about enforcement. The article was even-handed and took some exploratory approaches that make it more thoughtful than many discussions on such statistics. That said, having been an investigator whose statistics were included in these kinds of reports for more than 12 years, and having worked in Republican and Democrat Administrations, I have little interest in those numbers myself. There can be wide variation in what’s normal (think medical tests) and maybe within that wide range there are indicators of health or maybe not.
Mr. Penn touches on a subject much more interesting to me that I discussed in my March 2015 newsletter. That newsletter addressed the Administrator’s first interpretive letter on joint employment. There are two AI’s on joint employment that you should read if you have not- http://www.dol.gov/whd/workers/misclassification/ai-2015_1.htm and http://www.dol.gov/whd/flsa/Joint_Employment_AI.htm. Note that the latest letter isn’t just for the agriculture industry. Moreover, the concepts are worth contemplating even if every person who works for you is an employee and your business has no contractor relationships. Dr. Weil and his staff are addressing the effects of a gargantuan and now pervasive economic practice as it affects the nation’s worker protections. It is a bold and serious undertaking. Resources will be spent; litigation will happen.
On a different wage and hour note, some of you are seeing so much hype about the potential hike in the salary threshold for white-collar exempt employees, that you’ve been asking if the change has actually been made. No, nothing has happened. You don’t need to schedule big raises for the next pay period or start calculating overtime across the board yet. Please review whether all of your employees meet the duties tests or not. Even if a final rule is issued with a much more modest salary threshold increase than is expected, a final rule will raise everyone’s awareness of the exemptions in their entirety. Your vulnerabilities likely stem from problems you already have under the current rule. Failure to understand the duties tests and properly apply them will cause your biggest compliance violations. Don’t allow yourself to be distracted from this point by being narrowly focused on the question of whether the salary threshold will increase or by how much.
In a future newsletter, I’ll address another point that Mr. Penn raises in his article, that of the Wage and Hour Division’s decision to pursue three years of back wage payments and liquidated damages in the investigation process rather than reserve those actions for litigation. If anyone ever thought that it would be less expensive to make a mistake and ask forgiveness later, this is a viewpoint that should be dismissed! While I’ve studied the issue quite a bit and have an opinion on the practice, thoughtfully presenting the complexities of it is time-consuming. Do not wait until an investigation of your business has begun to call me if you have a compliance problem. It is less expensive to fix your problems now and this is what the Administration is counting on to increase employers’ compliance.
To read the Bloomberg article, click on the following link: http://www.bna.com/whd-stats-tell-n57982066640/