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Time is Money: On or Off the Clock Work?

As published by SHRM's HR Magazine:.  

12/1/2012  By Jonathan Segal 

Time Is Money: On or Off the Clock?  Vol. 57     No. 12  Many managers still don’t understand the Fair Labor Standards Act.  





By Jonathan Segal 








Virtually every week I hear about another employer allegedly requiring, encouraging or tolerating situations in which nonexempt employees are working off the clock. Even large employers with robust compliance programs are not immune to such legal missteps.


Of course, it is not just larger employers being sued. Employers with relatively few workers—that literally cannot afford the cost of defense—are being sued, too.


The goal for employers is not to win "off-the-clock" cases but to avoid them.


Consider these suggestions for minimizing your exposure to such claims and maximizing your chances of winning if such a claim is brought.


Basic Principles


Some strategies for avoiding off-the-clock cases should take employers back to the basics, including training and retraining, enforcing policies that prohibit off-the-clock work, and encouraging managers to report suspected off-the-clock work to HR.


Train and retrain.

Provide supervisors with training that makes clear they cannot require, encourage or even suggest that nonexempt employees work off the clock.


The most important message to convey is that supervisors cannot direct someone to work off the clock, explicitly or implicitly. Also, include guidance on how to address restrictions on overtime.


The untutored have said, "We cannot pay for any overtime." Some employees have heard "work it but don't record it."


Where overtime is not permitted, make clear that "No one is permitted to work any overtime" as opposed to saying, "We cannot afford any overtime."


Let supervisors know that if they break the foregoing rule, they will be subject to discipline up to and including discharge.


Carry a big stick.

Let supervisors know that if they require, encourage or even suggest that an employee work off the clock, they will be subject to discipline up to and including discharge. This prohibition will help prove that deviations were those of a rogue supervisor and not part of an established corporate culture.


Make clear that among the most serious violations would be altering an employee's time to reduce the amount owed to him or her to stay within budget. Almost always, such "wage theft" should result in immediate discharge.


Don't go it alone.

Train supervisors to report incidences to HR if they know, or have reason to know, that an employee may have worked off the clock, even if the employee has not said anything.


In harassment cases, it is not enough to avoid objectionable conduct. If employers have actual or constructive knowledge of it and ignore it, they are condoning it. Doing nothing is not a defense; it is an admission.


The same principle has been adopted in the wage and hour context. Even if employers don't require, encourage or suggest that an employee work off the clock, employers cannot allow it if they have reason to believe it may have occurred.


Supervisors need training on the obligation to report to HR potential off-the-clock work so that HR professionals can talk with the employee and determine whether and what is owed to him or her. If there is a pattern of working extra hours without permission, this may be cause for discipline of the employee, but the employee almost always should be paid.


Clear Policies


Don't leave employees guessing about the organization's policy on off-the-clock work. Spell out the employer's policy on payment for time worked, but make it clear that off-the-clock work is not permitted and that there may be disciplinary action for it. That said, set up a process encouraging employees to report off-the-clock work to HR without fear of retaliation.


Pay up.

Develop a procedure HR professionals can use when they speak with employees who report off-the-clock work.


Use the procedure to determine if they are telling the truth, and then make sure they are properly paid.


If a supervisor reports that an employee has or may have worked off the clock, an HR professional should contact the employee. HR needs to determine whether the employee performed any off-the-clock work and how much time is involved. An appropriate adjustment must be made.


Sometimes, HR professionals make the mistake of assuming that no money is owed as long as the employee does not go over 40 hours in a workweek or eight hours in a day in California. Payment may be owed for off-the-clock work, even if the employee does not become eligible for overtime.


For example, assume that an employee is paid a salary for working 35 hours for a workweek. If the employee works additional hours but is short of 40, the employee generally must be paid for the "gap time."


Be specific.

Develop a policy that prohibits off-the-clock work. Leave no doubt that employees must record all time worked.

Make clear that you will not tolerate any off-the-clock work.


Make clear that you will not tolerate any off-the-clock work and that all work must be on the clock.


A general rule is not enough. Spell it out. For example:


An employee may not do any work before clocking in, and, if he or she does, management must be contacted to override the start time so that he or she will be paid for all time worked.


An employee may not do any work after clocking out, and, if he or she does, management must be contacted to override the stop time so that he or she will be paid for all time worked.


Have an open-door policy.

Develop a complaint procedure with appropriate assurances of nonretaliation so that employees can report concerns without fear of retribution.


There must be a strong policy and a robust complaint procedure. Contacting their supervisors should not be employees' only option. After all, supervisors often are the perceived perpetrators.


At a minimum, employees should be given the option of speaking with HR as an alternative. Employers may want to go one step further and provide another option outside of HR, just in case the problem employee works for HR.


Of course, the policy should prohibit retaliation, which should be defined broadly. If employees don't feel comfortable raising their concern in-house, they could consult with a plaintiffs' lawyer and you could end up in court.


Automated Backup


Technology can be HR's friend or foe in preventing off-the-clock work. On the one hand, time-keeping systems may be adjusted to provide HR with notifications about interrupted meal breaks or other off-the-clock work



While technology may facilitate telework, however, telecommuting poses unique compliance risks to employers, particularly regarding their nonexempt employees.


Tweak time-keeping system.


Determine whether questions should be included in your time-keeping system that ask employees if they have done work off the clock, so that you can follow up with the employees, capture any time worked but not recorded, and then pay them for it.


Most employees are honest, but some are not. How do you protect yourself against those who may claim later that they worked hours off the clock but then bring bad-faith claims?


Most modern time-keeping vehicles include the potential for questions at the beginning or end of each shift. The answers may be helpful in ensuring that employees are paid in real time, as they should be, and in defending against false claims.


For example, at the beginning of every shift, employees can be asked before they clock in if they have done any work since they clocked out on their last shift. If they answer yes, HR should receive notification and speak with the employees.


Similarly, at the end of the day, ask a question about the employee's meal break, such as "Did you enjoy an uninterrupted meal break of 30 consecutive minutes?" If the answer is no, either HR would be contacted to determine if payment is owed or the unpaid meal break would be automatically converted to paid time.


If an employee who responds affirmatively to the meal break query later claims that he or she was interrupted almost every day but not paid, any subsequent allegations are inconsistent with his or her prior answers, sometimes referred to as attestations. This should weigh heavily against an employee's credibility.


Limit telework.

Establish clear rules about whether and when employees may work remotely, such as checking e-mail, and how to ensure that time is properly documented and paid.


Sometimes it is your hardest-working employees who can cause trouble in this area because they log in at all hours and perform work. While their intentions are likely noble, you could pay a handsome price for such dedication.


Set boundaries for remote work, even for stellar employees. For example, you could block remote access to your network by nonexempt employees. Or, you could allow access only if approved and provide guidance on how to record the time to ensure proper payment.


A similar issue arises with personal digital assistants. The safest policy legally is to deny your nonexempt employees smartphones, BlackBerry devices and the like. But is that smart from a business perspective?


There may be times when nonexempt employees need these devices, so set limits as to when they can use the devices and pay them appropriately.


For example, you might set a specific block of time outside of working hours when a marketing employee away on business can use his or her BlackBerry. If you allow such periodic use, under the continuous day rule your duty to pay could be continuous, too.


Even if you have not developed specific policies yet, if you have reason to know an employee may have done work remotely, you must speak with the employee and pay him or her accordingly.


To illustrate this point: A client forwarded me an e-mail from her assistant regarding information that we needed to respond to a U.S. Equal Employment Opportunity Commission charge. The message was "Good news. See below."


My response: "Not really. See when your nonexempt assistant sent it to you!"


The author, a partner with Duane Morris in Philadelphia and managing principal of the Duane Morris Institute, focuses on counseling, training and strategic planning to minimize litigation and unionization.






















































































































In The Year 2525

As published by SHRM's We Know Next: See it here

In 1969, Zager and Evans sang “In the Year 2525.”  If you are smiling, you too probably have looked in a mirror and asked: how did that happen? Did you ever wonder what the employment world will look like in 2525?  Perhaps the following:

  • The NLRB will help unions which are failing to thrive by trying to make employers post union-marketing notices to drum up business for them.
  • The DOL will create a smart phone application to help employees track their time so that they can more easily sue their employers.
  • The EEOC will interpret the ADA so broadly that even shy bladder syndrome (the ability to “pee on cue”) may be a disability.  While I have no doubt that Shy Bladder Syndrome is a real syndrome, I also have no doubt that illegal drug users are likely to develop bashful bladders in need of assertiveness training.
  • California will pass 22 employment laws in one year.

Oh no, we don't have to wait until 2525.  All of the above have happened in the last year or so.
If this is where we are now, can it go any further in 2525?  Of course it can. Consider:

  • The Unconscious Dreaming Pay Protection Act. Why shouldn't the unconscious get paid for its hard work? And, should not there be a higher minimum wage since, as we all know, the unconscious does the heavy lifting?
  • The Social Media Right to Bash Your Employer Act. Why should employees be dependent on the NLRB for protection?  We need to create a private cause of action so employees can go right into federal court. Of course, it’s not about the money.  Just knowing you have hurt your employer’s brand, pushed away customers and put your colleagues’ jobs at risk if customers flee should be satisfaction enough.
  • The California Right to Choose Your Manager Act. Of course, the relationship will be at will so that employees can change managers at any time and for any or no reason and with or without prior notice.   And, there will be no exceptions to this at-will principle!
  • The Endangered Species Union Act.  All new hires must be given union authorization cards “for their consideration” when they are asked to complete their portion of the I-9.  After all, it is possible that they might miss whatever union notice the employer may be required to post.

As much as we try to do the right thing, not all employers do. Just as there are good and bad employees, there are good and bad employers. And, there is no question that we need the law to protect employees from wrongful conduct.
But overly aggressive plaintiffs’ lawyers and government agencies continue to push the boundaries of the law. And that does not always benefit employees.
As employers pay more to their lawyers, the reality is that there may be less money for their employees. Just as important: if everything is a legal issue, then we risk trivializing the important purposes underlying the laws. If everything is harassment, then nothing is harassment.
I hope we don’t have to wait until 2525 to find balance in protecting employees but without turning the workplace into what sometimes feels like a legal war zone. Moderation and balance are not inconsistent with protecting and enforcing employee rights. The extremes are, to me, extremely scary.
But, since we won’t be here in 2525, let’s continue the conversation at the Annual Conference. I will be speaking on the Year 2525 at Monday at 10:45 AM. I hope to see you there! Travel safely.

This blog should not be construed as legal advice or as pertaining to specific factual situations.




Costly Unpaid Internships

As originally published by SHRM's "We Know Next," found here.

An important customer, client, colleague or business partner asks an executive if her son can intern with your company for the summer.  Don’t worry about the money, she says.  My son is only looking for the experience.

As we approach the summer, expect more of these requests.  I personally have received quite a few already!

Sounds like a classic “win-win.”  The intern learns something and you strengthen an important relationship at no cost. So, the executive says “of course.”  Not so fast, please!

There have been several recent high-profile cases in which interns have alleged that they were really employees and should have been paid. While mere allegations do not mean actual liability, the fact is that the Department of Labor and the plaintiffs’ bar are focusing very closely on this issue.

In September 2011, a case was filed against Fox Searchlight Pictures, Inc. by two interns who had worked on the production of “Black Swan.”  They claim that they were misclassified as unpaid interns and that they should have been paid.

In February of 2012, an unpaid intern who worked for Harper’s Bazaar sued Hearst Corporation, the publisher of the magazine, claiming that her unpaid internship did not meet the internship requirements, and she should have been paid.

And, just last month, a class action suit was filed against Charlie Rose and the production company Charlie Rose Inc., alleging that unpaid interns who worked for the Charlie Rose Show should have been compensated saying they were really employees, not interns, under the federal Fair Labor Standards Act (FLSA).

Under FLSA, six requirements must be met for an individual to qualify as an intern. Take the time to read the regulations now or you may find yourself reading them later -- responding to a DOL audit or answering a complaint.

The six requirements are:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Of the six factors listed, the fourth is typically the hardest to meet. It requires that the employer not receive any real benefit from the intern’s “work,” and that, at times, the intern’s presence actually impedes operations.  Ouch.

So, talk with your executives.  Let them know that before they say yes to an offer that sounds too good to be true, they should check with you -- because it may be too good to be true. You don’t want your unpaid internship to make a plaintiff's lawyer rich at your expense.

The author, a partner with Duane Morris in Philadelphia and managing principal of the Duane Morris Institute, focuses on counseling, training and strategic planning to minimize litigation and unionization.



7 Ways Employers Can Protect Their Ass(ets)

As originally published by ALM's "Law.Com," found here.

From the Experts: 7 Ways Employers Can Protect Their Ass(ets)
Some things you need to know about labor law in 2012.
A list of seven action items for employers to help minimize exposure to labor and employment law litigation.

We’re in the first quarter of 2012, and the government and plaintiffs’ lawyers are continuing their assaults on businesses. Perhaps the biggest job growth this year will be in the employment of defense counsel. Here are seven areas where employers already are—or are likely to be—challenged in 2012 and recommendations for minimizing exposure to such attacks.


The Genetic Information Non-Discrimination Act generally prohibits employers from asking employees about genetic information. You may be tempted to skip this section because most of your managers don’t start Monday mornings by asking: “How was your weekend, and do you have any genetic information that you would like to share with me?”

Yet, under GINA’s regulations, our managers may be doing just that. More specifically, the regulations make clear that there are some very particular dangers regarding an employee’s genetic information. When you ask for medical information, if you do not tell the employee’s doctor not to disclose the genetic information to you, and if you then get genetic information, it is as bad as if you had actually asked for it.

The regulations include a “safe harbor” disclaimer that is recommended be included with all requests for medical information. If you include the disclaimer and you receive genetic information, you still cannot use it, but it will not be treated as though you had asked for it.

Action Item: Review your policies and practices to make sure that you include a GINA disclaimer whenever your HR manager asks for medical information to support a leave under the FMLA, an accommodation under the ADA, etc.

Also, make sure managers are trained in what to do and not do if an employee discloses that a family member has a medical condition. If an employee tells her supervisor that her mother has breast cancer and so did her grandmother, the supervisor may be tempted to encourage the employee to be screened.

But if the employee later is subject to an adverse employment action, the employee may claim it was because of the supervisor’s concern about her genetic likelihood of getting cancer. Sad but true, like the ADA, GINA can make kindness risky.

Tell the employee she is in your thoughts and prayers. Even offer to help. But stay away from medical recommendations.

2. ADA and Leaves of Absence

The EEOC loves consistency, except when it doesn’t. The subject of maximum leave provisions is one of those areas where it doesn’t.

To maximize consistency, many employers have policies that provide that employment will terminate automatically if an employee is absent a certain number of weeks, for example, 26 weeks. The EEOC has taken the position that these automatic termination provisions violate the ADA and has sued numerous employers—and includes on its website the multimillion dollar settlements it has extracted from employers.

Action Item: Revise your policies to make clear that an employee’s employment will not terminate automatically when the “flexible maximum leave” is reached. Rather, before the maximum is reached, the employer will reach out to the employee to determine whether there are any accommodations that would enable the employee to return to work or whether the employee needs additional leave, and whether such additional leave may be a reasonable accommodation. Develop a protocol to implement the policy.

3. FLSA—Remote Work

The FLSA was enacted in 1938 when people worked at work. We now work everywhere—all the time—and the question now becomes: how does the FLSA apply to work outside of the workplace?

Last year, the U.S. Department of Labor developed a smartphone application so that employees could keep track of their own time. The DOL also created hard copy “exhibits” for employees to track their time. In taking these steps, the DOL has stated that employees must be paid for any work they do, regardless of where they do it.

Some have suggested that the DOL is encouraging claims rather than adjudicating them. Whatever the intent, the effect will be to add wind to the tsunami of wage and hour claims. The number of collective actions has increased by more than 400 percent since the 1990s.

Action Item: Focus on off-duty work in terms of your wage and hour practices. Make it clear that non-exempt employees cannot do work remotely, absent prior permission from their supervisor. For example, if BlackBerries or other PDAs are given to non-exempt employees, tell them when they can use them, how to record their time, and pay them for such time.

4. Like Me Bias

We all know that there is not only conscious bias but also unconscious bias. Of course, the unconscious bias exists only at your competitors but never in your own organization!

The EEOC and private plaintiffs’ lawyers are attacking subjective hiring practices where hiring managers hire or promote someone who is like them—in other words, “like me” bias.

When white men look in a mirror, they don’t see a woman of color. Of course, the converse is equally true. So, if we hire and promote our mirror images, we may be engaging in unlawful bias, albeit often unconsciously. At a minimum, we may be excluding talent to our detriment.

Action Item: Have a diverse team make your key hiring decisions. It would be hard to argue that a diverse team hired its mirror image. Plus, diverse teams tend to come up with better decisions by including different perspectives.

Also, be careful of “cultural fit,” which may be seen as a proxy for bias against someone who differs from the group. Where cultural fit is an issue, focus on behaviors exhibited or expectations expressed that were problematic. If you cannot explain them, you have a problem. And if the explanation sounds stereotypical, you have a problem.

5. Social Media and Disparagement

Before the advent of social media, when employees were unhappy, they used to talk with their co-workers. Now, they may blog, tweet, or otherwise send a postcard to the world fulminating about their employer. The initial response may be to fire the employee. Be careful: the posting may be protected.

The National Labor Relations Board is beyond protective of employees who complain about the terms and conditions of their employment by way of social media. While the National Labor Relations Act protects only “concerted activity,” the NLRB has defined concerted activity so broadly that even narcissists who complain only about their individual treatment may be protected in some circumstances. And, remember, the NLRA applies to non-union employers too.

“Disparaging” postings may be protected by other laws, too. For example, allegations of unlawful bias or other unlawful activity may be protected by federal, state, and local non-discrimination and whistleblower laws. Plus, some states have off-duty conduct statutes that may provide further protection.

Action Item: Review your social media policy and minimize the risk that it will be deemed to prohibit protected activity. Prohibit supervisors from taking adverse action based on a social media posting without checking with HR/counsel first so you can assess whether the posting may be protected. And don’t forget the practical reality that terminating an angry blogger only gives him/her more time to post crazed vituperations about you!

6. Performance Management Guidelines

To ensure due process, many employers have progressive discipline policies. I am a believer in progressive discipline, but there are risks in spelling out in too much detail what you will do and how you will do it. If you don’t follow the policy and/or procedure, the employee will argue this is evidence of bias. Don’t let your best legal defense in these circumstances be the lame: “We never follow our policy and/or procedures anyway, so our failure here is not bias“ That’s hardly the sort of defense you want to assert if you want to be seen as a great place to work.

Assume that, over the next year and beyond, we will continue to expect more and have less time and tolerance for those who don’t meet our higher expectations. In the 70’s, Spiral Staircase sang, “I love you more today than yesterday, but not as much as tomorrow.” The update today could be, “I expect more from you than yesterday, but not as much as tomorrow.”

Action Item: Make sure you reserve the right to skip steps in any policy you may have. Consider listing possible steps without suggesting there is a progression from one to the next.

7. Retaliation

The U.S. Supreme Court has leaned toward employers in every area except one: retaliation. In retaliation cases, employees have won every case before the high court. In 2010, retaliation charges were the most common charge filed with the EEOC (for the first time). The same was true in 2011, and we can expect the same in 2012 again.

Sometimes retaliation claims happen because we wait too long to act. An employee knows he/she is in trouble. Before the manager approaches the employee, the employee consults with a lawyer. Then, the employee approaches his/her manager: “I know my performance is not what it should be. That’s because I am clinically depressed, ADA style, because you have been discriminating against me, Title VII style.” The retaliation claim has been set up if and when adverse action follows.

Action Item: Don’t put off the inevitable. When you have made a decision to take adverse action, do not delay. Delay creates a window of opportunity for a protected complaint. Develop a robust retaliation policy that tracks the broad holdings of the Supreme Court’s decisions—for example, prohibited retaliation is not limited to tangible employment actions, but also may apply to other material terms and conditions of employment. Emphasize in training that the fact that a complaint lacks legal merit is almost never a defense against retaliation claims.

And treat retaliation as seriously as discrimination and harassment, which we should treat very seriously. Remember, even if the regulators have taken certain legal rights to the extreme, discrimination, harassment, and retaliation are still wrong. Very, very wrong.

The enormous regulation and extreme litigation result in employers spending too much time and money on lawyers. While legal fees are unavoidable, they can be minimized with careful and proactive planning so that you can achieve your legitimate business goal with less risk.





PA Act 102: Prohibition On Mandatory Overtime Covers More Than FLSA Overtime

Pennsylvania Act 102 covers health care providers (broadly defined) in Pennsylvania.  It prohibits covered employers from mandating that covered employees work "overtime" except under certain limited circumstances.

Generally speaking, covered employees include employees directly involved in direct patient care and other clinical services.  Employees not covered by Act 102 include, but are not limited to,  physicians, physician assistants and patient care/clinical supervisors who are paid on a salaried (but not hourly) basis.

A common area of misunderstanding is what is meant by mandatory overtime under Act 102.  The definition of mandatory overtime under Act 102 is not based on the FLSA.  In other words, it does not mean work in excess of 40 hours in a work week. Instead, Act 102 defines mandatory overtime to mean work in excess of the employee’s “agreed to, predetermined, and regularly scheduled daily work shift.”

For example, assume a covered employee works three 10-hours shifts as agreed to upon hire.  Assume further that the covered employee's replacement is late so his employer wants him to work additional time until his replacement arrives.

This additional time, in most circumstances, would constitute overtime under Act 102, even thought it would not result in the employee's working overtime in the work week as defined by the FLSA.  The employee could agree to work the "overtime" voluntarily or the employer could mandate that the employee work the "overtime" involuntarily if one of the narrow exceptions to mandatory overtime were to apply (for example, unexpected absences, discovered at or before the commencement of a scheduled shift, which could not be prudently planned for by an employer and which would significantly affect patient safety.)

The bottom line is that, even if a health care provider that does not mandate overtime as defined by the FLSA, the health care provider may be covered by Act 102 if it requires that a covered employee remain beyond her or his agreed to, predetermined and regularly scheduled shift.  This is all but inevitable in most health care institutions.

Health care providers who have only voluntary overtime in the FLSA sense need to take a second look at Act 102 and develop, if not a policy, then at least an internal protocol to comply with it. 

Three (3) final notes:

  1. If employee works Act 102 overtime, that does not translate into duty to pay overtime under FLSA. Generally, an employee in Pennsylvania  is eligible for overtime under the FLSA only if he or she works in excess of 40 hours in a work week
  2. Rather than paying overtime after 40 hours in a work week, some employers follow the federal 8 and 80 overtime rules.  Whether this alternative manner of computing overtime is available in Pennsylvania  is unclear and one Philadelphia court has said it is not an option for Pennsylvania employers.  While the Philadelphia decision is binding only in Philadelphia, lawyers in other counties may rely upon the decision to challenge 8 and 80 overtime in such counties.
  3. Many states other than Pennsylvania, such as New Jersey, have rules that restrict mandatory overtime in health care. In most of these states, like Pennsylvania, overtime as defined  by the state law differs from overtime under the FLSA.  

This blog should not be construed as legal advice or as pertaining to specific factual situations.


Jonathan Segal

Business Ally. Help clients achieve business goals and manage legal risks. Areas of focus include: gender equality; wage and hour compliance; social media; leadership training; union avoidance; performance management; and agreements

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© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.
The opinions expressed on this blog are those of the author and are not to be construed as legal advice.