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Happy Labor Day? . . . . Not for Employers

Articles published in The National Law Journal yesterday morning and two days before highlight new laws, new enforcement activities and new employee lawsuit risks faced by American employers.

A just released U.S. Department of Labor (DOL) report concludes that workers lose more than $56.4 million per week as a result of employment and labor law violations.

This has the attention of the current administration. Now that it has been published in a national publication for lawyers, it also has the attention of plaintiff’s employment attorneys. Soon, through the efforts of the mass media and plaintiff’s attorneys, it will have the attention of your employees as well.

With four pro-labor executive orders from the new White House, a dramatic increase in the DOL’s compliance and enforcement activities, a substantial increase in DOL wage and hour investigations and changes in the National Labor Relations Board, the rules you must comply with and the risk for mistakes are increasing dramatically.

Wage & Hour Complaints Coming Soon
The report previously mentioned, Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities was published September 1, 2009. The report and yesterday’s article are being reviewed by plaintiff’s attorneys across the country, throughout the state and in our city.

A couple of years ago, wage and hour claims became the hottest area of employment litigation. These claims now surpass discrimination claims - both in terms of number of actions and amount of money awarded. There are lawyers in every city who do nothing but file wage and hour claims. Other plaintiff’s employment attorneys include wage and hour claims in their employer lawsuit arsenal.

Are your employee classification (exempt and nonexempt), time keeping, meal breaks, rest period and overtime practices in full compliance? The report found that for 76% of America’s workers, the answer is no.

Inadvertent mistakes can cost employers dearly. First, there is the cost of the mistake. Then there are the costs of penalties and attorney fees awarded to workers when mistakes are shown. Next is the cost of the employer’s attorney fees. Finally, once a plaintiff’s attorney finds one employee with a claim, they bring class action lawsuits against the employers on behalf of all other employees. Once you add the value of the claim, penalties and attorney fees for a group of employees over a period of years, the dollar damages can become staggering.

Now is the time to update your policies, review your procedures and verify your practices to make sure you’re not one of the next employers facing crippling wage and hour claims.

Pro-Labor Executive Orders
The new White House, shortly after inauguration, issued four pro-labor executive orders. These orders affect federal contractors. Even if you are not a federal contractor, you should be concerned. Executive orders for federal contractors have a way of working themselves into the laws all employers must follow.

A summary of the four executive orders are listed below.

1.  Federal contractors are prohibited from using federal funds to engage in “persuader” activities.

2.  Federal contractors replacing a prior contractor are now required to offer employment to the former contractor’s employees. This is to ensure that the former contractor’s union representation continues.

3.  Federal contractors are now required to post a notice of employee rights under the National Labor Relations Act (NLRA).

4.  Federal agencies are now encouraged to use project labor agreements setting terms and conditions of employment for all employees on all construction projects worth more than $25 million.

The DOL will now issue regulations implementing the executive orders. It also will enforce the orders and regulations. If you have federal contracts, you must comply.

Increased DOL Compliance & Enforcement
The DOL’s enforcement activities (investigations of and actions against employers) saw a 2010 budget increase from $82 million to $109.5 million a year. It is expected 213 new employees will be hired to investigate discrimination in hiring, compensation and promotion.

Wage & Hour Investigations Will Increase
The federal government’s report asserting that employers fail to follow the lengthy requirements of wage and hour laws for 76% of America’s workers was discussed above. The wage and hour division of the DOL has received an additional $30.86 million to hire 288 additional employees in 2010. This includes 200 new investigators. This will result in a substantial increase in DOL wage and hour compliance and enforcement activities.

When the DOL picks an area for compliance and enforcement attention, private attorneys soon follow. Even if you are not subject to a compliance audit by the DOL, you could still be subject to a state investigation or a claim brought by a plaintiff’s attorney for a current or former employee. The increased federal compliance and enforcement activities will have an impact on employers far greater than the $30.86 million budget increase.

NLRB Changes Expected
Most employers do not have a union. Thus, they are not generally subject to labor laws or the jurisdiction of the NLRB. There are, however, exceptions.

The exceptions begin if a group wants to organize a union in your workplace. If so, can you ban union organizers from using your email systems for union related communications? Under current law, you can ban the use of your email system. The Obama NLRB is expected to reconsider the current rule.

Even if you are not a union employer, your employees have certain rights to engage in “protected concerted activity” in your workplace. The Obama NLRB is expected to give more scrutiny to standard workplace rules that it believes could affect employees’ concerted activity rights. This could even include rules banning profane language and harassment.

The Obama NLRB is expected to grant non-union employees the “right” to have a “representative” in any meeting with you that could lead to disciplinary action. Having conducted many such meetings for employer clients, we have seen a number of attempts to bring others to the meetings. No one has asked to bring an attorney. Instead, employees have asked to bring domestic partners, parents and others into investigation interviews and discipline meetings.

One danger for employers is that a new NLRB rule could be violated simply because the employer is not aware of the rule. Why should they? What non-union employer would realize that NLRB rules for unions could apply to them?

The Obama NLRB is also expected to narrow the definition of a “supervisor” so that more employees will be covered by the union bargaining-unit. Making supervisors part of the union can have a number of serious consequences for employers.

The Obama NLRB has several pending cases involving non-employee access rights and union “bannering.” It is expected that the board will allow non-employees greater access to an employer’s private property for the purpose of organizing a union. It is also expected that the NLRB will allow unions to pressure neutral employees by bannering (standing outside worksites holding banners attacking management).

I hope you enjoyed this week’s Labor Day. With the changes that have been made, with the changes that are coming, with the additional compliance and enforcement activities that are funded and the lawsuits that will surely follow, you have your work cut out for you between now and next Labor Day.

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