(Post by Rick Dacri, January 12, 2017)
President-Elect Trump has nominated Andrew Puzder for Secretary of Labor. Puzder is a successful businessperson, lawyer, and CEO of CKE Restaurants, the parent company of fast food chain’s Hardee’s and Carl’s Jr.
The mission of Labor is “to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.” They are also responsible for investigating minimum wage violations, overtime infractions, and worker safety laws.
Puzder has taken positions in opposition to many of the regulations the DOL oversees, including the federal minimum wage, worker eligibility for overtime, the Affordable Care Act (Obamacare) and sick leave polices.
The U.S. Senate is scheduled to begin confirmation hearings on Puzder in February.
I have put together 18 questions that I believe the Senate should ask the nominee:
- What qualifies you to be the next Secretary of Labor?
- You have opposed the raising of the federal minimum wage. Why? What do you believe is an adequate minimum wage?
- You indicated a proposed $15 minimum wage would force businesses to automate their operations and thereby eliminate jobs. Do you believe that a minimum wage increase drives the need for automation or is automation a tool for productivity? If wages collapsed, would businesses stop automating?
- According to the Economic Policy Institute, CEO pay has grown 90 times faster than the typical worker pay since 1978. Due to this unequal growth, average top CEOs now make over 300 times what typical workers earn. Do believe wage disparity is a problem in this country and what, if anything, should Labor or the Trump administration do about this?
- The Department of Labor oversees the federal wage and hour division, which ensures that workers are paid for all the hours they work. Yet in California, your franchise restaurants have been fined over $20 million for wage and hour violations. Can you address this issue and what steps did you take to remedy this problem in franchises you control. Secondly, what steps will the DOL take, under your reign, to enforce wage and hour laws?
- A Roc United survey given to your franchise store employees in California, found that a third of those employees were not given meal breaks after working at least 5 hours, in violation of the state’s worker break laws. 79% said they also served or prepared food while they were sick. Can you address these issues and what steps did you take to remedy these problems in franchises you control. Secondly, what steps will the DOL take, under your reign, to enforce break laws?
- You are also on record opposing sick leave policies, yet many workers in your franchise restaurants are preparing and serving food while sick. Are you concerned about endangering both your customers and employees? Should sick leave laws be mandated?
- Bloomberg did an investigation of your company’s franchises. They found that in 60% of the DOL investigations in your restaurants, there were minimum wage and overtime violations. Again, can you address this issue and what steps did you take to remedy this problem? Secondly, what steps will the DOL take, under your reign, to enforce wage and hour laws?
- President-Elect Trump has indicated he supports 6 weeks of paid maternity leave. You have stated that mandatory leave creates undue burdens on business. How directly do leaves create a burden, and as Labor Secretary, will you support or ignore the President-Elect’s initiative?
- According to a review of inspection records with the Occupational Safety and Health Administration since 2000, the year your took over as chief executive of CKE, Hardee’s and Carl’s Jr. locations have incurred at least 98 safety violations, 36 of them listed as serious. OSHA defines a “serious” violation as one that could result in death or grave physical harm that the employer should have been aware of. Can you address this issue and what steps did you take to remedy this problem in franchises you control? Secondly, since OSHA and worker safety fall under DOL’s responsibility, what steps will the DOL take to enforce these laws?
- Your company has introduced commercials that include women wearing skimpy bikinis and lingerie while eating burgers. In response, you stated in a 2015 Entrepreneur interview, “I like our ads. I like beautiful women eating burgers in bikinis. I think it’s very American. I used to hear, brands take on the personality of the CEO. And I rarely thought that was true, but I think this one, in this case, it kind of did take on my personality.” My questions, is this your personality, as you stated? Do you believe these ads objectify women? What kind of tone does this set in your workplaces?
- 2/3 of female workers in restaurants operated by you, claim that they have been sexually harassed by your customers. Many employees indicated that these customers mentioned those ads. Were you aware of this and what is your plan to address this?
- Do you believe that sexual harassment in the workplace is a legitimate issue and what steps should employers take to eradicate it?
- Are there any federal labor laws that you would eliminate and if so, which ones and why?
- Do you believe there are any new labor laws that should be initiated? What are they and why are they needed?
- President-Elect Trump stated that he would like to eliminate unemployment compensation fraud. How big a problem is it and how could you eliminate it? Please be specific.
- You have opposed the Affordable Care Act. What specifically is the problem with the Act? Are their components of it that you would like to keep? What would you replace the Act with, what would it cover and not cover, and will it be cheaper than the current ACA?
- You have stated that we should cut government benefit programs because workers turn down promotions to keep such benefits, such as food stamps. Please explain this and tell us how wide-spread a problem this is?
(Post by Rick Dacri, November 28, 2016)
Time to take a deep breadth.
By now you know that a federal judge in Texas has put on hold the implementation of the changes to the Fair Labor Standards Act. The law, with a scheduled December 1 effective date, would have increased the salary level to qualify for overtime, virtually doubling the existing rate to $913 per week.
The overtime rate (“means test”) needed adjusting, but the Department of Labor’s proposal was excessive, so a hold is a good thing, albeit a bit last-minute. If Labor had asked me (they didn’t) I would have suggested a modest adjustment, along with a closer look at modifying the “duties test,” which many employers do not fully understand. It was the biggest area of misunderstanding from employers who called into my HR HelpLine.
Now that the law is on hold, what should employers do? Unfortunately, since the enforcement was enjoined at the last minute, most employers have either put the changes in place or at least announced the changes. And, Labor is likely to appeal the ruling, so an implementation of the law may still happen. So, here is what I suggest:
- If in the course of your review you found positions that did not meet the duties test, implement those changes.
- If you have not put in place compensation changes based on the new means test (raised salaries to meet the threshold and/or reclassified positions), you may want to put these on hold until we get clarity on Labor’s next move. Keep in mind, if you announced the changes, you will need to address the employee’s potential expectations.
- If you implemented salary changes and reclassified employees, it would be hard to pull these back. Besides it being an employee relations nightmare to do so and because you could still be in violation of some state laws, if the law is finally implemented, it could requires restoring them again.
- Communicate your plans to your employees. They may not know that the law is on hold and clearly do not know your plans. Be open and frank.
Employers have been put into a box with these actions. Consider what I have suggested above and put together your new plan. You may also want to seek professional legal guidance before you take any action.
(Post by Rick Dacri, October 15, 2015)
What and how you pay your workers is becoming a major issue managers are being forced to address. The ability to recruit and retain star employees is driving wages upward. And both the states and federal government are zoning in on wage violations, while at the same time proposing stricter, more costly guidelines.
In this post, I will outline some key compensation trends and the potential pitfalls which could prove very costly to you and your organization.
- Wage Growth: expect to see a steady increase in wages. In 2014, we saw a 2.5% increase followed by 3% this year. Plan on another 3% in 2016. The Northeast has been experiencing greater growth and certain positions, such as electrical engineers, IT, line workers and nurses are demanding and getting greater increases. Review all your wages to ensure they are in line.
- Wage Equity: Recruitment is impacting existing wage programs. The need to pay job candidates higher wages than your current employees to get them to accept your job offer is throwing internal equity out of whack. Employers must remain competitive to attract talent, but you must also maintain parity so as to retain your current employees. It’s a difficult balancing act. Review your compensation program to insure you have both internal and external competitiveness and equity. As a best practice, this type of study should be done every 2 years. (As an aside, I have been asked to conduct several compensation reviews and analyses just this year).
- Wage Violations: There are a wide range of wage regulations that are getting significant attention. The Fair Labor Standards Act (FLSA) is one of the employment laws that employers frequently violate, often without intent and knowledge that they have gone afoul of the law. Unfortunately, intent is not a good defense and the consequences are severe and include 2-3 years back pay for each infraction, legal fees and in extreme cases, criminal penalties. Here are some of the problem areas:
- Misclassification of salaried workers (exempt versus non-exempt): You cannot simply pay an individual a salary to avoid paying overtime. The Department of Labor has developed a complex testing process to determine whether a job is legitimately exempt or not. You should review and test all your salaried positions to ensure they meet the requirements. Here is the DOL link to the test. Call me if you need help.
- Prohibited deductions of exempt employees wages: You cannot arbitrarily reduce the wages of an exempt worker for missing work or leaving early to go to the dentist. In doing so, you jeopardize the position’s exempt status and frankly, open up a huge can of worms. I have developed a white paper on making proper deductions. Give me a call and I will send it to you.
- Failure to pay for all time worked: This is a big problem. While Wal Mart continues to grab the headlines for these violations, I regularly get calls from clients on my HR HelpLine concerning obligation to pay for work done off the clock, work being done during breaks, eligibility for comp time (both for municipal and private sector workers), requiring workers to be on-call, storm closings, travel pay, and expecting all workers to monitor and respond to emails and calls 24/7. Review your policies and procedures to ensure employees are properly paid.
- New Proposed White Collar Regulations. The DOL is proposing to increase the means test requirement (that’s the minimum dollar amount you must pay a salaried worker) to $50,444, up from $23,660. If this passes for 2016, and many experts believe it will, that will double the amount required. Prepare now by reviewing every exempt worker you have; determine whether they fall below the threshold; and then develop a strategy around how you will deal with this issue. There are a variety of options. Call me if you need help.
- Independent Contractors: For the last few years, the various states, IRS and DOL have been hammering employers who employ Independent Contractors. In many cases they have declared these contractors as employees and have required employers to pay back pay, back taxes, workers comp, unemployment comp, and back benefits to the workers. Each state has their own tests and the IRS has another. Before you hire an Independent Contractor, test the position. Here’s the IRS test.
- Student Interns: While most unpaid student interns meet the required educational standards, DOL has been clamping down on abusers. Follow the 6 criteria point test to ensure you are not in the wrong.
Listed above are just some of the trends and pitfalls. What you should do now includes:
- Auditing your compensation and pay practices today.
- Making sure your entire compensation program is up-to-date, compliant and competitive.
- And, If you need assistance, give me a call.
Other Dacri posts you should read:
- FLSA Record Keeping Requirements
- How to Comply with Massachusetts Minimum Wage Increase
- Linkedin Gets Burned for Overtime Violations
- Overtime: Should Holidays and Vacation be Included?
(Post by Rick Dacri, October 1, 2015)
The U.S. Department of Labor is stepping up its enforcement of misclassifying workers as exempt and failing to maintain records on non-exempt workers. This post outlines the record keeping requirements under the Fair Labor Standards Act (FLSA as noted in the DOL’s Fact Sheet #21.
All employers should regularly review the classification of all their exempt employees and secondly, audit the records of their nonexempt employees.
What Records Are Required: Every covered employer must keep certain records for each non-exempt worker. The Act requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate. The following is a listing of the basic records that an employer must maintain:
- Employee’s full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of week when employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
How Long Should Records Be Retained: Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales and purchase records. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. These records must be open for inspection by the Division’s representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.
What About Timekeeping: Employers may use any timekeeping method they choose. For example, they may use a time clock, have a timekeeper keep track of employee’s work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.
If you need help determining whether you have properly classified your employees, give me a call.
Other Posts you Might Like:
- Pay Procedures: How To Avoid Wage and Hour Problems
- Overtime Eligibility To Double: Prepare For Change
- Misclassification of Independent Contractors in IRS Crosshairs