In 2012, Wage and Hour compliance was the number one financial liability for employers. Even though the Fair Labor Standards Act was passed in 1938, employers continue to be fined for non-compliance and further, the Department of Labor has hired several hundred new investigators to enforce the regulations and collect back wages due to non-compliance.

The Fair Labor Standards Act requires the following of all employees:

• Maintain accurate record of time,

• Pay overtime for hours worked in excess of 40 hours per week (or as required by state laws), and

• Be paid at least minimum wage (Federal $7.25 or as required by states),

Unless otherwise exempt.

There are a number of complete/white-collar exemptions as issued by the Fair Labor Standards Act. If the position meets the test as prescribed, then the employee does not have to maintain a time record nor does the organization have to pay the employee overtime for hours worked as required. These white-collar exemptions include:

• Executive
• Administrative
• Outside Sales
• Professional
• Computer
• Highly-Compensated

Because these white-collar exemption tests are complicated, it is suggested that all positions being paid on a salaried/exempt basis be reviewed to ensure that the position does, in fact, meet one of the tests as prescribed.

For all other employees, we must meet the requirements as noted above. Additionally, all employers must be aware of the following:

1. The Workweek — The workweek is the general standard for calculating minimum wage and overtime payments due to an employee. The workweek is a fixed regularly recurring period of consecutive 24-hour periods. The workweek must be defined and communicated to all employees in writing. An employee handbook is an exceptional vehicle for this practice. The workweek does not need to coincide with the payroll period and the workweek can be different for various positions.

2. Hours Worked - Hours worked refers to all the time for which an employee is entitled to be compensated under the Fair Labor Standards Act. It includes but is not limited to:

• All time required to be on duty or on the premises or at a particular workplace/location.

• All time the employee is "suffered or permitted" to work; the work does not have to be requested, re: work before or after the shift or homework must be paid.

• Certain kinds of idleness or incidental activities where the employee is required or restricted to be onsite or engaged in waiting.

3. The Regular Rate — The regular rate is the hourly rate the employee is actually paid for working; it can be changed weekly depending on the pay arrangement with the employee

It is calculated by dividing the employee's total compensation for the workweek by the total number of hours actually worked by the employee that workweek.

The regular rate is critical in compensating overtime on all earnings for all hours worked.

The regular rate is not necessarily the standard hourly rate that is communicated to the employee. The regular rate would include additional compensation such as incentives, bonuses, commissions or all other monies paid to an employee.

With these requirements and definitions in mind, the common problems/issues that SESCO regularly sees based on our Wage and Hour audit practice includes:

1. Believing employees can waive their rights — Employees cannot waive their rights under the Fair Labor Standards Act. If during an investigation, employees tell the investigator that they do not want to be paid for working overtime or receive back wage liability, the money will be sent to the Treasury and the employer found in non-compliance.

2. Co-employment — Employees may work for two (2) different organizations as owned or managed/operated by the employer or co-employers. All time must be calculated for the purposes of overtime — we cannot collapse time and pay for time worked separately under each employer.

3. Assuming someone is exempt from the regulations - Job title, job description or our own perception of how critical the job is does not determine whether a position is exempt or not. Only the white-collar exemptions as articulated by the Act determine whether or not a position is exempt.

4. Assuming certain kinds of employees are exempt professionals — The Professional exemption is widely applied — incorrectly. Because an employee has a four-year degree, even a Master's or other education does not mean the position is exempt. Duties alone determine the exemption status.

5. Thinking anyone who is paid a salary is exempt — Because we pay someone on a salaried basis, does not mean that the position is exempt. Again, only the white-collar exemptions determine if a position is exempt. You can pay a position on a salaried basis and still be found in non-compliance and thus pay overtime for hours worked in excess of 40 hours per week.

6. Not understanding what is meant by salaried basis payment - Under the white-collar exemption test, we must pay a guaranteed salary as required. An employer must be careful about any deductions being made from that salary — although there are times we can legally deduct from a guaranteed salary basis.

7. Non-compliant fee or per diem pay plans — We can pay employees on a per job or per day basis. However, all working time must be included in the calculation of time worked for overtime purposes.

8. Not understanding how bonuses affect overtime pay — Bonuses and incentives (non-discretionary bonuses) are considered wages earned and thus need to be included in the employee's regular rate, as defined, and subsequently overtime paid on these monies earned, re: production or attendance bonuses.

9. Assuming a certain number of hours have been worked — A time record is required and also is beneficial to the employer as it establishes a record of time. It avoids any "he said she said" debates and also allows the employer to edit and monitor compensable/working time on a weekly basis.

10. Thinking unauthorized overtime does not count as hours worked — An employee who is allowed or suffered or permitted to work before or after normal schedules or overtime must be paid.
11. Thinking employees can voluntarily work off the clock — As with the above, employees cannot legally perform work on a voluntary basis and not be compensated accordingly.

12. Not counting travel time as hours worked — Travel to work and from work to home is not compensable. However, travel during the day, between locations, to training or other required events is considered compensable time. (Note: Overnight travel is treated differently — contact your SESCO consultant to discuss overnight travel compensation requirements.)

13. Assuming that sleep time is not hours worked — Sleeping time can be excluded if the employee can usually have at least eight (8) hours of sleep, uninterrupted. If an employee cannot receive at least five (5) hours sleep, the entire time is working time. Any interrupted time during sleep time must be paid.

14. Not treating training/meeting time as hours worked - Training and meeting time is normally paid time, unless all of the following conditions are met:

• Attendance occurs outside the employee's regular working hours.

• Attendance is completely voluntary.

• The employee does no productive work while attending.

• The program is not directly related to the employee's job.

15. Improper treatment of on-call pay/time — An employee who is restricted to a specific location to receive phone calls or waiting to be engaged to work must be paid for this time. However, if the employee is provided a cell phone or beeper and can live their "normal" life and only report within 20 to 30 minutes, the on-call time is not considered compensable time.

16. Granting time off in lieu of overtime pay — Unless for specific "public employers" — there is no such law as "comp time" for the private employer. We cannot grant time off in lieu of overtime pay.

17. Failure to consider state law — Most states have their own Wage and Hour regulations to include higher minimum wages, more strict regulations as relates to overtime payments on weekends, etc. Employers not only must consider federal but also state laws and comply.

The financial liabilities are significant as relates to non-compliance. At a minimum, the liabilities are calculated for each employee back two (2) years of employment for non-willful violations — back three (3) years for willful violations.

However, employees can engage a private attorney and file a lawsuit through the state. The liability associated with these lawsuits is four (4) years back wage liability plus attorney fees.

It behooves all employers, no matter how sophisticated, to conduct an annual Wage and Hour compliance audit. SESCO was founded in 1945 by a Wage-Hour investigator and as such, our history is deeply rooted in Wage and Hour compliance. Please contact SESCO to conduct such an audit.

Release Date: 05/02/2013
Contact Information: Dale Kemery (news media only) Kemery.dale@epa.gov 202-564-7839 202-564-4355

The RRP rule protects homeowners and tenants from dangerous lead dust that can be left behind after common renovation, repair, and painting work. It requires that contractors and subcontractors be properly trained and certified, and use lead-safe work practices to ensure that lead dust is minimized. Lead exposure can cause a range of health effects, from behavioral problems and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.

“Using lead-safe work practices is good business and it’s the law,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA is taking action to enforce lead rules to protect people from exposure to lead and to ensure a level playing field for contractors that follow the rules.”

The enforcement actions address serious violations of the RRP rule, including fourteen actions where the contractor failed to obtain certification prior to performing or offering to perform renovation activities on pre-1978 homes, where lead is more likely to be present. Other alleged violations included failure to follow the lead-safe work practices, which are critical to reducing exposure to lead-based paint hazards.

The 17 enforcement actions listed below include 14 administrative settlements assessing civil penalties of up to $23,000. These settlements also required the contractors to certify that they had come into compliance with the requirements of the RRP rule. Additionally, EPA filed three administrative complaints seeking civil penalties of up to the statutory maximum of $37,500 per violation. As required by the Toxic Substances Control Act, a company or individual’s ability to pay a penalty is evaluated and penalties are adjusted accordingly.

Enforcement actions:

· Groeller Painting, Inc. of St. Louis, Missouri.
· Albracht Permasiding and Window, Co. of Omaha, Nebraska.
· Midwest College Painters, LLC of Bloomfield Hills, Michigan.
· ARK Property Investments, LLC of Richmond, Indiana.
· Henderson & Associates Services of Largo, Florida.
· Home Resources Management, LLC of Columbia, Tennessee.
· Camaj Interiors & Exteriors of Jacksonville, Florida.
· Cherokee Home Improvements, LLC of Church Creek, Maryland.
· Window World of Harford located in Belair, Maryland.
· EA Construction and General Contracting of West Chester, Pennsylvania.
· Roman Builders of Morton, Pennsylvania.
· Accolade Construction Group, Inc. of New York, New York.
· PZ Painting of Springfield, New Jersey.
· Creative Renovations of Brooklyn, New York.
· Reeson Construction of Webster, New Hampshire.
· New Hampshire Plate Glass Corporation of Portsmouth, New Hampshire.
· CM Rogers Handyman of Manchester, New Hampshire.  

More information about the settlements: www.epa.gov/enforcement/waste/cases/lrrp050213.html
More about lead and instructions on getting certified: www.epa.gov/lead

Small businesses may not have a complete insurance market set up specifically for them when the state and federal health exchanges begin in January 2014.

Instead, the Department of Health and Human Services (HHS) announced that the Small Business Health Options Program (SHOP) will be delayed until 2015. Small business employees will still be able to get insurance, but states have the option to limit that to one choice, rather than a variety of plans, for the first year.

"For transitional purposes we have proposed that in 2014, a SHOP may elect to have businesses choose one plan to offer employees, and in 2015 employees will be able to choose from the full range of plans in the marketplace," said an HHS spokesperson.

John Arensmeyer, CEO of the Small Business Majority, an non-profit advocacy group, said insurers have indicated they did not have enough time to come up with insurance plans that met the federal standards.

"We're disappointed they chose to delay these particular features," he said. "I think there's a reason behind it, but it's outweighed by tremendous benefits." More choice in health plans would allow employers to negotiate better rates.  However, most states will go ahead with plans to try to offer more choices in spite of having the option to delay, he said.

The Chamber of Commerce issued a statement saying that, by delaying the provision, small business insurance through the health exchange "will be of little or no value to employers, or by extension, their employees.  We believe that as employers assess whether or not to offer coverage to their employees, the more flexibility that they have in deciding how and what to offer, within the confines of the law, the more likely employers will continue to offer health care coverage," the statement read.

SESCO will continue to monitor developments in health care reform to include compliance as well as recommendations for employers on best practices for their firms.  In the mean time, SESCO has recently updated “An Employer’s Guide to Healthcare Reform” providing a detailed overview of what is required by the law, including a timeline indicating when different provisions are to be implemented.  This white paper is available for $50.00 ($30.00 for retainer clients) and may be ordered by phone at 423-764-4127,  by clicking HERE from our Online Publications store, or by email at sesco@sescomgt.com.

SESCO is also counseling employers onsite, conducting webinars for associations and chambers of commerce and subsequently is available to support your company’s efforts in understanding, preparing for, and complying with this regulation.

"What an unbelievable transformation. THANK YOU SO MUCH!!!!!!!!!!!!!!!!!! your team has certainly played a huge role in changing lives and providing a better quality of living for these truly poor , but deserving children.   Again, Thank you, Thank you!!!!  

Mary
Phoenix Children's Project
www.phoenixchildren.org"

We would like to extend a thank you to all the wonderful volunteers that participated in our recent community service project for the Phoenix Children's Project!  Click here to view our photo album.

As time nears for implementation of key provisions of the ACA, it is critical that employers begin to determine how the regulations will affect their business costs and employee relations environment.

The following are the basic steps in determining coverage of the ACA and considerations for both large and small employers:

1. Determine if you are a large or small employer — A large employer for the purposes of the Affordable Care Act's play or pay mandate is 50 or more employees. To determine if your organization is covered under the "pay or play" mandate, consider the following calculation:

• Employer is considered a large employer for the calendar year if it employed on average, at least 50 full-time employees including "full-time equivalent employees" (FTE's) during the previous year. To calculate FTE's, use the following guide:

# _____ full-time employees (those who work an average of 30 hours or more per week) in the month

+

# _____ full-time equivalents in the month (total hours worked by all part-time employees for the month (but not in excess of 120 hours for any such employee) ÷  120 (retaining any fractions)

=

# _____ total FTE's for the month.

Then, total the FTE count for each calendar month and divide by 12. If the total for the prior year is equal to or exceeds 50, the employer is subject to the pay or play mandate. In calculating this final number, disregard any fractions. For example, if the final average is 49.9, round down to 49.

For employers who are close to meeting the threshold for the 2013 look-back year, they may be able to qualify for special transition relief that allows the employer to use any 6-consecutive month period during 2013, rather than the entire year. This may allow employers the time to apply the measurement period, have several months to analyze the results, determine whether they need to offer a plan, and then choose and establish a plan.

A special rule for seasonal workers allows employers to avoid the pay or play mandate if they exceed the 50 FTE threshold for 120 days or fewer during the look-back period solely because of seasonal workers. The guidance allows employers to use either the 120 days or a four calendar month period for purposes of this special rule. The guidance defines "seasonal worker" as including a worker who performs labor or service on a seasonal basis, retail workers employed exclusively during holiday seasons and, pending further guidance, any other reasonable, good faith interpretation of the statutory definition as adopted by the employer (any such interpretation should be made with the assistance of legal counsel).

For those employers who have less than 50 as determined above, you are not required to provide healthcare. There are no penalties or fines or other mandates. However, all employees (individuals) must obtain healthcare whether it is through you if you offer it or through health exchanges.

For those less than 50, the one noticeable concern for 2013 and beyond are the significant increases in health insurance costs. Health providers such as Blue Cross and UnitedHealth are gearing up for the increases in cost and thus are charging more. SESCO predicts up to 40% to 50% increases in healthcare costs. As such, small employers will need to determine whether or not they wish to absorb these increases and provide health insurance as part of their benefit offerings or delete health insurance as a benefit and forcing individuals and their families to the exchanges. Obvious factors for consideration include:

• Cost of increases/coverage

• Recruitment/retention/employee morale challenges

If you are a covered employer, re: those large organizations which employ 50 or more full-time equivalents, you must determine whether or not you are going to pay or play. The law does not require employers to provide health insurance but for those who do not, there is a penalty/tax for not doing so.

Therefore, the factors for consideration include:

• Affordability

• Staffing structures (part-timers)

• Employee recruitment/retention/morale

Pay Mandate — Those large employers who decide to pay the penalty (not provide health insurance to its employees meeting the minimum standard requirements) will be fined $2,000 per full-time employee less the first 30 full-time employees from actual total number of FTE's. For example:

Employer has 51 full-time employees:

- 30 FTE's = 21 FTE's

21 x 2000 or $42,000 per year.

Play Mandate — The play provision means that employers will provide health insurance meeting the minimal essential coverage. Employers must cover at least 60% of the cost of the "minimum essential coverage" for employees and the total employee cost for health coverage cannot exceed 9.5% of the employee's income. Further, benefits must include:

- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse disorders including behavioral health treatment
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventative and wellness services and chronic disease management
- Pediatric services including oral and vision care

Under the play scenario, health insurance providers will help design your plan to ensure that it meets the minimum essential coverage requirements. However, you as the employer have one other decision to make — who will be considered full- or part-time for healthcare coverage. Healthcare coverage must only be provided to those who work 30 or more hours per week. Many organizations have elected to reduce working hours to less than 30 so that health insurance cost/coverage is not required for those employees.

This determination must be made now or no later than July 1st as beginning in 2014, part-time employees will be determined based on a look back period which is typically the last six (6) months of 2013. You will take an average of hours worked.

Therefore, those employers who do not want to provide health insurance to "part-time" employees (29 hours or less on average), must change schedules to meet the look back period for determining part-time employees from July 1, 2013 to December 31, 2013.

For those who need assistance in determining coverage as a large or small employer or in calculating employees' FTE's for coverage under a group health plan, please contact SESCO. Also, SESCO has updated its compliance guide to reflect the latest changes/regulations to the ACA.

Finally, one option for larger employers may be to consider self-insuring. However, know that self insurance creates a high level of risk on the employer as self insurance is exactly what it says — the employer self-insures and is responsible for employees' medical and healthcare costs.

For those employers who are hoping that this regulation is going away — it is not. Also for those employers who are thinking about "rolling the dice" as to compliance, we strongly suggest that you do not. All employers will be required to complete online IRS forms as to their compliance with the program. These forms are directed to the IRS and reviewed by IRS agents monthly. Therefore, ACA has a built-in compliance mechanism making it almost impossible for employers not to be checked for compliance.