Last year was a record-setting year for the Equal Employment Opportunity Commission.  It received more charges than ever, resolved more charges and obtained more monetary relief through mediation than ever, and reduced its pending charge inventory by nearly 10 percent.  The agency secured several multi-million dollar consent decrees in class actions against large employers.  To top it off, the EEOC accomplished these feats despite a hiring freeze.

The EEOC is on an upswing, so compliance is more important than ever.  Employees are filing charges in record numbers, in part due to outreach programs in which the EEOC encourages employees to go after employers who have violated the law.  In addition, the mandatory EEOC poster contains a toll-free number for employees.  For details of this program, click here .

As with many of the Obama Administration’s initiatives, the revitalized EEOC is not about changing the law but about increasing scrutiny.  This can be more significant for employers because new laws do not necessarily lead to more enforcement, but when an agency steps up enforcement of existing laws, employers need to be ready.

Take this opportunity to make sure you know whether you are in compliance.  Have you trained your supervisors?  Do your employees, and more importantly supervisors, understand the ramifications their behavior can have for the company?  Is your handbook up to date?  When did you last have an HR audit?  Make sure your company is ready if the Government focuses on you.

Brody and Associates regularly provides counsel on civil rights issues and employment litigation in general.  We also help employers with all aspects of Human Resource audit and compliance strategies.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

The Internal Revenue Service (IRS) recently instituted the Voluntary Classification Settlement Program.  Employers can voluntarily apply to this program in an effort to reclassify their independent contractors as employees.  In order to qualify for reclassification, the worker must have been improperly treated as an independent contractor consistently for the previous three years.  If you are already being audited by the IRS or the Department of Labor, it is too late for you to apply for the program. 

Employers who are accepted into the program will sign a closed settlement agreement with the IRS.  Employers will end up paying about 10% of the amount of back employment taxes it actually owes on the misclassified worker and are not liable for any interest or penalties.  Employers under the program agree to an extended six year statute of limitations for the next three years, instead of the usual three year statute for payroll taxes.  In addition, the IRS agrees not to audit the employer for previous years of misclassification. 

This is a great program for employers who want to voluntarily comply with the law.  Classifying a worker as an independent contractor or an employee is a complicated, fact-specific process.  Click here for further information on proper worker classification. Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

In the film industry, unpaid internships are commonplace, and are almost necessary to get your foot in the door.  Two men, along with hundreds of other people, were hired as unpaid interns during the production of the movie, one in the accounting department and one in the production department.  The interns say they did such tasks as make spreadsheets, review personnel files, get coffee, empty the trash and other secretarial work. 

As we previously mentioned, both state and federal laws set out specific guidelines for unpaid internships.  The purpose of an internship is purely educational which often involves receipt of college/graduate school credit for the internship.  The employer should derive no benefit from the intern’s presence; in fact, the intern should be a burden to the employer.  Interns cannot replace a worker who would otherwise be doing that work.  They should not expect or be promised a job upon completion of the internship. 

In this case, it seems as though the Black Swan interns were clearly doing menial work that should have been completed by paid employees.  The plaintiffs are suing for back pay and injunctive relief, stopping Fox Searchlight from using unpaid interns improperly in the future. 

Employers should remember that just because it is common in your industry to use unpaid interns does not mean it is legal.  The federal government, as well as many state governments, recently began cracking down on illegal unpaid internships.  You should audit your practices to ensure your interns are truly gaining educational experience (without displacing a paid worker). 

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

Editor’s Note: This is the third in a six-part series examining how employment law issues specifically affect law firms. Next week’s article will focus on law firm discrimination and harassment issues.

In the last article, we began discussing wage and hour issues relevant to law firms.  We began with the basic rule that non-exempt employees must receive overtime for all hours over 40 and reviewed the three exemptions most relevant to law firms: executive, administrative, and learned professional.  Here we focus on whether office managers and hourly, document review lawyers are exempt, plus a review of two common administrative issues: payment frequency and meal breaks.  

Office Manager

Office managers are hard to classify as they come in many varieties.  Some may essentially be secretaries who keep the office tidy and files in order.  Others may have significant responsibilities such as handling some aspects of HR, business development, and/or accounting. 

Still others may run all aspects of the business other than the provision of legal services.  Since exempt status is determined by employees’ primary duties, it is no surprise some office managers are exempt while others are not. 

Consider an office manager with a bachelor’s degree and extensive knowledge of accounting, financial and other non-legal administrative services.  He exercises discretion and independent judgment in coordinating meetings and interviews with clients, agencies, medical providers, investment advisors, insurance companies and institutional representatives and preparing corporate reports and minutes.  Most of his time is spent on activities related to direct client services or to direct support of executives in the firm.  Lastly, he develops his own procedures, assesses alternatives and provides a recommended course of action.  Exempt?  In a 2003 opinion letter examining these facts, the U.S. Department of Labor said no.

The issue was whether the administrative exemption was met.  As a reminder, administrative employees perform office work directly related to management policies or general business operations of their employer and regularly exercise discretion and independent judgment with respect to matters of significance.  On these facts, the Labor Department concluded the employee did “not appear to have the authority or power to make independent choices free from immediate direction or supervision with respect to matters of significance.  Nor [did] he appear to be formulating policy or exercising the type of authority within a wide range that could commit [the] firm in substantial respects financially or otherwise.”

Rather, he was only “carrying out the day-to-day functions of [the] firm rather than its management policies . . . .”  The lesson is that the more authority and autonomy an office manager has in terms of running the firm’s business (and not providing the firm’s services), the more likely he or she will satisfy the administrative exemption. 

While the administrative exemption is generally the most relevant, an office manager regularly supervising at least two employees and who has authority to hire and fire may qualify as a supervisor/executive.

Document Review Attorneys

In our prior article, we noted that lawyers typically meet the duties test for the learned professional exemption.  We also noted that to be exempt, employees generally must receive a salary.  What about document review attorneys who are often paid hourly?  Fortunately, there is a regulation which states employees are exempt from the salary rules if they have a license to practice of law and are “actually engaged in the practice thereof.” 

What constitutes the practice of law can be a thorny question, and whether these attorneys are doing so has not been litigated in this context.  However, if the document review work is only being performed by attorneys (e.g., not paralegals), it should generally be tough to argue they are not actually practicing law. 

A Note on Titles

With regard to the exempt classification, the law is clear: titles mean nothing.  However, when dealing with a Labor Department investigator, you do not want an inconsistent title to confuse him or her.  For example, the office manager in the above opinion letter was called an “Administrative Assistant.”  While it may not have carried the day, it would not have hurt to call him “Office Manager” or “Director of Administration.”  If you have exempt employees, give them exempt-sounding titles.

Payment Frequency

Employers are often surprised to discover Connecticut law requires weekly pay by default.  Permission to pay less frequently may be granted by the Commissioner of Labor, and permission for bi-weekly pay is routinely granted in white-collar settings. 

Permission for semi-monthly pay can be trickier because the government is concerned about proper overtime pay (which must be calculated weekly, not twice a month) for nonexempt employees.  However, if most of the law firm’s employees are lawyers, this should not be a problem unless there is a lot of overtime worked by nonexempt workers.

Meal Breaks

State law requires employers to grant a 30-minute meal break (which can be unpaid) to employees working 7.5 hours or more.  While many lawyers routinely work through lunch, this is typically not an issue as long as it is voluntary. 

Be careful when letting nonexempt staff work through lunch as employers are required to accurately record their hours and pay them for all time worked.  For a person normally working 8-hour days, working lunches can result in 2.5 hours of overtime per week.

Conclusion

Wage and hour issues can be complex, even for lawyers.  By spending some time up front to properly classify workers and establish compliant policies, you can minimize your firm’s exposure to potential investigations and claims.

Editor’s Note:  This is the first of a six-part series that will examine how employment law issues specifically affect law firms.  Next week, the authors will write about federal and state overtime requirements. 

There’s an old saying that the cobbler’s children have no shoes.  This proverb is often true of lawyers.  Just think about how many contracts we all sign without reading them! 

When it comes to complying with employment laws, lawyers can be some of the worst offenders.  Typically this is not willful, but simply because we are often too busy being lawyers rather than managers.  This is a mistake.  Employees are increasingly willing to litigate, and with increased enforcement by federal and state agencies, missteps can be costly.  You may remember the Baker & McKenzie administrative secretary of four months who sued for sexual harassment and was awarded $7.1 million in punitive damages. 

If your firm were investigated today, how would you fare?  Try this self-audit: would your answers pass muster?

Overtime

You probably know there are a few exemptions to the federal and state overtime requirements.  Lawyers performing legal work, for example, are exempt as “Professionals.”  But are your paralegals exempt, and if so, on what basis?  What about your office manager?  Can you pay your lawyers an hourly rate but not overtime?

Bonuses

Often law firms incentivize attorneys with bonuses.  What happens when an attorney leaves and the firm does not want to pay the bonus?  Last year, such a bonus dispute went all the way to the Connecticut Supreme Court.  Do you communicate your bonus plan to employees properly?  Did you know a “discretionary” bonus is not always discretionary?

Discrimination

We all know race and sex discrimination are illegal, but do you know what all the protected classifications are under federal and Connecticut law?  Do you ask questions that solicit information you are not allowed to consider as an employer?  For example, do you ask questions about availability to work long hours (which elicit information about family obligations)?  

What information did you write down in your notes?  Do you screen applicants by going on Facebook?  How do you record what you find there?  If a former associate claimed his/her discharge was racially motivated, would the personnel file justify your decision?  If an associate requires special equipment, furniture, or software to accommodate a disability, do you have to pay for it?

Harassment

When is harassment illegal?  When should you say it is just wrong?  What steps should your employees take if they feel harassed?  Do you have a policy in place?  How is it communicated?  Are you covered by Connecticut’s mandatory sexual-harassment-prevention training requirement?  Should you do the training anyway?

Required Notices

Most federal and state employment laws require certain notices be posted.  Where are your notices posted (and can they be seen)?  Do you know which notices apply to your workplace?  Are your notices up-to-date?  Have you posted notices that don’t apply to you but are part of the “all-in-one” poster you bought?

Handbook

While an employee handbook is not legally required, if well written, it can enhance compliance and administrative efficiency.  Do you have one?  Is it current?  Does it create a contract?  Does it sell your firm or read like a rule book?

Hiring

A lot of paperwork is involved when hiring.  Do you correctly complete all legally required forms?  If you hire a non-U.S.-citizen with temporary work authorization, how do you know when it expires?  Do you report all new hires to the state?  What employment terms do you communicate to new hires in writing?

Leaves

When an employee requests a leave of absence, sometimes a federal or state law will require it be granted.  Do you know which leaves are mandatory?  Are you covered by the federal or Connecticut Family Medical Leave Act?  If so, do you know when and how much leave is required?  Do you know how much leave a pregnant employee must receive?  Do you have a parental leave policy; if so, does it discriminate in favor of moms?  Are you too generous or too cheap?

Privacy

Lawyers today spend all day on computers and hand-held devices.  Many employers allow personal use of such equipment as a courtesy.  If you do, do your employees have a reasonable expectation of privacy in their personal communications?  Do you monitor employees’ computer use, and do employees know this?  What about other forms of electronic monitoring?  Do you provide guidance on social media activity?  Does such guidance comply with the National Labor Relations Act? 

Additionally, state and federal law requires employers to guard certain personal employee information.  What steps do you take to protect social security numbers?  Do employees know what to do if they receive a call requesting information about another employee?  Where do you keep any employee medical records received?

Conclusion

If several of these questions left you scratching your head, be glad this was only a self-audit and not a government audit!  But what will you do now?  Of course, it’s not easy to find time to handle these non-billable HR issues while practicing law and trying to woo the next big client.  But you need to correctly answer these questions to minimize the risk of costly and time-consuming litigation and government investigations.  These articles, which will be published over the summer, are decisgned to offer some of these answers.  As lawyers, we often preach to clients that an ounce of prevention is worth a pound of cure.  It’s time to practice what we preach!

The bill requires employers with fifty or more employees in Connecticut to allow certain employees to accrue one hour of sick leave for every forty hours worked.  The leave is limited to a maximum of forty hours (five days) per year.  Employees can carry over forty hours to the next year, but an employee can only accumulate a total of eighty hours of leave in one year.  Paid sick leave can be used for an employee’s illness, to care for a sick family member, preventative care, or treatment for sexual or domestic abuse. 

The leave requirements apply to “service workers” who are either paid hourly or not exempt from overtime.  The definition of service workers is bound to cause confusion, as it is unclear, and lists several broad categories.  Such categories include secretaries and administrative assistants, office clerks, nurse practitioners, and many restaurant workers.  Most exempt employees and temporary or day workers are not included in this definition.  If your employee does not fit into one of those categories, you will not need to provide the paid sick leave. 

The bill exempts certain manufacturers and the YMCA from these requirements.  If an employer already provides for at least five days of any paid leave, such as vacation days, personal days, sick days or other paid time off, they are not required to provide an additional five days.  This is the case for many employers already, and therefore this bill will not affect them.  However, for businesses, such as restaurants, where employees usually switch shifts around as opposed to get paid for their sick leave, significant changes will need to be made. 

The law requires employers give employees notice upon hiring of their right to take leave, the details of the leave policy, the prohibition against retaliation, and their right to file a complaint with the Labor Commissioner.  In the alternative, employers can post a poster in their workplace which covers all that information in English and Spanish. 

Employers are prohibited from retaliating against any employee (not just service workers) who takes paid sick leave.  Employees are permitted to file a complaint with the Labor Commissioner if they believe their rights under this law have been violated.  The Commissioner may hold a hearing, and could assess a fine between $100 and $500 per violation, depending on the type of violation. 

Democrats and unions supported the bill.  They complain the United States is the only top industrialized country not to guarantee some type of paid sick leave.  Democrats claim this bill will protect workers and the public health, especially families with sick children.  Business owners claim the bill is anti-business and will make it harder to run businesses in Connecticut.

We anticipate Governor Malloy will sign this bill soon.  The requirements promise to create a new headache for employers in Connecticut, as more recordkeeping and legal interpretation will be necessary.  Employers need to revise their leave policies to reflect the new changes by the New Year.  Employers should discuss the new law with counsel to ensure compliance.  Brody and Associates regularly advises management on complying and remaining up to date with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

The FLSA requires most employees be paid overtime for all hours worked over forty.  The law exempts certain categories of employees from these overtime requirements.  In this case, the company classified certain employees, such as its new assistant store managers, as exempt from overtime.  The United States Department of Labor (DOL) investigated and determined these workers were actually not exempt from the FLSA and therefore should have received overtime for the past several years.

Since the Company treated these employees as exempt, they did not record their hours worked.  Further, it required these assistant managers work without additional compensation during early morning and late night shifts, as well as when covering for a staff shortage.  While federal law requires employers to keep time records for nonexempt employees, there is no such requirement for exempt employees.  However, if an employee is found to be improperly classified as exempt, and there are no records of the hours worked by that employee, the employer has now violated the recordkeeping requirements of the FLSA.  In addition, this leads to a “he said, she said” situation, where an employer has no way to contradict an employee’s claim for unpaid overtime.  Oftentimes the DOL will take the employee’s word on the overtime hours he claims he worked, leading to larger back pay awards than truly warranted. 

Overall, Levi Strauss was lucky, as it was able to come to a settlement agreement with the DOL.  If this issue had gone to trial, not only might the award be higher (based on the inclusion of penalties, interest, liquidated damages and the hours calculation itself) but the legal fees expended by the company would have been significant.  Employers should be vigilant in properly classifying their employees as exempt from overtime.  The classification implicates how you will handle the employee’s payroll records, and how you will track the employee’s hours.  It is highly advisable to consult an attorney regarding these matters, as we see damages for mistakes can be huge. 

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.