Our Blog Archive for January 2009

If you haven’t heard the term “wage theft” yet, you’ll be hearing it soon. In the past year, it’s gone viral. There’s the high profile book by Kim Bobo (Wage Theft in America), YouTube student documentaries (Wage Theft: Faces of a Hidden Crime, Part 1 of 3), plaintiff’s websites, and Bobo’s testimony before Congress (Committee on Education and Labor).

And here’s a tidbit for you – There are some rumors floating around that Bobo may be the next Administrator of the DOL’s Wage & Hour Enforcement Division. Talk about a potential new sheriff in town.

Even the government’s own watchdog, the GAO (U.S. Government Accountability Office), is shining a spotlight on the problem. Just last summer, the GAO testified that the DOL is failing to effectively enforce the nation’s wage and hour laws. (Labor Department Not Effectively Fighting Wage Theft; ELT blog summary ).

Obama to Battle Wage Theft…

My guess is that “wage theft” legislation and a beefed up DOL will be a hallmark of the Obama administration (just check out his letter to Former DOL Sec. Elaine Chao). In his own words:

It’s important that the Department put procedures in place that will lead to improvements in the enforcement of workers’ rights. This is the core mission of the Department and failing to adequately enforce the Fair Labor Standards Act (FLSA) is unacceptable.

No doubt, Obama will help workers get the money they’re rightfully owed under the law. It’s an important component of his economic stimulus plan.

And he and Congress are off to the races.

It started with a key appointment of Hilda Solis, D-California, to head the Department of Labor. In early January, she told a Senate panel that she’ll be a voice for working families. She has also promised to vigorously enforce wage and hour laws. In her own words:

The Labor Department must assure that American workers get the pay they have earned working in safe, healthy, and fair workplaces … A fair day’s work deserves a fair day’s pay.”

(Workforce article)

Lilly Ledbetter Fair Pay Act Passes!

And the efforts have continued with the swift passage of the Ledbetter Fair Pay Act which Obama signed today. With Ledbetter by his side, he reiterated his strong commitment to ensure that everyone gets paid fairly for their work:

So in signing this bill today I intend to send a clear message: That making our economy work means making sure it works for everybody…That there are no second class citizens in our workplaces, and that it’s not just unfair and illegal, it’s bad for business to pay someone less because of their gender, age, race, ethnicity, religion or disability. And that justice isn’t about some abstract legal theory, or footnote in a casebook, it’s about how our laws affect the daily lives and daily realities of people, their ability to make a living and care for their families and achieve their goals.

For those of you who have forgotten about the Ledbetter Fair Pay Act, it’s legislation named after a retired supervisor at a tire plant who belatedly discovered she was getting paid less than her male coworkers.

Under the new law, workers can bring a lawsuit for up to six months after they receive any paycheck they allege is discriminatory. The Ledbetter Fair Pay Act overturns a U.S. Supreme Court decision that had held such cases could be brought only within six months of the discrimination beginning. So in short, the time to bring these lawsuits (and the risk exposure for employers) has been exponentially increased.

And it’s not just about sex discrimination. The new rule amends Title VII, the Age Discrimination Act, the ADA, and the Rehabilitation Act.

As the early days of the Obama administration continue to unfold, I’m sure we’ll see more on this story.

What To Do?

So just when you thought the wage and hour war couldn’t get worse (check out some sobering stats and an insightful article by Garry Mathiason of Littler Mendelson on the topic), it’s time to brace yourself yet again. Clearly, those in power believe that wage and hours laws have not been effectively enforced and as tough as it is to imagine, claims are likely to increase again.

But I’ve said it before and it bears repeating - you don’t have to sit back and just wait for the onslaught. You can and should be proactive. For a nice summary of the fundamental components of a wage and hour compliance program check out the ELT blog and Mathiason’s article.

And when you start to audit your organization, what you’re sure to find is that most of the problems that make you a sitting duck are easily preventable. That’s because the costly errors that fuel class action litigation in this arena are so basic. It all boils down to poorly communicated policies and a general lack of understanding about simple pay rules already established by your organization.

Train Your Employees!

The best and easiest cure? High quality, effective wage and hour training for all your employees. It’s the only way to ensure that all of your workers know what’s expected of them when it comes to pay. And it’s the only way to address all the preventable and costly mistakes that make your organization an easy target.

The right training can also help fight class action certification and help establish an affirmative “good faith” defense in litigation, reducing your potential liability by as much as two-thirds.

That makes training a no-brainer - the ROI justification is black and white.

If you haven’t already, check out ELT’s online Wage and Hour course. It’s the fastest and most effective way to educate all your employees about the wage and hour topics that matter most to your organization. The most powerful feature? The program intelligently configures its content based on the state location of each employee. Considering that the bulk of the most costly and difficult wage and hour litigation is happening at the state level, addressing state laws is absolutely crucial.

So when we see a tide of new claims and class actions, and when employers are struggling to battle off the plaintiff’s bar, you can feel protected. You’ve audited your practices, and most importantly, trained your managers and employees. You’ve done your best to shield your business and mitigate your potential liability in what’s sure to be a rocky 2009.