At the Wage and Hour Division (WHD) stakeholder meeting held May 21, 2010, at the U.S. Department of Labor (DOL) in Washington, D.C., WHD Deputy Administrator Nancy J. Leppink announced the agency would be pursuing an aggressive auditing and enforcement policy. She said DOL would target employers that “have been setting the pace in the race for the bottom of the compensation scale” by misclassifying workers as independent contractors or otherwise treating qualifying employees as exempt from the payment of overtime.
New Enforcement Efforts
The agency is armed with 250 new investigators and plans to have 1,000 on board by the close of FY 2011—representing an increase of approximately 50 percent over 2008 levels. The Wage and Hour Division is also partnering with unions and employee advocacy groups, other DOL agencies, the Department of the Treasury, the vice president’s Middle Class Task Force and state wage and hour investigators to identify and investigate employers on a nationwide versus local basis.
The goal is to make employers aware that the Obama administration Labor Department is dead serious about enforcing the nation’s wage laws. The intent is to make employers caught in the new dragnet to feel economic pain to the maximum extent allowed by law—and to publicize their pain broadly to prevent and deter others from even thinking about skirting wage and payroll tax obligations.
In conjunction with these new enforcement efforts, in August 2010, the Wage and Hour Division plans to publish a proposal for sweeping changes in the employer recordkeeping rules to make employer pay practices “open and transparent,” including a requirement for individualized written explanations of the basis for treating workers as independent contractors, employees exempt from overtime pay and the method of calculating overtime—and proof of disclosure of such information to the affected employees.
If these changes become final, the agency plans a publicity campaign aimed at employees and their representatives—to further aid the agency in bringing the nation’s recalcitrant employers into compliance.
Employers who fail to comply with the new recordkeeping obligations will face a willful violator presumption if caught, subjecting them to three years or more back pay liability and liquidated damages based on the results of the agency audit.
Source: Excerpted from SHRM 6/15/2010 by Mary Pivec