Employment law lessons are truly everywhere.

Wage & Hour Insights is reporting on a new lawsuit filed against Lady Gaga by her former personal assistant. In short, the plaintiff claims that she is owed several hundred thousand dollars because Lady Gaga failed to pay her overtime.

The Lawsuit

The complaint describes a 24-hour non-stop cycle of Gaga-ness, including allegations that the plaintiff:

• worked “not only in [Lady Gaga's] home, but also during her travels for her global concert tours, from city to city throughout the world, at locales including stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses”
• “was always behind the scenes, and figuratively, if not literally, always at her side”
• “was on duty during all hours of each twenty-four (24) day, with no entitlement to breaks, for meals or otherwise, or, at times, even sleep”
• was responsible for keeping Lady Gaga “on her desired schedule from the earliest waking hour, for being responsive to the slightest need throughout the day, and for addressing spontaneous, random matters in the middle of the night”
• was also responsible for “ordering meals and ensuring that they were correctly prepared and served at specific times; maintaining the availability of [defendant's] personal supplies; ensuring the availability of chosen outfits; ensuring the promptness of a towel following a shower; and serving as a personal alarm clock to keep [defendant] on schedule”

Wow.

The Lessons

All employers (even celebrity superstars who demand 24-hour attention including “towel promptness”) need to know the ins and outs of the Fair Labor Standards Act.

Never ever assume that an employee is exempt from overtime just because they’re paid a salary. And always always always carefully follow FLSA record-keeping and other requirements. If you don’t, you could be facing claims for backpay, damages and penalties far exceeding the original amount owed.

Click here for our handy FLSA Cheat Sheet to help you stay out trouble.

Got some misclassified independent contractors? Now might be the time to come clean.

As discussed here previously on the Blawg, the government continues to crack down on employers that misclassify independent contractors. Now, however, the IRS has announced a new Voluntary Compliance Settlement Program (VCSP) that will allow employers to rectify past independent contractor misclassifications by paying a small tax and agreeing to reclassify the contractors as employees.

Who’s Eligible?

Employers that:

• have consistently treated the workers as nonemployees;
• have filed all required 1099 forms the previous three years; and
• are not currently under audit for misclassifying those workers.

How Do You Apply?

Employers must file an Application for Voluntary Classification Settlement Program (Form 8952) at least 60 days before the reclassification. The form will be available on the IRS site in October.

What Happens After I Apply?

According to the IRS, an employer who participates in the VCSP:

• will agree to treat the workers as employees for future tax periods;
• will not be subject to an employment tax audit with respect to the workers’ classification for prior years;
• will pay 10% of the employment tax liability that may have been due on the compensation paid to the workers, without interest or penalties;
• will extend the period of limitations on the assessment of employment taxes for three years; and
• will, for the first three years under the program, also be subject to a special six-year statute of limitations, rather than the three-year limitation period that generally applies to payroll taxes.

Should I Do It?

As always, I highly recommend that you discuss any potential misclassifications with your favorite employment lawyer before taking action.

On Forbes.com, one prominent lawyer calls the VCSP “illusory” and advises employers to avoid it. Another prominent firm counsels employers to “think carefully” before jumping into the program.

Where Can I Get More Info?

Of course, the best advice is to classify all employees and contractors correctly in the first place. Click here for our handy independent contractor checklist and here for a recent Q&A on this topic.

Click here for VCSP FAQs from the IRS itself.

The Associated Press is reporting that the federal government is aggressively expanding its enforcement actions against businesses that misclassify independent contractors.

What’s Happening?

According to the report, the Department of Labor is signing information-sharing agreements with the IRS and nine states that will help enforcement agents target companies that unlawfully label employees as independent contractors to skirt minimum wage and overtime pay requirements. The DOL has also hired about 300 new agents to investigate wage complaints and has seen a 400% increase in backpay recoveries in recent years.

Noting that the new arrangement could subject employers to penalties from multiple agencies, Patricia Smith, the DOL’s top lawyer, said “There’s more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased.”

Participating states include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington, with New York indicating that it plans to join the effort in the future.

The Bottom Line

Now is not the time to run afoul of wage and hour laws. To stay out of trouble, click here for our handy Independent Contractor Checklist and here for a recent Question of the Week addressing this subject.

Got anything you’d like to tell/ask the Department of Labor about wage and hour regulations? Click here to join the DOL’s live chat scheduled for today at 1:00 p.m. EDT.

Enjoy!

(Special thanks to Dan Schwarz of the Connecticut Employment Law Blog for bringing this to my attention.)

Here are the answers to yesterday’s Wage & Hour Big 10. We asked . . .

Which of the following must employers pay?

1. On-call time
2. Commute time
3. Wait time
4. Changing into and out of uniform if required at work
5. Donning and doffing safety gear
6. Walking between changing and production areas
7. Rest periods of 30 minutes or less
8. Bona fide meal periods of 30 minutes or more
9. Travel during the course of the work day
10. Travel outside work hours

The Answers

Generally speaking, employers must compensate Items 4, 5, 6, 7 and 9. (As always, check with your favorite employment lawyer familiar with your state’s laws before making any changes to your policies and procedures.)

Stay tuned for more wage & hour tools & tips in the coming days. In the meantime, here’s our handy FLSA Cheat Sheet for your perusal.

As we discussed yesterday, wage & hour issues are the undisputed #1 scary-lawsuit-producing employment law issue on the planet right now.

The following is a little test of your knowledge of the “Wage & Hour Big 10.” If you master these, you’ll be well on your way toward a future free of FLSA foibles.

Which of the following must employers pay?

1. On-call time
2. Commute time
3. Wait time
4. Changing into and out of uniform if required at work
5. Donning and doffing safety gear
6. Walking between changing and production areas
7. Rest periods of 30 minutes or less
8. Bona fide meal periods of 30 minutes or more
9. Travel during the course of the work day
10. Travel outside work hours

Tune in tomorrow for the answers.

Wage and hour lawsuits continue to dominate the employment law headlines with seemingly no end in sight.

What can you do to avoid your company being the next target? We’re here to help. Over the next several weeks, we’ll be providing the latest tools and tips and answering your questions to help keep you out of trouble.

Today, we’ll start with some key facts . . .

Latest Stats & Hot Spots

• The overall $$$ amount of class action settlements increased four-fold last year.
• Employers idenitifed wage & hour suits as #1 in both current cost and anticipated increase.
• Wage & hour “hot spots” include:
  • Overtime misclassifications (especially administrative)
  • Independent contractor misclassifications
  • Off-the-clock (pre-/post-shift work, computer logon/logoff, checking email to get assignments, etc.)
  • Tip-pooling
• Rest / break / meal period claims are expected to decrease slightly.

Enforcement, Enforcement, Enforcement

Now is not the time to violate the FLSA. Last year, the Department of Labor hired 200+ new Wage & Hour Compliance Officers to enforce compliance. It also invested $25+ million and and hired 100 DOL enforcers to target independent contractor misclassifications.

Also notable is the government’s new “We Can Help” Campaign in which it’s running public service announcements encouraging potential claimants to come forward. In addition, a joint DOL/American Bar Association program was recently launched to connect employees with FLSA lawyers.

OK, I’m scared. Where should I start?

Click here to access our patented FLSA Cheat Sheet. Study it intensely and then stay tuned for more on this critical subject.

Sources: ManpowerGroup, Seyfarth Shaw, Fulbright & Jaworski, Jury Verdict Research

We’ve gotten several questions about the rules around furloughs and other reductions in pay. The Department of Labor has issued a timely new guidance entitled Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues.

Here are the highlights . . .

If an employer is having trouble meeting payroll, does it still need to pay non-exempt employees on the regular payday?

Yes. Failure to do so violates the Fair Labor Standards Act (FLSA).

Is it legal for an employer to reduce the wages or hours of hourly employees?

Yes, as long as minimum wage and overtime laws are followed.

Does an employer need to pay an hourly employee for a full day of work if s/he was scheduled for a full day but only worked a partial day due to lack of work?

No. The FLSA does not require employers to pay non-exempt employees for hours not worked.

Can an employer reduce an exempt employee’s salary due to a slowdown?

Reductions in an exempt employee’s salary normally causes a loss of exemption, requiring payment of overtime and minimum wage. However, in some cases, a prospective reduction may not cause a loss of the exemption so long as other FLSA tests are met. (I’ll be posting more specifics on this particular question soon.)

Can an employer reduce the leave of a salaried exempt employee?

Generally, yes, provided that the employee still gets paid his/her salary in any week in which work is performed.

Can an exempt employee volunteer to take time off due to lack of work?

Yes (but it must be truly voluntary).

Can an employee still be on-call or performing work at home during a furlough day?

Whether on-call time is hours worked depends on the circumstances. Generally, if an employee is “engaged to wait,” it’s work time. If the employee is only “waiting to be engaged,” it’s not.

What are the penalties for violations?

Potential penalties include back wages and liquidated damages in an equal amount, plus interest, attorneys’ fees and court costs. Willful violations may result in criminal penalties, including fines and imprisonment.

(Special thanks once again to the Connecticut Employment Law Blog)

Wal-Mart has agreed to pay $35 million to settle a class action alleging that 88,000 employees in Washington state were forced to skip rest and meal breaks or work off the clock.

The three workers who brought the suit will get $10,000 each. Other employees will get varying amounts based on length of service and other factors.

How much do the attorneys get? A whopping $10.5 million.

“This lawsuit was filed years ago and the allegations are not representative of the company we are today,” said Wal-Mart spokesperson Daphne Moore. “Our policy is to pay associates for every hour worked and to make rest and meal breaks available.”

In December, Wal-Mart announced that it would pay more than $600 million to settle 60+ wage and hour lawsuits across the country.

Click here and here for more.

The New York Times is reporting on a Government Accountability Office (GAO) audit that is highly critical of the handling of wage claims by the Wage and Hour Division of the Department of Labor (DOL).

Among other things, the GAO is criticizing the DOL’s overall reduction of enforcement actions, handling of overtime and minimum-wage complaints, failure to focus on lower-wage industries and delays in handling cases.

Among the findings, according to the Times:

• Enforcement actions filed by the DOL decreased 37% over the past decade.
• The DOL mishandled “more serious cases” 19% of the time.
• The DOL mishandled 9 out of 10 cases brought by undercover agents posing as aggrieved workers, failed to record 5 of the matters in the DOL database, failed to investigate 3 of the matters and incorrectly reported that back wages had been paid in 2 of the matters when they had not.
• In one matter, the DOL reportedly failed to investigate a complaint that underage children were working during school hours at a California meatpacking plant with dangerous machinery.

In response, the DOL pointed to the fact that it has more than doubled its wage and hour recoveries in the past ten years despite a 20+% reduction in its number of investigators. It maintains that it reduced the number of enforcement actions due to improved case screening plus its decision to focus on more time-consuming systemic cases.

Secretary of Labor Hilda Solis reportedly intends to increase the Wage and Hour Division’s staff by a third by adding 250 investigators (100 as part of the stimulus package). The goal is to “refocus the agency on these enforcement responsibilities” and to “ensure that contractors on stimulus projects are in compliance with the applicable laws.”

For more, click here and here.