Labor: The year of the “gotcha”

Employers must beware of increased wage and hour enforcement and litigation in 2012

Based on the U.S. Department of Labor’s (DOL) Wage and Hour Division’s (WHD) 2012 budget, employers can expect an increase in wage and hour enforcement and litigation. The WHD’s budget increased by more than $15 million in 2012, and the agency will add 107 new investigators this year. The WHD made only one cut to its budget in 2012: it decreased the budget of Employer Compliance Assistance and Call Center by $2 million and eliminated 12 of its employees.

Historically, the WHD initiated investigations based on employee complaints. But in 2012, the WHD pledges to increase targeted investigations as part of its “corporate-wide compliance strategies designed to ensure that employers take responsibility for their compliance behavior” in order to “promote system-wide behavioral changes within industries.” Directed or targeted investigations allow the administration to target industries, specific issues and even select employers.

The IRS, for example, created a program that provides partial amnesty to employers who self-report misclassified independent contractors. The IRS also has a mechanism where employers can write and receive a determination of whether a contractor is properly classified. However, there is no WHD policy that encourages employers to self-report or that would assist in determining whether a contractor is misclassified.

These investigations are being carried out by 300 new investigators, who are utilizing very aggressive techniques, including:

Managing Partner

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Salvador Simao

Salvador P. Simao is managing partner of Ford & Harrison LLP’s New Jersey office. Having spent the majority of his career as a trial attorney...

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