Wage and Hour Claims in the Energy Industry

Transcription

1 Wage and Hour Claims in the Energy Industry Today s Webcast will begin promptly at Noon FOLLOW STEPTOE & JOHNSON ON TWITTER: ALSO FIND US ON Steptoe & Johnson PLLC. All Rights Reserved.

2 Steptoe & Johnson Upcoming Events 2013 Steptoe & Johnson Energy Leadership Summit September 10 & 11, 2013 Southpointe/Canonsburg Hilton Garden Inn Steptoe & Johnson Labor & Employment Seminar September 12, 2013

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4 Today s Presenters Rodney L. Bean rodney.bean@steptoe-johnson.com Larry J. Rector larry.rector@steptoe-johnson.com

5 Overview Department of Labor s enforcement initiative in the shale gas industry Employees and independent contractors Paying day rate Wage and hour issues for companies with employees in West Virginia

6 DOL Enforcement Initiative Multi-year enforcement initiative Began in 2012 Targets: West Virginia and Pennsylvania Focuses on oil and gas companies and related businesses FLSA compliance DOL claims 80% of employers are not in compliance with FLSA

7 Fair Labor Standards Act Federal law governing minimum wage and overtime Applies to employees but not to independent contractors

8 Employee/Independent Contractor Classification

9 Employee or Independent Contractor IRS 11 Factor Test Former 20 factor test has been streamlined into 11 factors Little substantive change Purpose: determine whether enough control to establish employer-employee relationship All factors are not weighed equally Not all factors must be present for someone to be an employee

10 Employee or Independent Contractor Case by case IRS uses three main categories to make the distinction Behavioral control Financial control Relationship of the parties

11 Behavioral Control Does the employer direct the worker? Time and place Tools or equipment to use Where to purchase supplies and services Training

12 Financial Control Unreimbursed business expenses Freedom to work for other businesses Payment for services Opportunity for profit or loss

13 Type of Relationship Written contract Fringe benefits Length of the relationship Services performed are key aspect of regular business of company

14 Consequences of Misclassification IRS Income tax withholding Social Security taxes Medicare taxes FLSA Overtime Liquidated damages Attorneys fees

15 Employee or Contractor Take Away Look at the entire scope of the relationship Evaluate each independent contractor agreement separately Keep good records Form SS-8

16 Paying Day Rate Properly

17 Day Rate

18 Paying Day Rate Properly Most employees paid on day rate are eligible for overtime pay Employer is required to keep track of hours worked Start with assumption that every employee needs compensation reevaluated

19 Exempt or Non-Exempt? Determine classification as exempt or non-exempt employee Employees are exempt if employed in: Executive; Administrative; Professional; or Outside sales capacity

20 Non-exempt Employees Subject to FLSA minimum wage and overtime laws Federal minimum wage: $7.25 per hour Overtime rate: one and one-half times the regular rate of pay for all hours worked over forty in a workweek

21 Calculation of Day Rate Regular Rate for day rate worker = All $ received for the workweek Number of hours worked during workweek

22 Calculation of Day Rate Overtime for day rate workers = ½ x Regular Rate x # hours worked > 40

23 Calculation of Day Rate Example E e works a 50-hour week over 5 days Day rate compensation = $352/day Total straight time comp = $1,760 ($352 x 5) Regular rate for week = $35.20/hour ($1,760/50) OT for week = $176 (1/2 x $35.20 x 10) Total comp for week = $1,936 ($1,760 + $176)

24 Overtime Basics Calculated on a weekly basis Time-and-one-half the regular rate of pay The workweek is an important concept Non-traditional workweeks and different methods of calculating overtime are possible, but rare

25 Calculating Regular Rate An employee s regular rate generally includes all payments from the employer to the employee Non-discretionary bonuses Shift differential On-call pay

26 Day Rate Everybody does it is not a valid defense

27 Special Concerns for Employers With Employees in West Virginia

28 A Pesky Little Law The Wage Payment and Collection Act has long confounded attorneys and courts alike. Meadows v. Wal-Mart Stores, Inc., 530 S.E.2d 676, 687 (W. Va. 1999).

29 A Pesky Little Law Unclear Provisions Big Problems Severe Penalties

30 Are You Covered? Doing Business in West Virginia having employees actively engaged in the principal activity of the... corporation in West Virginia.

31 WPCA Two-Week Rule Employers must pay employees all wages due at least once in every two weeks Semi-monthly pay periods violate this rule Special Agreement from W. Va. Division of Labor requires compelling showing of peculiar circumstances WPCA separately defines wages due The term wages due shall include at least all wages earned up to and including the fifth day immediately preceding the regular payday. One of WPCA s most violated provisions

32 WPCA Five-Day Rule Wages due must be paid every two weeks WPCA separately defines wages due o The term wages due shall include at least all wages earned up to and including the fifth day immediately preceding the regular payday. W. Va. Code (i)

33 WPCA Method of Payment United States Currency Check Money Order Payroll Card Account o FDIC Insured o Requires Agreement Direct Deposit o Bank, Credit Union, or Savings and Loan Account o Requires Agreement

34 WPCA Method of Payment Employee and Employer Must Agree in Writing Writing Must Include Name of Employee Name of Financial Institution Type of Account Account Number Mandatory Direct Deposit for New Employees Only

35 WPCA Paying Departing Employees Discharged employees Next Payday or 4 business days (whichever is first) (eff. 7/12/13) Resignation without notice Next Payday Regular pay channels or mail (if employee requests) Resignation with notice last day of work Layoff or Labor Dispute next payday Regular pay channels or mail (if employee requests)

36 Authorized Deductions Legally required amounts (taxes, FICA, FUTA) Union/Club Dues Pension Plan Contributions Payroll Savings Plan Contributions Credit Union Deposits Charitable Contributions Hospitalization and Medical Insurance Premiums

37 Authorized Deductions Elements of a Valid Wage Assignment Must contain employee s notarized signature Must specify total amount due from employee Must state that 75 percent of employee s wages are exempt from the assignment Must contain the employer s written acceptance Must not extend beyond one year

38 Fringe Benefits Employers determine their fringe benefit obligations Pay policies must: o Be in writing o Be unambiguous o Be followed o Explain how fringe benefits are calculated o State whether fringe benefits are paid at end of employment Silence (might) mean that you pay

39 Penalties for Non-Compliance Damages available under the WPCA o Delinquent Wages o Liquidated Damages o Attorneys Fees and Costs o Interest o Criminal Sanctions

40 Penalties for Non-Compliance Good faith is no defense to civil claim Time is of the essence o Attorneys fees are accruing on both sides o Removal election must be made If you screwed up, offer to settle quickly Good faith is a defense to criminal action against individual corporate officer

41 WPCA Compliance Tips Most important rule: TREAT WAGES AS SACRED Care pay administration Clear, circulated policies Avoid risky pay practices If sued, determine course immediately

42 QUESTIONS?

43 Thank You! Rodney Bean Larry Rector DISCLAIMER: This presentation has been prepared by Steptoe & Johnson PLLC for informational purposes only and the content contained herein is not offered as legal advice. The author and other attorneys at Steptoe & Johnson PLLC reserve the right to advocate freely other positions in other forums or settings.