Smartphone App Is a Good Reminder to Ensure FLSA Record Keeping in Order

Source: Daily Labor Report: News Archive > 2011 > May > 05/31/2011 > BNA Insights > DOL's

Smartphone App Is a Good Reminder to Ensure FLSA Record Keeping in Order By James M. Coleman

104 DLR I-1
WAGE & HOUR

The Labor Department's new smartphone application that employees can use to
track their hours worked, breaks, and overtime—and eventually their tip income,
commissions, bonuses, and paid time off—should serve as a warning for
employers to thoroughly review all recordkeeping obligations under the Fair Labor
Standards Act, management attorney James M. Coleman warns in this BNA
Insights article.

Until it becomes more clear how differences between the employer's set of
timekeeping records and the employee's app-based records will be handled by
courts and by DOL's Wage and Hour Division, Coleman, with Constangy Brooks &
Smith in Fairfax, Va., advises employers to take the time to make sure their wage
and hour recordkeeping is in order.

DOL's Smartphone App Is a Good Reminder to Ensure FLSA Recordkeeping in Order
By James M. Coleman
James M. Coleman is a managing partner with the national labor and employment law firm of
Constangy, Brooks & Smith LLP, the co-chair of the firm's Wage & Hour Practice Group, and heads the firm's office in Fairfax, Va. Mr. Coleman can be reached at jcoleman@constangy.com.

The next time you see your employees entering data on an iPhone, be thankful if they're only texting
their friends.
Instead, your employees may be creating their own records of the hours that they will claim they
worked. On May 9, 2011, DOL's Wage and Hour Division (WHD) announced its first “smartphone
application” (89 DLR A-2, 5/9/11). Although the current version works only with the iPhone and the
iPod Touch, DOL promises updated versions that will work on Blackberry and Android-based
smartphones, as well as updated functionality that will allow for the tracking of more extensive data,
including tip income, commissions, bonuses, deductions from pay, holiday pay, shift differentials, and
paid time off.
For now, the free app provides users with an electronic timesheet, which DOL says will help employees
to independently track the hours they work. Once the employee's hourly wage is entered, the app
automatically calculates the gross wages that are due based on the data entered. It can also track
breaks and overtime. The app is currently available in both English and Spanish.
The DOL is touting its app as a significant technological advance because “instead of relying on their
employers' records, workers now can keep their own records. This information could prove invaluable
during a WHD investigation when an employer has failed to maintain accurate employment records.”

DOL is not saying whether it will consider the employer's records to be inaccurate merely because the
employee's own records may differ.
Although it has received a lot of attention, many believe that the timekeeping app is more of a
gimmick and an effort at public relations, than anything else. Employees have always been free to
create their own records of hours worked, whether using pencil and paper, a calendar, an oldfashioned
Palm Pilot, or stone tablets, for that matter. In the end, the app does not allow an employee
to do anything that she couldn't have done before, albeit by less technologically advanced means.
Also, one wonders how many workers who might use an app like this can afford to own an iPhone or
iPod Touch, or the associated monthly data charges.
That said, the app has certain advantages, including the automatic calculation of gross pay, and the
ability to e-mail the data–perhaps to the employee's lawyer or the WHD. And it certainly provides
employers with an incentive to make sure that their wage and hour recordkeeping is in order.

Recordkeeping Obligations Under FLSA
The federal statute that is implicated by the app is the Fair Labor Standards Act , as amended, 29
U.S.C. § 201, et seq. (FLSA). The FLSA requires employers to maintain accurate records of hours
worked by nonexempt employees, and failure to maintain records is a violation of the FLSA in itself,
even if the employer complies with its minimum wage and overtime obligations.
But frequently, the failure to maintain adequate records is also used against the employer to prove
that it committed substantive violations of the FLSA's minimum wage or overtime requirements.
Where the plaintiffs are “exempt” employees who contend that they should be treated as nonexempt,
the employer will usually have no records of hours worked because exempt employees are excluded
from that portion of the FLSA's recordkeeping requirements that mandate records of hours worked.
Courts use a burden-shifting analysis in order to establish the hours worked for which minimum wage
or overtime compensation is due. The plaintiffs have the initial burden of proof to establish that they
performed work for which they were not properly compensated under the FLSA. When the employer
has maintained no records of hours worked—perhaps because it had been treating the plaintiffs as
exempt, or because the records that do exist are inaccurate or unreliable—the plaintiffs can easily
satisfy their initial burden of proof. All they have to do is produce sufficient evidence to show the
amount and extent of that uncompensated work as a matter of just and reasonable inference. Once
this inference is established to the satisfaction of the court, the burden is then placed on the employer
to come forward with evidence of the precise amount of work performed or with evidence that negates
the reasonableness of the inference established by the plaintiffs.
FLSA Cases Based on App
It will be interesting to see what the courts will do with employee time records that were maintained
via the new app. Presumably, “app records” will be given the same weight as any other employee
record of hours worked. However, it will take some time before “FLSApp cases” make their way
through the court system.
We expect to see more quickly how WHD will respond to FLSA complaints that are supported by
records created via the new app. Employers may be hearing soon from WHD investigators with
questions about why the employer's time records differ from employee records created via the new
app. Presumably, some variation between the competing sets of records is to be expected, but if the
differences are significant, it will be interesting to see which set of records DOL will be more likely to
accept as an accurate reflection of hours worked. Stay tuned…
Contact us at http://www.bna.com/contact/index.html or call 1-800-372-1033
It will be interesting to see what the courts will do with employee time records that were maintained via the new app.

ISSN 1522-5968
Copyright © 2011, The Bureau of National Affairs, Inc.. Reproduction or redistribution, in whole or in part, and in any form, without express written permission, is prohibited except as permitted by the BNA Copyright Policy. http://www.bna.com/corp/index.html#V



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Are You About to Negotiate Executive Compensation? Follow These Tips

Are You About to Negotiate Executive Compensation? Follow These Tips

by N Nayab (74,520 pts ), Edited by Jean Scheid
Published on May 5, 2011

The increased competitive pressures and traditionally high executive compensation levels place executive compensation in the spotlight, with both companies and executives under increasing pressure to justify their compensation packages.
Quantify

How to Negotiate Executive CompensationCompetitive pressures have forced most organizations to take a quantitative approach to their hiring decisions. HR managers looking at how to negotiate executive compensation now go by the value the new person can provide to the company as the guiding force, and negotiate compensation on such a basis.

The best approach for executive compensation negotiation requires incorporating figures. Instead of simply recording past activities or achievements in the resume, quantify such achievements. For instance, instead of merely stating “oversaw business process re-engineering to reduce process time by five minutes” include details such as “reducing process time by five minutes results in productivity increase by 20 percent, leading to overall savings of $20,000 for the unit.”

Assess the expected value the company gains by making the hire, based on record of accomplishment in previous positions, job profile, company’s business plan, and size of operations. For instance, point out the expected ROI of the hire against budget, revenue growth, stock value and other parameters derived from the financial statements. Negotiate a salary as a percentage of the expected value added.
Benchmark

The prevalent knowledge centric business environment raises the stature of human resources as a critical source of competitive advantage. Companies compete for talent, and would readily match if not exceed, the compensation and benefits provided by competitors to retain talent.

Benchmark on skill-sets rather than the position. The demands of flexibility have pushed the traditional concept of pay scale out of executive compensation plans, and compensation now depends more on the skills of the individual rather than the title of the position. Try to determine the worth of specific skills in the industry, assess the skills possessed, and conjure up the industry values for such skills possessed. Professional organizations and websites such as Salary.com or the Bureau of Labor Statistics, or mentors in the industry constitute good sources for such information.

Successful negotiation depends on understanding the demand for the skill-sets, the scope of the job or the nature of duties, and negotiating based on the extent to which the candidate’s skills and competencies will “fit” the requirements.
Benefits

Executive compensation includes salary, bonus, and benefits such as stock options, free accommodation, transportation, reimbursement of children’s education, extra insurance, extra vacation, memberships, financial and legal counseling, golden parachutes or lump sum payments in the event of a layoff, and others. Negotiating executive compensation requires considering the range of such benefits offered. Consider the extent and range of benefits offered, and the long term value of such benefits.

At times, the nature of negotiation changes from the overall compensation figure to the type of benefit. Select the most useful and most relevant benefit. For instance, an employee with college going children would find benefits such as company reimbursement of education expense and free company transportation, allowing him to stay near the children’s college most valuable.

Consider the tax implications of the benefits. For instance, opting for 401(k) plan would save income tax, as would stock options. Such tax savings can serve as effective means to reduce cost-to-company without employees losing out in a big way.
Understand Trends and Preferences

How to Negotiate Executive CompensationPeople looking at how to negotiate executive compensation would do well to understand underlying critical issues such as the company’s compensation framework and structure, and the prevalent market and economic trends. Understanding such trends and positioning for what the company can commit to easily makes for a good negotiation tactic.

For instance, if the company traditionally has a cash-heavy compensation structure, negotiating for greater perks may not cut much ice.

Increased labor turnover and tight economic conditions leads to tighter controls for granting perks such as company cars, club memberships, executive health plans, and some other benefits with long-term commitments and implications. Insisting on such benefits may become counter-productive.

Some companies may encourage executives to co-invest in the firm’s existing portfolio of companies, to tie the success of the company and the executive’s performance. Agreeing to the same might create a favorable impression.

Again, regulations such rules established by the SEC and Financial Accounting Standards Board (FASB) may also impact executive compensation. For instance, the FASB rule FAS123R makes it mandatory for companies to record as expenses the value of stock options granted to employees as compensation. This makes employers prefer giving deferred stock or restricted stock grants that vest after a certain period.
General Tips

Finally, the success of executive salary negotiation depends on adherence to some time tested tips:

* Prioritize demands. Focus on deal-breakers and leave minor issues to the end.
* Adopt a win-win approach. Posturing for a win-lose approach creates doubts about the candidate from the word go, or at least may lead to unrealistic expectations.

Other factors influencing executive salary negotiation include a fancy job title, accelerated salary review periods, flextime options, paid sabbaticals, growth opportunities, nature of reporting relationships, and more. The extent to which candidate values such facilities or options may have a bearing on the overall compensation figure.

Merit alone does not ensure a handsome compensation package. As the adage goes, “you get what you negotiate, not what you deserve.”
References

1. Salary.com “Executive Compensation Checklist.” http://www.salary.com/Articles/ArticleDetail.asp?part=par181. Retrieved May 02, 2011.
2. AllBusiness. “How to Negotiate an Executive Contract.” http://www.allbusiness.com/human-resources/compensation/925293-1.html. Retrieved May 02, 2011.
3. DiversityMBA. “Negotiating the Executive Compensation Package.” http://diversitymbamagazine.com/negotiating-the-executive-compensation-package. Retrieved May 02, 2011.


Read more: http://www.brighthub.com/office/career-planning/articles/116545.aspx#ixzz1OBVLEMRT


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ADA Final Regs In Effect

Virginia Workplace Law
ADA Final Regs In Effect
By: Karen Elliott. Tuesday, May 24th, 2011

Today is the day the final regulations governing the Americans with Disabilities Act, as amended (ADAA), became effective. Much has been written heralding these new regulations which provide definition to the Act’s amendments, which were effective over two years ago.
The media, including blogs, have largely focused on how the new regulations didn’t really change much, which is true. So from a media perspective, this “effective date” has largely gone unnoticed. This is an unfortunate message because this assumes that management has already been instituting the major changes demanded by the 2008 Amendments that are now “old” news. In my experience, businesses still do not understand those changes. Do you? If you can’t answer “yes” to the following questions, you still have some work to do:
1. Do you have a detailed job description noting the essential functions of each job?
2. Have you instructed and trained all of your managers to report to human resources when employees state they are not performing or underperforming due to a health situation?
3. Do you know that when you are given information by an employee that they are not performing due to a health-related reason that you are on notice that you must now engage in the interactive process to determine if a) they are disabled and b) if a reasonable accommodation is in order?
4. Did you know that the law now treats most significant health-related issues as a “disability.” In other words, employers are expected to work with their employees if they have significant health issues to determine if there is a way to keep them employed.
5. Did you know that if you engage in a good faith effort to reasonably accommodate an employee that the law forecloses the award of punitive damages?
If you need any assistance with turning your “no” into “yes,” please contact a Virginia Employment Attorney.

http://virginiaworkplacelaw.com/
Richmond • Christiansburg• Fredericksburg • Research Triangle • Mclean
Copyright Sands Anderson PC
THE INFORMATION CONTAINED IN OUR WEB SITE DESCRIBES LEGAL MATTERS HANDLED IN THE PAST BY OUR ATTORNEYS. OF COURSE, THE RESULTS
WE HAVE ACHIEVED DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH MATTER. BECAUSE EACH MATTER IS DIFFERENT, OUR PAST RESULTS
CANNOT PREDICT OR GUARANTEE A SIMILAR RESULT IN THE FUTURE

Why Boards are Reluctant to Replace Themselves

Why Boards are Reluctant to Replace Themselves

Category: Chief Executive Officer & Board of Directors
Tags: board of directors
Reprint from: Heidrick & Struggles

Let me be blunt. At some critical points in their careers, the executive management of many of our largest and most august companies do not have the interests of their organizations at heart.

By this I mean that they, like the rest of us, are subject to that most basic of human characteristics: vested self-interest.

Here are a couple of examples from our experience:

In a multi-billion merger situation, management decided not to embrace the suitor, even though it would have been of benefit to shareholders, because they were all likely to lose their jobs! The buying entity already had a good management team.
A global corporation with a need and desire for a top team succession plan, were just too uncomfortable with the notion of going into the market to identify their own potential replacements.
A fantastic executive with a great job and assured future, simply up and quit, putting his reputation and livelihood at risk, because someone else got the job he wanted. Again, putting it in emotional terms, the issue was jealousy, but there was a big financial cost both to the organisation and to the executive.
Sometimes it’s not clear where the authority really lies in a major enterprise. The BP oil spill disaster is an example, and I commented on this in an article on the BBC website.

When you read the financial press, you are generally reassured that British companies in general are sophisticated, well-oiled and amazingly run machines. But despite the fact that executives running these businesses are smart and well-educated, at the very top, in reality, there is often “hand-to-hand combat.”

Just because the executives have reached a level of well-paid seniority and achievement, this doesn’t mean they don’t care about the things that all the rest of us care about, like losing our jobs, or being overlooked, or finding it tough to open ourselves up to critical evaluation.

In fact it’s very much harder at the top. Less senior executives have little choice – they get succession-planned whether they like it or not. They are basically told: “We're going to look inside and outside our company to check out the talent pool for your job and if we feel we can do better, or you decide to leave us, you are replaceable.”

But when you’re talking about the prestigious, top-level C-suite, the same rules don’t necessarily apply.

The worst examples of leadership failure were seen during the recent global financial crisis, and the backwash of bad behavior is still playing out in some boardrooms and executive suites as we see companies struggling to find their feet after months of economic and emotional devastation.

But as we’ve seen in recent times, it’s not the executives who suffer financially, but the shareholders.

The solution is not only good governance, but also better leadership. The best boards with whom we deal are those with outstanding chairmen who know when to leap in and when to stay back. They are able to interrogate management and give critical feedback while also being supportive..

In big events such as potential acquisitions or mergers, chairmen must step up and take a leading role, as the chief executive is invariably conflicted.

As we say in our publication Purposeful Partners, written after interviews with more than 50 chairmen and CEOs, the role of the chair is changing dramatically. Chairmen can’t be hands-on, but they must be head-on, challenging assumptions and getting more involved than they have been. Intense and strategic working relationships between chairmen and CEOs will become the new norm rather than the exception.

For a print copy of Purposeful Partners, email David Peters.




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Legal Alert: Ninth Circuit Finds Employer Has Burden of Proof When Denying Reinstatement After FMLA Leave

Legal Alert:
Ninth Circuit Finds Employer Has Burden of Proof When Denying Reinstatement After FMLA Leave
5/6/2011
In a case of first impression on a claim that an employer interfered with an
individual's exercise of her rights under the Family and Medical Leave Act
(FMLA), the Ninth Circuit Court of Appeals recently held that the employer
bears the burden of proving it had a legitimate reason for not reinstating the
employee to her former position following FMLA leave. The court further held
that the employee is not required to demonstrate that her employer lacked a
reasonable basis for its refusal to reinstate her. Sanders v. City of Newport
(9th Cir. March 17, 2011).
Background
Sanders, a former utility billing clerk who had worked for the City of Newport
for approximately 10 years, began suffering health problems after the City
moved her office to a new location and started using lower-grade billing
paper. After being diagnosed with "multiple chemical sensitivity" triggered by
handling low-grade paper at work and poor air quality in her work area,
Sanders requested and was granted one month of FMLA leave. This leave
was later extended because of an unrelated medical condition.
Subsequently, Sanders submitted a letter from her doctor stating that she
had recovered from her unrelated medical condition and she could return to
work, so long as she avoided use of the problem-causing low-grade paper.
Sanders also submitted a fitness for work certificate from the surgeon who
treated her unrelated medical condition.
On May 5, 2006, the City informed Sanders that she would not be permitted
to return to work because the City could not guarantee that her workplace
would be safe for her to due to her chemical sensitivity. On January 8, 2007,
the City sent Sanders a letter advising her that her employment would be
terminated that same day "due to the restrictions placed on [her] by [her]
physician, Dr. Morgan, which the City is unable to accommodate." Sanders
filed an administrative appeal. In response to her appeal, the City informed
her: "The decision to terminate your employment was made for the reason
that the City could not provide a safe workplace for you given your sensitivity
to chemicals and the lack of knowledge as to the chemicals or
concentrations that may cause a reaction."
Sanders subsequently sued the City in federal court, claiming violations of
the FMLA, the Americans with Disabilities Act (ADA) and the Oregon Family
Leave Act (OFLA), as well as other federal and state laws. After the jury
returned a verdict for the City on Sanders' FMLA claim, she filed an appeal
with the Ninth Circuit. Sanders argued that the court's FMLA jury instruction
improperly placed the burden on her to prove that she was denied
reinstatement without reasonable cause and that by adopting a reasonable
cause requirement, the court incorrectly stated the elements of her FMLA
claim.
The Ninth Circuit agreed with Sanders and reversed the lower court's
decision, remanding the case for a new trial.
FMLA Interference Claim
Under 29 U.S.C. §2615(a)(1), it is "unlawful for any employer to interfere
with, restrain, or deny the exercise of or the attempt to exercise" the
substantive rights guaranteed by FMLA. When a party alleges a violation of
§2615(a)(1), it is known as an "interference" or "entitlement" claim. The Ninth
Circuit held that the right to reinstatement is the linchpin of the entitlement
theory because "'the FMLA does not provide leave for leave's sake, but
instead provides leave with an expectation that an employee will return to
work after the leave ends.'" (Citations omitted). Thus, evidence that an
employer failed to reinstate an employee who was out on FMLA leave to her
original (or equivalent) position establishes a prima facie denial of the
employee's FMLA rights. See 29 C.F.R. §825.220(a)(1),(b)[1].
Citing decisions from the Sixth and Seventh Circuits, the Ninth Circuit
summarized the elements of an employee's prima facie case where the
employer fails to reinstate the employee: "the employee must establish that:
(1) he was eligible for the FMLA's protections, (2) his employer was covered
by the FMLA, (3) he was entitled to leave under the FMLA, (4) he provided
sufficient notice of his intent to take leave, and (5) his employer denied him
FMLA benefits to which he was entitled." The court also noted that in
interference claims, the employer's intent is irrelevant to a determination of
liability.
The court then held that although the FMLA creates a statutory right to
reinstatement after taking FMLA leave, this right is not without limits. The
court noted that the Department of Labor (DOL) has interpreted this part of
the statute in various regulations that set forth the limitations on an
employee's right to reinstatement. However, the DOL regulations do not
clearly state which party has the burden of the proof when an employer
defends against a denial of reinstatement by asserting one of these
limitations and the federal appeals courts are divided on this issue.
Burden of Proof for Failure to Reinstate
The regulation at issue in this case, 29 C.F.R. §825.214, addresses an
employee's right to return to work following FMLA leave and states that "if
the employee is unable to perform an essential function of the position
because of a physical or mental condition, including the continuation of a
serious health condition, the employee has no right to restoration to another
position under the FMLA." Although the text of this regulation is ambiguous
with respect to the parties' respective burdens, the Ninth Circuit held that it is
clear from other regulations that the burden rests with the employer to
establish whether the employee can perform the essential functions of the
job. Thus, the employer has the burden of showing that it had a legitimate
reason to deny the employee reinstatement and the trial court's contrary jury
instruction was erroneous.
The Ninth Circuit also held that the trial court erroneously instructed the jury
that Sanders was required to prove that the City did not have "reasonable
cause" to deny her reinstatement. The court noted that the DOL regulations
interpreting the limitations on an employer's obligation to reinstate an
employee include no reference to a "reasonable cause" standard. The Ninth
Circuit held that by adding a reasonable cause requirement as an element of
Sanders' reinstatement claim, the trial court's instruction permitted the jury to
assess the City's overall response to Sanders' complaints rather than
directing the jury to consider the specific reasons under DOL regulations
why the City refused to reinstate Sanders to her former position after taking
FMLA leave. The court held that this approach is contrary to the FMLA.
Further, the court held that this instruction was not harmless because it
added an unnecessary element to Sanders' burden of proving her FMLA
reinstatement claim.
Accordingly, the Ninth Circuit vacated the judgment on the jury's verdict and
remanded the case for a new trial.
What This Means for Employers
The effect of the court's decision in Sanders is that when an employer seeks
to establish that it had a legitimate reason to deny an employee
reinstatement, the employer must be prepared to prove the employee had
no right to be reinstated. This is true even though the right to reinstatement
from FMLA leave is not absolute. Unlike FMLA discrimination or retaliation
cases, which apply the type of burden shifting framework recognized in
McDonnell Douglas v. Green to evaluate such claims, employers in FMLA
interference and reinstatement cases are at a disadvantage in the Ninth
Circuit because they carry the ultimate burden of proof that the employee
was not entitled to reinstatement. Thus, employers considering discharging
an employee who has taken FMLA leave must ensure that the legitimate
business reason for the discharge is clear and adequately documented.
If you have any questions regarding this decision or the requirements of the
FMLA, please contact the author of this Alert, Angela M. Quiles,
aquiles@fordharrison.com, an attorney in our Los Angeles office, or the Ford
& Harrison attorney with whom you usually work.
[1] The DOL amended its FMLA regulations effective January 16, 2009;
however, the regulations discussed by the court were virtually unchanged in
substance. Because the events in this case took place prior to the effective
date of the amendments, the court cited the 2008 FMLA regulations.

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Key Elements of Effective Organizations: Bridgespan’s Organization Wheel

Key Elements of Effective Organizations: Bridgespan’s Organization Wheel


High performing nonprofits think about their organizations as much more than the boxes and lines on an “org chart.” Bridgespan finds that truly effective organizations exhibit strengths in five key interrelated areas: leadership, decision-making and structure, people, work processes and systems, and culture (see Exhibit 1). Effective organizations pay attention to 10 key characteristics across these five areas. For example, effective leadership requires having a clear vision that is translated into well understood priorities, and supported by a cohesive and aligned leadership team.

Culture is linked to and affected by each area of the organization wheel. As such it enables organizations to meet their strategic goals to achieve impact. In fact, because it is about how people in the organization behave, it can be either a powerful ally or a real barrier to implementing a strategic change. Because of its linkages to other areas of the organization wheel, Bridgespan has found that levers that change behavior are often found within these other areas of the organization wheel (see Exhibit 2). Therefore, leaders who need to change culture to support strategy need to determine what levers in other areas of the organization wheel will support the right behaviors. For example, these may include choices about what people to have in the organization, how to align them to priorities and motivate them, who has what decision-making authority, how people are expected to work together using key processes, etc. To see this process in action, please read the article, “Strategies for Changing Your Organization’s Culture,” in which two nonprofit leaders share their stories of aligning their cultures to support new strategies.

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