Overtime

Subscribe to Overtime

Seyfarth Synopsis: Agricultural employers have a hard row to hoe with the latest crop of legislation affecting overtime requirements in California. New requirements under Labor Code section 860 took effect when the rooster crowed on January 1, 2019. This law will phase in overtime pay requirements for agricultural employees covered by Wage Order 14.

Under federal law (the FLSA), “agricultural work” is exempt from the overtime rules, but in California the Industrial Welfare Commission’s Wage Order 14-2001 has entitled agricultural employees to daily overtime for hours worked in excess of ten hours in a day. Although California was thus outstanding in this field, it still did not mandate overtime protections for agricultural employees to the extent that it did for employees generally. Finding that situation udderly unacceptable, the Legislature in 2016 directed the Department of Industrial Relations to update the Wage Order so that agricultural workers will eventually be entitled to earn overtime moo-lah to the same extent as other non-exempt employees.

The phase-in process for the new law, summarized in the chart below, should alleviate some of the acres and pains it will undoubtedly cause. Starting in 2019, employers with 26 or more employees must pay overtime at 1.5 times the regular rate of pay for agricultural employees who work more than 9.5 hours per day or more than 55 hours per week. By January 1, 2022, the overtime triggers for agricultural employees will be on par with other California non-exempt employees, that is, 1.5 times the regular rate for work of more than 8 hours per day or 40 hours per week, and 2 times the regular rate for work of more than 12 hours per day. Employers with fewer than 26 employees have a more gradual phase-in process, which begins on January 1, 2022.

26+ Employees <26 Employees
Date 1.5x Reg. Rate 2x Reg. Rate Date 1.5x Reg. Rate 2x Reg. Rate
1/1/19

>9.5 hrs/day

or

>55 hrs/week

 n/a 1/1/22

>9.5 hrs/day

or

>55 hrs/week

 n/a
1/1/20

>9 hrs/day

Or

>50 hrs/week

 n/a 1/1/23

>9 hrs/day

or

>50 hrs/week

 n/a
1/1/21

>8.5 hrs/day

or

>45 hrs/week

 n/a 1/1/24

>8.5 hrs/day

or

>45 hrs/week

 n/a
1/1/22

>8 hrs/day

or

>40 hrs/week

 >12 hrs/day 1/1/25

>8 hrs/day

or

>40 hrs/week

 >12 hrs/day

The new law does not change the definition of agricultural employees under Wage Order 14-2001, which applies to workers who bring home the bacon by engaging in the following activities:

  • Preparation, care and treatment of farm land, pipeline, or ditches;
  • The sowing and planting of any agricultural (generally, farm) or horticultural (generally, garden, orchard, or nursery) commodity;
  • The care of any agricultural or horticultural commodity;
  • The harvesting of any agricultural or horticultural commodity;
  • The assembly and storage of any agricultural or horticultural commodity;
  • The raising, feeding and management of livestock, fur bearing animals, poultry, fish, mollusks, and insects;
  • The harvesting of fish for commercial sale as defined by Section 45 of the Fish and Game Code;
  • The conservation, improvement or maintenance of such farm and its tools and equipment.

Workplace Solution: Employers of agricultural employees covered by Wage Order 14-2001 should review their pay practices to ensure that they comply with the new law, but need not plow through these issues on their own. Seyfarth Shaw is outstanding in the field when it comes to wage and hour laws, and we are here to help employers navigate this maize until the cows come home.

Seyfarth Synopsis: Our mission here at Cal-Pecs is to illuminate how California employment law differs from the law that employers generally experience throughout America. In this back-to-basics piece, we provide some background and a brief catalog of stark contrasts.

In 1846, American settlers in Mexican Alta California staged the Bear Flag Revolt. They declared an independent republic, seeking freedom from Mexico. The rebels got lucky: the Mexican-American War soon intervened to dislodge the California territory from Mexican control. California, in 1850, became our thirty-first state.

The legacy of the Bear Flag Revolt continues: the state flag depicts a grizzly bear astride a patch of grass, above the logo “California Republic.” The underlying rebellious attitude has persisted as well. State politicians—especially since the 2016 election—have defiantly proclaimed California’s right to chart its own course on such vital matters as the environment, health care, immigration, and the right to use marijuana.

Perhaps nowhere is California’s independence more prominent than in the area of employment law. Federal labor law hit high tide in the 1930s, with the National Labor Relations Act and the Fair Labor Standards Act. The high tide returned in the 1960s—bringing us the Equal Pay Act, Title VII, and the Age Discrimination in Employment Act—and returned yet again in the 1990s, bringing us the Americans with Disabilities Act and the Family and Medical Leave Act.

In the Golden State, meanwhile, the waves of employment regulation have risen ever higher, even when federal regulations have ebbed. The chart below spots differences between federal and California law in key areas of interest to employers that operate both in California and in the rest of America. In each case, of course, the California version favors employees, plaintiffs, and unions, while never favoring the employer.

Issue U.S. Law & State Law Generally California Law
What’s the minimum wage? $7.25, and higher in a few states $10.50, rising to $15 by July 2022
Must that wage be paid separately for all work, including unproductive tasks? No. Employers generally can comply with an average wage that meets the minimum. Yes. This result has surprised some employers that pay piece rate or commissions.
Must employers pay non-exempt piece-rate and commission workers separately for rest breaks? No Yes
Must employers pay non-exempt employees for required travel outside regular hours? No Yes
What overtime hours generally require premium pay? Only hours worked in excess of 40 per week. Weekly overtime plus daily overtime (over 8 hours per day) plus any time on seventh consecutive workday in a workweek.
Can employers use the “fluctuating workweek method” to compute overtime pay for salaried non-exempt employees? Yes. The regular rate is salary divided by all hours worked, with a 0.5 multiplier for overtime hours. No. The regular rate is deemed to be weekly salary divided by 40, and the overtime multiplier is 1.5, not 0.50.
Is doubletime ever required? No Yes, for hours exceeding 12 per day or 8 hours on a seventh consecutive workday.
Are there civil penalties for labor law violations? Often no, and penalties that do apply are relatively modest. Yes: for many Labor Code violations penalties are typically $100 per employee per pay period.
Can plaintiffs personally sue supervisors and co-workers under anti-harassment statutes? No Yes
Are middle managers, pharmacists, and nurses typically exempt from overtime rules? Yes No
Are employees entitled to reimbursement for routine business expenses? No Yes
What statuses do employment discrimination laws protect? Race, color, religion, sex, national origin, age over 40, disability (and sexual orientation by some judicial readings of Title VII) Those plus sexual orientation, gender identity, transgender status, political affiliation, marital status, breastfeeding, HIV status, requests for disability accommodation, etc.
Can employers invoke the “undue hardship defense” for religious accommodations simply by showing a cost > de minimis, and can they accommodate grooming and dress practices by transferring employees to a more remote location? Yes and yes. No and no. The “undue hardship” defense must meet the same tough test required in disability cases. And it is categorically unreasonable to accommodate a religious dress or grooming practice by moving the employee away from the public.
Can undocumented workers recover back pay on a claim for wrongful termination? No Yes; immigration status of a worker is irrelevant to any California remedy, except reinstatement of employment if prohibited by federal law.
Can an employer fire a worker who provided a false name, SSN or information about legal status to work? Yes No; an employer cannot discharge, discriminate, retaliate or take any adverse action against an employee who updates such information based on a lawful change.
What consequences do employers suffer for denying meal or rest breaks? Breaks that are too short are counted as working time. Failure to provide specified, timely breaks can result in up to two extra hours of premium pay per day.
Are “use it or lose it” vacation plans acceptable? Yes, generally. No
Is paid sick pay required? No Yes
Do farmworkers have the right to unionize, and do unions enjoy special protections with respect to their mass picketing? No and no. Yes and yes. California’s Agricultural Labor Relations Act protects farmworkers, and its Moscone Act limits judicial power to prohibit mass picketing.

As this limited sample of comparisons might suggest, an employer used to doing business elsewhere can find California employment law a real bear. For more detailed treatment, see the 2017 edition of our Cal-Peculiarities: How California Employment Law is Different.

Seyfarth Synopsis: On November 8, 2016, San Jose voters approved the most recent local effort to dictate employment scheduling practices. Beginning in March 2017, San Jose employers must offer existing part-time employees additional work hours before hiring any temporary, part-time, or new worker. Violations of the ordinance can trigger city fines and private law suits.

Temporary, part-time, and contract employees are important segments of the economy, particularly around the holidays. Retailers and logistics companies often rely on these workers to meet customers’ holiday wishes. And outside of the holidays, temporary and part-time employees provide important scheduling flexibility in an increasingly on-demand economy. The new year, however, will bring new restrictions on the ability of San Jose employers to use these important staffing tools.

Ok, so what do I need to know?  On November 8, 2016, San Jose voters approved Ballot Measure E, called the “Opportunity to Work Ordinance,” which requires an employer to offer part-time employees additional hours before the employer hires any new or temporary employees. Sponsored by a coalition of labor unions, the new ordinance limits employers’ ability to bring on new workers by forcing them to first offer existing “employees” the opportunity to work the additional hours. The ordinance also saddles employers with new record retention and notice requirements.

The restrictions will take effect on March 8, 2017 and, as covered here, continue a trend seen in other California cities, such as San Francisco, of local regulation of employers’ scheduling and hiring practices.

What if I employ only two people in San Jose? You still may be covered. The ordinance covers employers if they employ more than 35 employees and are subject to San Jose’s business tax. But employers can be covered even if they employ 35 or fewer employees in San Jose. For chain businesses, the ordinance counts every employee of the business, whether or not located in San Jose. For franchisees, the ordinance counts all employees of the franchisee, again, without regard for where the employees work.

The ordinance also broadly defines “employee.” Companies “employ” an individual if they exercise direct or indirect control over the individual’s wages, hours, or working conditions. For an employee to fall under the ordinance, the employee must have worked two hours within the last calendar week or be entitled to California’s minimum wage.

How can I comply? The short answer is that it is not entirely clear. We know that the ordinance:

  • requires employers to offer qualifying employees the extra hours before looking to temporary labor solutions (obviously),
  • requires employers to post notice to their employees about their rights under the new ordinance,
  • requires employers to “use a transparent and non-discriminatory processes” to distribute hours among existing employees,
  • only requires employers to offer additional hours to employees who “in the employer’s good faith and reasonable judgment, have the skills and experience to perform the work,” and
  • stops short of requiring employers to pay existing employees overtime.

Employers need not offer additional hours to employees if those hours would entitle the employee to a premium rate of pay.

Aside from these guidelines, however, the ordinance provides no additional detail on how employers must distribute hours among existing employees or when an employer can send work to a contractor or temporary staffing company. For more guidance, we must wait on the City or the courts. The ordinance grants the City authority to issue guidelines and rules, as well as to make non-substantive changes to the ordinance itself.

Is there anything else I need to do? Yes, and you may need another file cabinet. In addition to its scheduling component, the ordinance burdens employers with record retention and notice requirements. Employers must retain records for new hires that show the employer’s efforts to first offer the additional work to existing part-time employees. Employers must also preserve employee work schedules and “any other records the City requires for employers to demonstrate compliance with the ordinance.” All of these records must be maintained for four years. Failure to comply will create a presumption that the employee’s account as to scheduling practices is accurate.

Further, the ordinance requires employers to display a poster outlining the rights created by the ordinance.  The City’s Office of Equality Assurance will publish a bulletin outlining the required notice, but has not done so yet.

What are the consequences if I stick to my old scheduling practices? Ignoring the ordinance could result in significant liability. Although the ordinance exempts employers for their first violation, the ordinance authorizes the City to issue administrative fines up to $50 per violation and to seek civil penalties in court for noncompliance.

More alarming yet, the ordinance authorizes private actions. Any person not offered work under the ordinance can bring a private suit in court. If successful, the individual would be entitled to lost wages, penalties, and attorneys’ fees.

The ordinance also adopts the San Jose minimum wage law’s employee-friendly retaliation language.  Employees who claim they suffered an adverse employment action within 90 days of complaining about a violation of the ordinance will enjoy a rebuttable presumption that retaliation has occurred.

What if I have a collective bargaining agreement or just can’t comply? Perhaps as a nod to its sponsors, the ordinance provides a carve-out for CBA scheduling provisions. But to invoke the carve-out, the CBA must explicitly waive the ordinance in clear and unambiguous terms.

The City has the authority to exempt businesses from complying with the ordinance where the business works in good faith to comply but compliance is impracticable, impossible, or futile. The City has yet, however, to outline the procedures for requesting this exemption.

Stay tuned. The ordinance takes effect on March 8, 2017. Be sure to check this site in the coming weeks for updates on the City’s plans for rolling out the ordinance and any guidelines it might issue to help clarify the burden San Jose employers must bear in the new year.

Workplace Solutions. Compliance with new city ordinances can be tricky, especially since they are often unknown to employers. Knowledge is the first step. Compliance efforts are the next. If you would like assistance with ensuring compliance with this new ordinance, please contact the authors or another attorney from Seyfarth’s Labor and Employment Group.

Counting moneyWe normally write about how California law differs from American law generally. Today, though, we highlight a recent California case that rejected the notion that California law should deviate from analogous federal wage and hour law. That case is Alvarado v. Dart Container Corp. of California. More detailed information appears here.

In Alvarado, the California Court of Appeal ruled that an employer complies with California law when it uses the federal method of calculating the regular rate of pay in determining the overtime premium pay owed on a “flat sum” bonus.

Why are we writing about this? Well, under both California law and federal law, employers must pay overtime premiums based on the regular rate of pay. The regular rate is also important in California because it is the rate at which benefits under the California Paid Sick Leave Act must be paid to non-exempt employees (unless the 90-day lookback method is used). Therefore, knowing how to calculate the regular rate is important to ensure that employers make these payments properly.

Calculating the regular rate includes all items of remuneration paid to non-exempt employees, except for those items that are specifically excludable. The regular rate thus includes almost all payments, including non-discretionary bonuses. Employers, in paying those bonuses, sometimes forget to add overtime premium pay. The employer in Alvarado remembered to make that payment, but used a method of calculating the regular rate that an employee then challenged

The employee was paid a $15 attendance bonus for working weekend shifts. The employer calculated the overtime pay due on this bonus by using the FLSA method of calculating the regular rate of pay. Under the FLSA regulations, an employer may derive the regular rate of pay by simply adding the bonus to the other includable compensation paid and then dividing the sum by the total number of hours worked. The regulations provide an example: an employee works 46 hours in a week, earns $12 an hour, and receives a $46 production bonus for the week.  Under the FLSA formula, the regular rate of pay would be $13 an hour [(46 hours x $12/hour) + $46 bonus] / 46 hours].

California statutes do not specifically address how to calculate the regular rate of pay in computing the overtime pay due on a non-discretionary bonus. Thus, like many employers, the employer in Alvarado used a formula that was consistent with the FLSA formula.

The California Department of Labor Standards Enforcement, meanwhile, has taken a different, peculiarly Californian position: the DLSE has opined that the regular rate must be the sum of all compensation divided by only the regular (non-overtime) hours worked.  Otherwise, the DLSE has reasoned, the regular rate would be diluted in a way that would conflict with a general California public policy discouraging the use of overtime hours.

The Alvarado court, noting the absence of specific statutory guidance on this subject, rejected the DLSE’s position. The Court of Appeal held that the DLSE’s view was not valid and that employers do not violate California law when following the federal standard.

Now, California employers who pay “flat sum bonuses” in the same pay period that they are earned should be able to rely on the FLSA regulations for calculating overtime payments.  It turns out that, in this particular respect, California is not so different after all.

iStock_000015087680_LargeIt’s been said the best things in life are free. In California, where running a business is very expensive, an unpaid internship program might seem a perfect gift. Employers of all sizes and in virtually all industries use internships to train and identify the next generation of superstar employees. Interns frequently bring new ideas to challenging business problems and provide a regular flow of needed support staff, at a low cost or at no cost whatsoever. The benefits of internships are frequently so great that one can certainly imagine Santa staffing his busy workshop with hordes of elfish interns this time of the year.

Let Rudolph Be Your Guide

But the legal environment is not all candy canes and gum drops for unpaid or flat-rate internship programs, especially in California. The highest state and federal courts in California have not explicitly approved unpaid internships, and no California statute or regulation authorizes unpaid internships.

Some 60 years ago, the U.S. Supreme Court in Walling v. Portland Terminal Co. recognized the “special status” of interns and trainees as exempt from wage and hour laws, but Walling, alas, does not provide a clear legal standard. Apart from Walling, employers are left to follow varying sources of nonbinding “guidance” from state and federal labor agencies, and decisions from federal courts outside of California endorsing one of three multiple-factor tests: (1) the “primary beneficiary test,” (2) the ambiguous “totality of the circumstances test,” and (3) the less-than-clear “economic realities test.” Navigating this maze of tests and factors might just about require a holiday miracle!

The risks of missteps with internships are great. California has strict laws on meal and rest periods, minimum wage, and daily overtime. Many, if not most, internship programs are unpaid or involve stipends that fall below minimum wage based on hours worked, and thus do not meet California Labor Code requirements. Plaintiffs’ attorneys live on the thrill of seizing on these laws and their associated penalties to snowball employers with single-plaintiff lawsuits and class actions. For these reasons, the Abominable Snowman of wage and hour litigation appears poised to wreak further havoc on California employers using internship programs.

Don’t Shoot Your Eye Out, Kid!

So are internship programs in California akin to the often dreamed of “Red Ryder BB Gun”—a device whose potential risk outweighs the benefits? Many federal courts assess internships by asking who “primarily benefits from the relationship.” This is a good place to start when assessing your program. The DOL’s 2010 published “guidance,” including six criteria present in legal internships, deserves special attention, as it directly borrows from the U.S. Supreme Court’s only decision on the issue (Walling). Virtually all court decisions on internships, although outside of California, discuss the DOL’s factors in some degree. One important step in securing an internship from a legal Grinch is to integrate the internship with the intern’s formal education, through academic credit or a tie between technical work and classroom learning. The intern’s overall economic contribution to the business, weighed against the company’s resources dedicated to the internship program, should also remain in sight, as this is one means courts use to determine the “primary” beneficial party of the arrangement. One cannot hide the economic reality with pretty gift-wrapping. Simply labeling a job with the title “internship” is insufficient alone to ward off litigation and to keep coal out of your stocking.

The internship test involves a multitude of factors. Employers must thus consider their internship programs from every angle. Don’t simply spin the dreidel this holiday season and hope your “letter” comes up. Take action and grab the reindeer by the reins! For starters, consider including arbitration and class/collective waiver provisions in written internship agreements. That could help avoid large-scale judicial actions. Our California Workplace Solutions lawyers can also help review the numerous and varying factors involved and advise on methods to make the program more defensible from BB pellets, snowballs, or whatever comes your way this holiday season and the year to come.

The $10 state-wide minimum wage that hits us on January 1, 2016, will complicate things even more than the last increase.

We previously reported here and here on the two-step legislation aimed to increase minimum wage from $8 to $10 by way of two $1 incremental raises. The first $1 increase took effect July 1, 2014. Now it’s time for the second $1 increase, effective January 1, 2016.

That means Happy New Year for some, budget-busting headaches for others.

The obvious employer takeaway from the new minimum wage hike is that now it’s time to pay more:

  • Pay more hourly wages. As in 2014, the increase in minimum wage will increase what employers must pay for regular and overtime wages.
  • Pay more in salary. To maintain salary-exempt status for administrative, executive, and professional employees, employers must now pay a higher minimum salary (calculated at two times the current minimum wage). The salary minimum will thus increase from $37,440 to $41,600.
  • Pay more in commissions. To maintain overtime-exempt status for commissioned salespeople (in retail and service establishments, with the threshold calculated as 1.5 times the current minimum wage), employers must now pay a higher minimum earnings threshold—$15.01 per hour—and over one-half of that amount must consist of commissions, so commissions might have to be increased accordingly.

And, of course, employers, under the Wage Theft Prevention Act, must notify non-exempt employees in writing of any changes to their new rate of pay within seven calendar days from the time of the change (i.e., by January 7, 2016).

While these implications are all readily apparent, the new minimum wage has more subtle implications as well, particularly for employers of unionized employees. Among possibly other implications are these to consider as the new year looms:

  • A Sick Pay Impact? California’s new sick pay law, discussed here, here, and here, provides that most employees will earn at least one hour of paid leave for every 30 hours worked. Certain unionized employees covered by a qualifying CBA are exempt from this sick pay requirement, but the hike in minimum wage will raise the qualification bar: CBA-covered employees are exempt only if their regular hourly pay is at least 30 percent more than the minimum wage.
  • An Overtime Impact? California employees under a qualifying CBA are exempt from state overtime law. Here, as with the sick pay law, a CBA, to qualify, must provide for regular hourly pay that is at least 30 percent more than the minimum wage.
  • A “Non-Productive” Time Piece Rate Calculation Impact? As discussed here, effective January 1, 2016, employers paying employees on a piece-rate basis must pay for “other non-productive time” (when the employee is under the employer’s control but is not engaged in the piece-rate activity). The hourly rate calculation for that time must be no less than the minimum wage, which will increase to $10 on January 1st. Note that this law also applies to unionized employees.
  • An Impact On Meal And Lodging Credits? Wage orders in virtually every industry or occupation allow the value of meals and lodging furnished by the employer to be credited toward the employer’s minimum wage obligation up to specific amounts. Employers who use this form of compensation as part of their wage obligations must adjust accordingly to ensure that they are meeting the increased minimum wage obligations.

If you have any questions about how the new minimum wage will affect your business, you can always reach out to the author and our California Workplace Solutions team.

Last night — on the eve of the last day for the California Legislature to pass bills before interim recess in this 2013-2014 regular session — the Legislature sent to the Governor for signature AB 10, which, over time, will raise the minimum wage in California from $8.00 per hour to $10.00 per hour. 

The Governor has already publicly announced that he will sign the bill, stating that “the minimum wage has not kept pace with rising costs” and will help families “struggling in this harsh economy.”  Assembly Speaker John Pérez and Senate President Pro Tempore Darryl Steinberg also supported the bill, claiming the money will be put back into the economy through spending and help ensure economic recovery and job growth.  California first set a minimum wage in 1916.  The California Chamber of Commerce opposed the measure because the increase exceeds a 3.5% rate of inflation and only adds to the costs — such as the Affordable Care Act, Proposition 30 taxes, and CA Department of Industrial Relations employment assessments — that California employers are already facing.

The bill will raise the minimum wage in two one-dollar increments, from the current $8 per hour rate to $9 per hour effective July 1, 2014.  Then to $10 per hour effective January 1, 2016.

Workplace Solution:  Employers should be aware this legislation is coming so they can respond to employee inquiries, know actual effective dates of each increase, and prepare to modify payroll systems and wage notices and forms to ensure necessary changes are made. This development also makes still more significant the recent judicial interpretations [see here and here] that require separate payment of minimum wage for the non-productive work performed by workers compensated on a piece-rate or commission basis. 

The California DLSE has been busy!  Following the May release of A Report on the State of The Division of Labor Standards Enforcement  by Labor Commissioner, Julie A. Su, the DLSE issued a press release highlighting “record-breaking results for labor law enforcement in California.”  The news is that, in 2012, the field investigators assessed 462% more in minimum wages and 642% more in overtime wages than the DLSE did in 2010 (the year before Governor Brown took office), and achieved “favorable resolutions” in over 95% of cases. 

Here are some interesting points from the Report and DLSE press release: 

  • Significant Increase in Total Wages Assessed through Investigations: The Bureau of Field Enforcement (BOFE) significantly increased its assessment activities in the last two years.  The BOFE conducts investigations of employers and accesses civil penalties for non-compliance with wage and hour laws, workers’ compensation laws, and business licensing and registration requirements. The BOFE doubled its monetary assessments between 2010 and 2011, and increased its assessments by 419% between 2010 and 2012.
  • Industry Focus Resulting in Record Wage and Civil Penalties: Awards for wages and penalties have been assessed in virtually every industry and position, but the BOFE has set a record in the past two years collecting money from five major industry groups:  car washes, restaurants, construction, garment, and agriculture.
  • Highest Award in the Past 5 Years:  Last year, the Wage Claim Adjudication (WCA) offices (the largest unit within the DLSE), awarded over $85 million in unpaid wages, compensation, and penalties.
  • Individual Wage Claims Moving Faster: In 2012, it took two months less for matters to be heard, and hearings lasted an average of only two days.
  • Retailers Beware!  The DLSE continues to target the garment industry:
    • In 2012, the WCA awarded $7 million in hearing decisions on wage claims in the garment industry, and issued 254 hearing decisions, the most of all hearing decisions.  This is more than 6 times the amount awarded in 2010; and triple the number of decisions issued in 2010. 

What does this mean for California employers?  Especially if you are in one of the targeted industries, this Report should get your attention.  Overall, while the Report notes staffing decreases in recent years, the Commissioner remains keenly focused on adjudicating wage claims, assessing penalties, and pursing investigations, especially in certain “underground economy” industries.  As in many areas, the best defense here may be a demonstrable record of compliance.  Making sure that policies and practices are legally correct, training, and conducting routine internal audits and spot checks of wage and hour, pay and timekeeping practices can minimize risks.