• Unprecedented Joint Department of Labor -- American Bar Association Referral Initiative Connects Potential Plaintiffs with Private Attorneys to Pursue FLSA and FMLA Cases
  • February 9, 2011 | Author: Joshua L. Schwartz
  • Law Firm: Barley Snyder - Lancaster Office
  •             On December 13, 2010, in a move touted by the American Bar Association as a “first of its kind partnership between a federal agency . . . and the private bar,” the U.S. Department of Labor (DOL) launched an unprecedented initiative to assist potential plaintiffs in obtaining legal counsel to enforce their rights under the Fair Labor Standards Act (FLSA) and Family Medical Leave Act (FMLA). Employees bringing FMLA or FLSA complaints that are not resolved by the DOL’s Wage and Hour Division are now given a toll-free telephone number that will connect them to a newly created ABA-approved attorney referral system. A caller will be given information regarding referral services in his or her geographic area, and these referral services will, in turn, provide assistance in locating an attorney to handle the claim.
                In addition to attorney referrals, in those cases where the DOL has conducted an investigation, the DOL will provide the employee with its initial determinations, including its assessment of violations and back wages owed. The DOL will also provide employees and attorneys access to “the most relevant documents from [an employee’s] case file” should they decide to pursue claims in private litigation.
                Because the referral system provides plaintiffs’ attorneys practicing in this area increased access both to potential clients and to DOL’s investigative information, it has the potential to increase litigation -- including collective and class-action cases -- over FLSA and FMLA violations. The prospect of recovering attorneys fees, and, in FLSA cases, liquidated damages, makes these cases attractive for the plaintiffs’ bar, and those that the DOL could resolve or otherwise would not pursue may wind up in expensive litigation. Further complicating matters is the increased risk that employees and their attorneys will assess the strength of a case based on DOL determinations that have not been finalized and that have not been subject to a thorough and complete investigation as the DOL generally would do if it pursued the case on its own. Indeed, the DOL’s press release notes that this information “will be very useful for attorneys who may take the case.” Moreover, the DOL may use the prospect of private litigation and the threat of turning over its documents and findings as an incentive for employers to settle at the administrative level.
    Part of a More Aggressive and Enforcement-Focused U.S. Department of Labor.
                This DOL-ABA Referral Initiative is part of a more aggressive DOL approach to both investigations and enforcement in 2011 and into the future. The enforcement arm of the DOL -- the Office of the Solicitor of Labor -- recently developed an Operating Plan for 2011 and beyond. That Plan includes the Solicitor becoming more involved in the administrative and pre-litigation phases of DOL investigations. In wage and hour cases, in particular, the Solicitor plans to target employers for injunctions in addition to fines, to initiate a “liquidated damages pilot project” to assist the DOL in seeking double damages as part of the investigation and settlement process, and to identify cases for criminal prosecution.
                The upshot of the DOL’s aggressive approach to enforcement means that employers need to be wary and approach DOL audits and administrative investigations with litigation in mind as the end result. For example, because the DOL’s investigative file can be accessed under the Freedom of Information Act, employers should take measures to ensure that the information provided in the course of an investigation be treated as confidential and protected from disclosure to the fullest extent possible.
                On the regulatory front, the DOL’s Wage and Hour Division expects to propose several rules revising FMLA regulations with regard to military leave and FLSA regulations regarding misclassification of employees as independent contractors, the computation of wages, and the domestic employees companionship exemption. Through discretionary “Administrator Interpretations,” the Wage and Hour division will unilaterally issue guidance to clarify the law as it relates to an entire industry, a category of employees, or to all employees, so it will be important to stay on top of these developments, as well.

                Most importantly, employers should take proactive measures now to head off or, at least, minimize the risks of a DOL audit:
                •   Evaluate your compensation policies and practices to ensure that they are compliant with the FLSA and all applicable state and local laws.
                •   Audit your salaried managers and supervisors to make sure that they meet the exempt tests under federal and state wage and hour laws.
                •   Train managers, supervisors, and payroll employees to ensure that they understand how to comply with the applicable wage-hour requirements.
                •    Review arrangements with independent contractors to avoid misclassification.