Alicia Smith April 19, 2016 It is often said that “good things come to those who wait.” However, when it comes to  wage and hour compliance, it is becoming increasingly clear the time to act is now. In fact, waiting could put an employer in the undesirable position of drawing attention to itself in an arena where regulators and plaintiffs’ lawyers have never been more eager to pounce on mistakes – no matter how inadvertent – regarding how a company hires, engages and pays those performing services for them.

XpertHR has been closely tracking the developing issues in this area to deliver much-needed guidance and optimal solutions to employers. Many of our customers have indicated that employee reclassification efforts are high on their list of 2016 initiatives given the current uncertainties surrounding the regulatory framework and their fear of exposure to fines and class actions.

As part of our effort to ensure all employers are well-prepared, we are pleased to announce our alliance with ComplianceHR, a joint venture between global employment law firm Littler Mendelson and Neota Logic, to bring you decision-support tools to ease the burden when facing these complex decisions.

ComplianceHR’s Navigator Suite™ brought to you by XpertHR, uses leading-edge technology and combines the experience and knowledge of Littler’s subject matter experts with Neota Logic’s expert system software platform to deliver unparalleled virtual risk assessment support. These new tools, combined with the comprehensive coverage of these issues and more via XpertHR, provide employers with everything they need to put the focus where it belongs – and avoid being caught in the crosshairs of enforcement actions and litigation.

Undoubtedly, a marketplace with a range of options for engaging the best talent can be exciting for employers and offers them various engagement possibilities, including but not limited to:

However, the challenge of complying with federal, state and local laws in light of all these diverse scenarios has never been greater. Even setting aside the risks of enforcement, employers could also find themselves at a disadvantage should they fail to enable their company to onboard the talent necessary to maintain a competitive edge by ensuring well-formed procurement and onboarding programs.

Two areas in particular seem to be causing the most headaches for employers weighing the risk of inaction against clear indications of targeted enforcement efforts by the US Department of Labor (DOL).  It is precisely these areas that the new tools have targeted out of the gate. The first is the decision around whether a worker is properly classified as an independent contractor or an employee. This issue has become even more compelling given the rise in the contingent workforce coupled with the growing partnership on enforcement efforts between the DOL and states looking to ensure tax revenue streams are not adversely impacted by improper classifications.

The second area has to do with classifying employees as exempt from the overtime provisions of the Fair Labor Standards Act (FLSA). As most employers know all too well, assessing the validity of employee classifications across an organization does not just happen overnight. Assessments can be very individualized to particular positions and to particular employees. Add in the further wrinkle of the current regulatory scheme being in flux due to recent, and arguably transformative, proposed changes to the FLSA overtime rules lurking on the horizon, and that employer headache quickly becomes a migraine.

Conscious avoidance however is not always the wisest course. A leading expert in this area, Tammy McCutchen – managing director at ComplianceHR, a partner with Littler and a former administrator of the DOL’s wage and hour division – recommends employers prepare now rather than wait for the DOL to publish final rules.  This way they are best positioned to make their ultimate decisions and implement changes within two months of the rules being published. As recently covered in our blog, McCutchen spoke at SHRM’s 2016 Employment Law & Legislative conference and, given the complications and time involved in reclassification efforts, proposed an action plan for employers to help minimize the impact and disruption of the new regulations.

McCutchen also recommends an action plan for employers potentially facing independent contractor scrutiny in light of the DOL’s recent expansion of the definition of joint employer under the FLSA. This expansion reflects the DOL’s broad view of the employer-employee relationship as well as its continued narrowing of the definition of independent contractors. As such, McCutchen recommends that all employers ensure proper vetting of independent contractor engagements to avoid unwanted DOL scrutiny.

Part of that action plan can now include access to ComplianceHR’s new tools available through XpertHR. The Navigator Suite currently includes two robust decision-support tools, Navigator IC™ (to assess risk with regard to independent contractor status) and Navigator OT™ (to determine whether an employee or class of employees properly qualifies as exempt from overtime).

Simply answer a series of questions and the tools return instant results in a report that will help you assess whether your classification of a particular individual was in fact proper. Behind the scenes, the system uses decision trees, weighted factor analysis and other logic designed by Littler attorneys after an in-depth and continuous analysis of current statutes, regulations and case law across federal and all 50-state jurisdictions. The results of each session are saved to create an archived audit trail, which can form the basis of a good faith defense in subsequent litigation or agency investigations.

We’ve compiled some screenshots for one of the tools, Navigator OT, to provide a visual sample of its power.

Below is a screenshot of the tool’s administrative dashboard which allows you to collect and view all your ongoing evaluations: After launching an evaluation, you will be taken through a series of questions about the employer’s state of operation and the particular employee’s job role and duties that will help the tool assess which, if any, overtime exemptions may apply: Once the evaluation is complete and submitted, the tool will provide you with a visual depiction of the risk level in classifying that particular employee as exempt.  It will also make clear the reasons for the score and what legal factors were applied through a detailed report. A transcript of the questions and answers is also provided: Incorporating these tools effectively can give employers a leg up in ensuring they have a well-oiled and compliant onboarding machine to manage talent effectively, handle complicated decisions quickly and efficiently, and most importantly reduce their legal risk in the face of a dynamic and uncertain legal landscape.
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