Regulatory Enforcement:
2007 in Review

2007 saw an increase in regulatory enforcement activity by many federal agencies, as well as an increase in employment-related litigation. For the first time in the past five years, settlements in wage and hour and ERISA class actions outpaced employment discrimination class action settlements. According to the Annual Workplace Class Action Report released by the law firm Seyfarth Shaw LLP, aggregate settlements totaled $2.65 billion in 2007, with $282 million for employment discrimination class actions, $319 million for wage and hour class actions, $1.818 billion for ERISA class actions, and $197 million for government-initiated enforcement actions.

OSHA Enforcement Activity

The Occupational Safety and Health Administration (OSHA) conducted 39,324 inspections in 2007, 4.3 percent more than its goal of 37,700 inspections and 745 more than in 2006. There were 88,846 violations of OSHA standards and regulations, a 6 percent increase from 2006, of which 67,176 were classified as serious, a 9 percent increase from the previous year. The number of repeat violations also rose from 2,551 to 2,714.

The agencyís Enhanced Enforcement Program (EEP), established in 2004, continued to actively target employers who repeatedly ignored OSHA obligations. The EEP focused on cases with serious violations related either to a fatality or to multiple willful violations. During the first four years of the program, OSHA identified an average of 524 EEP cases per year. In 2007, OSHA identified 719 EEP cases, a record high.

Significant enforcement action included over one hundred inspections that each resulted in a total proposed monetary penalty of over $100,000. Programmed (scheduled) inspections showed a 2.7 percent increase. OSHA also conducted 16,288 unprogrammed inspections, which resulted from employee complaints, accidents, and referrals. There was also a 12 percent increase over the past five years in inspections generated through referrals from other governmental agencies.

OSHA completed 1,163 investigations of "whistle-blower" complaints of reprisals against employees. Twenty-two percent were deemed meritorious, and 95 percent of these resulted in settlements. Twenty-six states completed 1,022 whistle-blower investigations of their own, of which 24 percent were meritorious, and 86 percent of these resulted in settlements.

Wage and Hour

The Wage and Hour Division (WHD) of the Department of Labor (DOL) is responsible for enforcing laws regarding the minimum wage, overtime, the child labor provisions of the Fair Labor Standards Act (FLSA), and the Family and Medical Leave Act (FMLA).

Recently, WHD has placed a major focus on bringing very large employers into compliance. Numerous employers have made multi-million dollar payments, in two instances to more than 20,000 workers. Earlier this year, WHD obtained the largest private-sector settlement in the agencyís history.

In 2007 WHD recovered more than $220 million in back wages for over 341,000 employees. Back wage collections exceeded the 2003 record level of $212,537,554 by 3.8 percent. The agency concluded 30,467 compliance actions and assessed over $10.3 million in civil money penalties.

Overtime and Minimum Wage

WHD collected $163 million in back wages for FLSA overtime violations and more than $17 million for FLSA minimum wage violations. WHD also assessed employers $3.9 million in FLSA civil money penalties.

WHD continued to be on the look-out for both accidental and intentional mis-classification of employees by employers in order to avoid paying overtime.

Of the $180 million in FLSA back wages collected, nearly $16 million was collected for 12,000 employees as a result of violations of the Overtime Security regulations, compared to $13.2 million in 2006. The violation most frequently cited was that the employeeís primary duty was not "the performance of office or non-manual work directly related to the management or general business operations of the employer or the employerís customers," known as the "administrative duty test" ($4.5 million).

WHD also continued to focus on low-wage industries that employ young and immigrant workers. The agency collected over $52 million in back wages for approximately 86,500 workers in low-wage industries—an increase of over 33 percent since 2003. WHD expended nearly 40 percent of its enforcement resources on investigations in these nine industries:

  • Agriculture
  • Day Care
  • Restaurants
  • Garment
  • Manufacturing
  • Guard Services
  • Health Care
  • Hotels and Motels
  • Janitorial Services
  • Temporary Help

Child Labor

In 2007, WHD also found 4,672 minors illegally employed by businesses. The majority of child labor violations occurred when workers under the age of 16 worked too many hours, too late at night, or too early in the morning. In total, 3,406 minors were employed in violation of the child labor hours standards. Hazardous Occupation Order (HO) violations were found in a third of the cases. Violations of HO No. 12 (paper balers) were most common, followed by violations of HO No. 2 (driving). WHD assessed nearly $4.4 million in child labor civil money penalties.

Family and Medical Leave

The number of FMLA complaint cases concluded by WHD declined in 2007 to 1,983 from 2,161 in 2006. According to WHD, this trend reflects "an emphasis on more efficient complaint intake strategies to ensure that registered complaints are those on which the agency can act." Termination of employees seeking FMLA leave continued to be the primary reason for employee complaints, followed by discrimination and refusal to grant FMLA leave in the first place. Overall, WHD recovered $1,573,501 in back wages for affected employees.

Employee Benefits Security

The Employee Benefits Security Administration (EBSA) is responsible for enforcing the Employee Retirement Income Security Act (ERISA), which ensures the integrity of private employee benefit plan systems. EBSAís authority covers nearly 700,000 retirement plans, 2.5 million health plans, and similar numbers of welfare benefit plans, such as those providing life or disability insurance. These plans cover about 150 million workers and their dependents and include assets of approximately $5.6 trillion.

In 2007, EBSA conducted 3,236 civil investigations, with 74.23 percent yielding monetary results for plans or other corrective action, an increase of 30 percent since 2001. Total monetary results approached $1.5 billion.

EBSA also closed 188 criminal investigations, leading to the indictment of 115 individuals—including plan officials, corporate officers, and service providers&emdash;for offenses related to employee benefit plans. Since 2001, criminal investigations closed with either a guilty plea or with a criminal conviction increased by 43 percent.

Equal Employment Opportunity

The Equal Employment Opportunity Commission (EEOC) is the organization responsible for enforcing federal laws against discrimination in the workplace. These include:

  • Title VII of the Civil Rights Act
  • Equal Pay Act of 1963
  • Age Discrimination in Employment Act of 1967 (ADEA)
  • Rehabilitation Act of 1973, Sections 501 and 505
  • Titles I and V of the Americans with Disabilities Act of 1990 (ADA)
  • Civil Rights Act of 1991

In 2007, the EEOC received 82,792 charges of discrimination, a 9 percent increase over 2006, of which 72,442 were resolved administratively, securing more than $290 million in monetary benefits compared to $229 million in 2006. Overall, the EEOC secured both monetary and non-monetary benefits for more than 17,357 people.

The EEOC also pursued litigation when the administrative process failed to provide relief. In 2007, it filed 336 lawsuits and 26 subpoena enforcement and other actions for a total monetary recovery of $54,797,888.

Of these resolutions, 296 contained Title VII claims, 41 contained Americans with Disabilities Act of 1990 (ADA) claims, 35 contained Age Discrimination in Employment Act of 1967 (ADEA) claims, and 14 contained Equal Pay Act of 1964 (EPA) claims.

In terms of dollars recovered by statute, EEOC recovered $38,822,708 in Title VII resolutions, $3,075,969 in ADEA resolutions, $2,437,971 in ADA resolutions, $215,000 in EPA resolutions and $10,246,239 in resolutions involving more than one statute.

The largest EEOC suit in 2007 was against pharmacy giant Walgreen Co. It alleged that Walgreenís discriminated against African-American retail management and pharmacy employees in promotion and assignment. After mediation, the parties agreed to a total of $20 million (plus attorneysí fees) in payments to an estimated 10,000 class members.

Another suit against Woodward Governor Co. charged that the engine systems company discriminated against African-Americans, Hispanics, Asians and women. It resulted in a $5 million judgment.

Other suits include:

  • In EEOC v. Quietflex, 78 Latino production workers shared $2.8 million to resolve claims that the air conditioning duct manufacturer denied them entry into positions in more lucrative departments based on national origin.
  • In EEOC v. Trans Bay Steel, 48 Thai welders shared $1 million to resolve national origin discrimination claims.
  • In EEOC v. Jeff Wyler Eastgate, 39 women shared $2.3 million to resolve claims that the auto dealer refused to hire them into sales jobs based on sex.
  • In EEOC v. Flushing Meadow Geriatric Center, 29 black and Caribbean employees shared $900,000 to resolve claims that the rehabilitation center subjected them to racial harassment and prohibited them from speaking Creole while permitting other non-English languages to be spoken.

Extensis and Compliance

OSHA Compliance

Extensis Risk Management professionals will work with a business to develop procedures to meet OSHA general requirements and OSHA recording and reporting standards. We also supply training on such issues as accident cause and prevention, worksite hazard reduction, and how to prepare for an OSHA inspection.

FLSA Standards

Extensis specialists will consult with an organization to ensure that all job classifications and overtime calculations are appropriate and accurate. We are uniquely positioned to assist our clients in FLSA compliance by tracking jobs through our payroll system, including: tracking hours, tips, overtime, employee type, etc.

ADA Accessibility

Our Human Resources professionals will conduct a comprehensive ADA compliance analysis and work with a business to develop an implementation plan. We also provide training on ADA compliance for managers and supervisors, and can develop ADA-compliant job descriptions.

Sexual Harassment Policy

Our human resources professionals will customize a sexual harassment policy and communications program for a business and help implement formal complaint procedures to prevent or cure any incidence of harassment. We also conduct group educational sessions on preventing sexual harassment for managers and supervisors as well as for the general employee population.

For More Information

Call Our Human Resources Department at 888.473.6398 or e-mail hr@extensisnj.com for more information on how Extensis can assist you with regulatory compliance.