By Albert R. Bell, Jr. and Kyle R. Still, Ward and Smith, P.A.

Editor’s Note: Albert R. Bell, Jr. and Kyle R. Still are members of the Labor and Employment Practice Group of Ward and Smith, P.A.

The election of President Obama signaled a potentially significant shift in both the protections afforded to American workers and the way the United States government enforces those protections. While many point to President Obama’s support of the Employee Free Choice Act as the primary indication of a potential shift toward even more protections for employees, increased enforcement by the Obama Administration of existing protections by federal agencies such as the U.S. Department of Labor ("DOL") and the U.S. Equal Employment Opportunity Commission ("EEOC") already have had a more immediate impact.

The First Sign

This immediate impact was first evidenced by President Obama’s nomination of Hilda Solis as Secretary of the DOL. This nomination was viewed by many as signaling a dramatic change toward greater enforcement of employee protections by the DOL, an agency some observers felt had not vigorously enforced labor laws during the Bush Administration. Senator Patty Murray’s comments about Solis are indicative of this school of thought: "For the last eight years working families have felt like an afterthought of the previous administration. Workers today need an advocate in the new administration who’s going to stand up for them." Once confirmed, Solis, who grew up in a union household and who had a reputation as an enthusiastic advocate of unions as a Congresswoman, made clear that she would adopt a more aggressive approach to enforcing federal employment laws such as the Fair Labor Standards Act ("FLSA"). In her first public speech after becoming Secretary of Labor, Solis gave this warning to employers: "The Labor Department is back in business.…[Y]ou can rest assured that there is a new sheriff in town."

The Department of Labor

Solis’s commitment to laying down the law was evident in the DOL’s 2010 fiscal year budget request which asked for additional funding to hire hundreds of new compliance officers for the DOL’s Wage and Hour Division that would increase the size of that Division by a third. The DOL’s 2011 budget request continued this trend of seeking more investigators, requesting $67 million in funding, in part to hire another 177 new investigators and enforcement staff. On October 1, 2009, hundreds of additional compliance officers took to the field to conduct DOL investigations and audits examining employers’ compliance with the child labor, minimum wage, and overtime requirements of the FLSA. The compliance officers have full authority to examine an employer’s payroll records and, if appropriate, to assess penalties and fines against the employer for back wages owed to employees.

The DOL’s budget request for additional compliance officers was partly in response to a report issued by the Government Accountability Office ("GAO") about its investigation into complaints regarding the DOL’s enforcement activities. The report identified several perceived deficiencies by the DOL, including advising employees with grievances to get their own attorneys to pursue grievances rather than to rely on the DOL to pursue remedies, ending investigations when employers simply asserted that they could not afford any fines or penalties, and failing to pursue and follow up claims actively. The GAO reached these conclusions despite the fact that the DOL collected $185,287,827 in back wages in 2008 and collected an average of $182,582,365.75 in back wages for each fiscal year during George W. Bush’s presidency. These large figures, however, pale in comparison to the tremendous amounts of damages attorneys for employees have collected from employers in class-action lawsuits under the FLSA and similar wage and hour laws. To cite just one example, a California jury recently awarded a class of Wal-Mart’s California employees $172 million in damages for the company’s violation of meal break laws.

The Equal Employment Opportunity Commission

The EEOC, whose mandate is to enforce federal anti-discrimination laws such as Title VII, the Americans with Disabilities Act (the "ADA"), and the Age Discrimination in Employment Act ("ADEA"), also has experienced a significant increase in the number of investigators during the Obama administration. Since the fall of 2009, the EEOC has added 170 new investigators all over the country. These investigators are entrusted with evaluating employees’ charges of discrimination by interviewing relevant witnesses; reviewing documentation submitted by the employee and the employer; and, in some cases, conducting on-site investigations at the employer’s place of business to investigate the facts of a case. On-site investigations, which can be extremely disruptive to an employer’s operations, are likely to multiply in the coming year as a result of the EEOC’s increasing number of investigators.

This increase in investigators was driven, in part, by a significant rise in the number of discrimination complaints the EEOC has received since 2007. In 2007, the EEOC received 83,000 total discrimination complaints. In 2008, that number jumped to 95,000, an increase of 14.46%. The total number of complaints declined slightly to 93,277 in 2009, but that figure was still the second largest since the EEOC started keeping statistics. With the number of layoffs occurring during the current economic downturn, the number of discrimination complaints is likely to continue to stay high or even increase. To date, the EEOC has had difficulty in responding to the volume of discrimination complaints it receives each year. According to the EEOC’s Inspector General, the projected backlog of unresolved complaints was expected to be 87,807 by the end of fiscal year 2010.

Many of these new investigators will also surely assist in the EEOC’s focus on combating systemic discrimination that affects broad classes of people. The EEOC’s commitment to ending systemic discrimination has been seen most recently in the approval of a $6.2 million settlement between the EEOC and Sears, Roebuck & Co. The EEOC sued Sears, Roebuck & Co. under the Americans with Disabilities Act, claiming that the company’s policy of terminating employees upon the exhaustion of their workers’ compensation leave violated its legal obligation to accommodate employees’ disabilities. This lawsuit, which the EEOC initiated in November 2004, came to a conclusion in February of this year after almost six years of highly contested litigation.

Conclusion

The impact on employers from the addition of the hundreds of new investigators at the DOL and EEOC is likely to be significant. As always, an ounce of prevention may produce a pound or more of cure. Employers should assess their compliance with federal anti-discrimination laws such as Title VII, the ADA, and the ADEA, as well as the FLSA’s complex provisions related to minimum wages, overtime, and salary exemptions. Failure to do so may lead the new sheriffs at the DOL or EEOC to come knocking on your door.

© 2010, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Albert R. Bell, Jr. and Kyle R. Still practice in the Labor and Employment Practice Group where they represent clients in a wide range of employment litigation, regulatory, and legislative issues. Comments or questions may be sent to arb@wardandsmith.com or ks@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.