Legal Updates

U.S. Department Of Labor Announces "Plan/Prevent/Protect" Enforcement Strategy Requiring Employers To Proactively "Find And Fix" Workplace Problems

On April 26, 2010, the U.S. Department of Labor (“DOL”) announced a new regulatory and enforcement strategy for employers entitled “Plan/Prevent/Protect.”  Under Plan/Prevent/Protect, employers will be required to take affirmative measures to find and fix workplace problems rather than wait for a DOL audit to unearth them.

In particular, Plan/Prevent/Protect will require employers to create plans for achieving compliance with a number of laws enforced by DOL, including the Fair Labor Standards Act (“FLSA”), the Occupational Health and Safety Act (“OSHA”), the Employee Retirement Income Security Act (“ERISA”) and Executive Order 11246 (“E.O. 11246”), which regulates equal employment and affirmative action requirements for federal contractors and subcontractors.

The actual requirements of Plan/Prevent/Protect have not yet been determined.  According to DOL, they will be formulated and announced through a series of notices of proposed rulemaking over the next year.  DOL has indicated, however, that employers that fail to comply with Plan/Prevent/Protect will be considered out of compliance with the law and, depending upon the underlying violation, subject to remedial action.

Main Components Of Plan/Prevent/Protect

While the specific mandates of Plan/Prevent/Protect are still being formulated, DOL describes the main components of this initiative as follows:

• Plan:  [DOL] will propose a requirement that employers and other regulated entities create a plan for identifying and remedying risks of legal violations and other risks to workers — for example, a plan to search their workplaces for safety hazards that might injure or kill workers.  The employer or other regulated entity would provide their employees with opportunities to participate in the creation of the plan.  In addition, the plan would be made available to workers so they can fully understand it and help to monitor its implementation.
• Prevent:  [DOL] will propose a requirement that employers and other regulated entities thoroughly and completely implement the plan in a manner that prevents legal violations.  The plan cannot be a mere paper process.  The employer or other regulated entity cannot draft a plan and then put it on a shelf.  The plan must be fully implemented for the employer to comply with the “Plan/Prevent/Protect” compliance strategy.
• Protect:  [DOL] will propose a requirement that the employer or other regulated entity ensures that the plan’s objectives are met on a regular basis.  Just any plan will not do.  The plan must actually protect workers from violations of their workplace rights.

Intent To Eliminate “Catch Me If You Can” Compliance Strategy

DOL goes on to say that Plan/Prevent/Protect is intended to eliminate the “catch me if you can” compliance strategy used by many employers based on a “cold economic calculus.”  This strong language suggests that DOL is highly suspicious that workplace violations result from deliberate decisions by employers to play the odds against getting caught—and that the agency intends to come down hard on employers found not to be in compliance.

Worker Misclassification Issues

An anticipated Plan/Prevent/Protect requirement of particular note is a revised wage-and-hour recordkeeping rule.  In this regard, DOL states that its Wage and Hour Division (“WHD”) will soon propose to require employers using independent contractors to perform a “classification analysis, disclose that analysis to the worker[s], and retain that analysis to give to WHD enforcement personnel who might request it.”  This means that employers will have to explain in writing to their independent contractors why they are not classified as employees.  The potential consequences of such a rule for employers—more litigation and increased reporting of suspected misclassifications to the labor and taxing authorities, to name a few—are enormous.

Recommendations For Employers

While the specific requirements of DOL’s Plan/Prevent/Protect initiative will emerge over time via the regulatory rulemaking process, one thing is clear—employers should act now to ensure compliance with the laws enforced by DOL.  Accordingly, we recommend that employers:

• Audit wage-and-hour practices and procedures to ensure that workers are properly classified as either employees or independent contractors, and that employees are properly classified as either exempt or non-exempt;
• Audit OSHA practices and procedures and, in doing so, affirmatively identify and remedy any existing safety and health hazards;
• Audit benefits administration to ensure compliance with any applicable ERISA requirements; and
• If a federal contractor or subcontractor, ensure compliance with all applicable equal employment and affirmative action requirements.

We will keep you apprised of significant developments as proposed rulemaking concerning Plan/Prevent/Protect commences and unfolds.  Meanwhile, please contact us if you have any questions about this new enforcement initiative, or if you would like assistance with your organization’s compliance efforts.