How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers
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Seyfarth Shaw attorneys Rebecca Bromet and Kyle Petersen discuss: ◾Litigation trends and recent settlements in the construction industry, and what they mean to you ◾Your greatest compliance risks (you may be surprised) and how to avoid them ◾The ‘riskiest’ times of day for construction, engineering & landscaping employers ◾Simple safeguards that can keep you out of court For more than 60 years, Seyfarth Shaw has been recognized as one of the “go-to” labor and employment firms for business by providing extraordinary, cost-effective results. EPAY Systems, Inc. has joined forces with Seyfarth Shaw to educate employers of distributed labor environments on how compliance risk can be minimized
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How to Avoid Costly Wage and Hourly Pitfalls for Construction, Engineering, and Landscaping Employers
- 1. How to Avoid Costly Wage & Hour Pitfalls for Construction, Engineering & Landscaping Employers Featuring Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP
- 2. Welcome Today’s Host Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 773-499-7512 2 ©2012 Seyfarth Shaw LLP
- 3. EPAY Systems -- designed to meet the needs of your complex, distributed workforce • Reduce your labor costs by 5% or more • Keep you in control and in compliance 3 ©2012 Seyfarth Shaw LLP
- 4. Today’s Discussion Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000. Are you at risk? 4 ©2012 Seyfarth Shaw LLP
- 5. Our Speakers Kyle A. Petersen Associate, Seyfarth Shaw LLP Labor & Employment kpetersen@seyfarth.com (312) 460 -5000 Rebecca P. Bromet Partner, Seyfarth Shaw LLP Labor & Employment rbromet@seyfarth.com (312) 460 - 5000 5 ©2012 Seyfarth Shaw LLP
- 6. Ask Your Questions To ask a question, simply type your question in the “Question” box on the right side of your screen. 6 ©2012 Seyfarth Shaw LLP
- 7. Overview: Trends for 2013 • • • • • Litigation trends o Continued aggressive plaintiffs’ bar and agency Increased agency enforcement Compliance Risks – Surprise!!! “Riskiest” times of day. o Pre & Post Shift o Meal Times o Travel time Simple Safeguards 7 ©2012 Seyfarth Shaw LLP
- 8. Trends • Aggressive plaintiffs’ law firms have created consortiums, jointly filing class/collective suits • In recent years, plaintiffs’ firms have employed an industry-specific approach when it comes to wage & hour litigation o One firm successfully targets an industry and is quickly followed by other plaintiffs’ firms who target other employers in that industry 8 ©2012 Seyfarth Shaw LLP
- 9. Trends Continued • • Aggressive outreach efforts to identify potential plaintiffs o Outside companies sending email blasts to employees of target companies o Ads on Facebook, Twitter 7064 lawsuits filed under the Fair Labor Standards Act (“FLSA”) in 2012 o Record high number o State wage-and-hour actions raise this number significantly o Of all state and federal class or collective actions filed in the U.S., vast majority are wage and hour claims 9
- 10. Top 10 Private W&H Settlements in 2012 1. $99 Million – Novartis (misclassification of pharma sales reps) 2. $40 Million – Merrill Lynch (wage claims related to merger) 3. $35 Million – H&R Block (timeliness of payments) 4. $21 Million – Rite Aid (misclassification of ass’t store mgs) 5. $20 Million – City of New York (misclassification of police sergeants) 6. $19 Million – Robert Half (misclassification of recruiters) 7. $15.6 Million – HSBC Bank (misclassification of bankers, managers, & specialists) 8. $15.5 Million –Conoco Phillips (failure to provide meal breaks) 9. $14 Million – Family Dollar (misclassification of store managers) 10. $12.9 Million – Spearmint Rhino Cos. Worldwide, Inc. (independent contractor misclassification) 10 ©2012 Seyfarth Shaw LLP
- 11. FLSA Cases in Federal Court 1993-2012 11 ©2012 Seyfarth Shaw LLP
- 12. WHD Continues To Be Aggressive • • • • Increase in targeted investigations in low-wage/high risk industries Increase in corporate-wide investigations Assessment of liquidated damages, penalties, and other sanctions Grass Roots Campaign: o Continued push of “Bridge to Justice” and “We Can Help” Partnering with community and worker organizations to increase employee awareness Referring certain cases to private attorneys to initiate litigation 12 ©2012 Seyfarth Shaw LLP
- 13. Increased WHD Enforcement Capabilities Number of W age and Hour Division Investigators, 1987 to 2011 1,100 1,050 1,006 1,000 970 951 952 942 938 950 942 938 949 950 945 898 900 893 865 850 835 850 804 800 809 788 800 773 751 781 750 732 731 700 650 600 1987 1989 1991 1993 1995 1997 1999 Applied Econom ic Strategies , us ing U .S. D epartm ent of Labor, Wage and H our D ivis ion data. 13 ©2012 Seyfarth Shaw LLP 2001 2003 2005 2007 2009 2011
- 14. Compliance With The FLSA Is Not Easy • • • • • • • • The Fair Labor Standards Act was enacted in 1938 o Minimum Wage o Overtime o Child Labor Amended 44 Times Well Over 50 Statutory Exemptions Over 700 Pages of Regulatory Text 14-15 Public Chapters of Field Operations Handbook 350+ Opinion Letters Since 2000 Does Not Preempt State Law Generally Cannot Be Overruled by CBA 14 ©2012 Seyfarth Shaw LLP
- 15. Mistake #1 • • Employees have to pay for their own uniforms no matter what. Key issues: o Are the uniforms generic or elaborate? o Do employees authorize the deduction? o Does the deduction make their pay fall below minimum wage? o Are they responsible for cleaning the uniform? 15 ©2012 Seyfarth Shaw LLP
- 16. A Few Simple Safeguards • • • Receive authorization for the deduction (if required by state law). Do not count a uniform as a credit against wages. Make sure that the cost of uniform deductions does not reduce pay below minimum wage. 16 ©2012 Seyfarth Shaw LLP
- 17. Mistake #2 • • Requiring individuals to show up at work and wait to clock-in. Key Issues: o How long in advance of the shift are they required to arrive at the job site or central location? o Are employees free to use this time for their own purposes? o Are they disciplined or prevented from working if they do not show up at the required time? o Waiting to work- you don’t have to exert yourself to be working. 17 ©2012 Seyfarth Shaw LLP
- 18. A Few Simple Safeguards • • • Only require people to be at work by their scheduled start time. If employees are required to be at work by a certain time and employees are there by that time, pay the employees starting at that time. Only discipline individuals who are tardy for their scheduled start time, not the early arrival requirement. 18 ©2012 Seyfarth Shaw LLP
- 19. Mistake #3 • • Not including all required time in the calculation of hours worked Key issues: o Pay for pre- and post-shift activities (loading/unloading; donning & doffing; etc.) o Is the activity “integral and indispensable” to employees’ principal work activities (and therefore compensable)? o Do the employer’s rules or the nature of the work require it? o If an employee continues to work voluntarily after the end of his shift and the employer knows or has reason to know, that time is considered working time 19 ©2012 Seyfarth Shaw LLP
- 20. A Few Simple Safeguards • • • Do not let hourly employees start working until they are on the clock (but don’t require them to be there before they are allowed to clock in). Pay attention and make sure that people are not working after they clock out. Have employees verify each pay period that they have been paid for all time worked. 20 ©2012 Seyfarth Shaw LLP
- 21. Mistake #4 • • We don’t pay employees to ride in a truck. Key issues: o Home to work, or vice versa, typically is not compensable o Between job sites is part of the “continuous workday” and must be paid o If you don’t pay it, how do we track the time? Could be a recordkeeping issue if a lawsuit is filed. 21 ©2012 Seyfarth Shaw LLP
- 22. A Few Simple Safeguards • • Keep track of the job sites employees are working at each day. Do not stop the clock for travel between sites, unless there is a bona fide meal period taken during the travel time. 22 ©2012 Seyfarth Shaw LLP
- 23. Polling Question • Do you use an automatic meal period deduction? 23
- 24. Mistake #5 • • Automatically deducting for meal periods, even if not taken. Key issues: o Do they actually take a break? o Completely relieved from duty? o If they get interrupted during their meal period, are they paid for the interruption? 24 ©2012 Seyfarth Shaw LLP
- 25. A Few Simple Safeguards • • • • Implement a policy that only uninterrupted meal periods are unpaid. Implement a system to allow employees to document if they did not take or did not get their full meal period. Keep records. Have employees verify that any time deducted each pay period is accurate. 25 ©2012 Seyfarth Shaw LLP
- 26. Mistake #6 • Failure to take a strong stand against off-the-clock work • Key issues: o Failure to properly compensate for all hours worked = most frequently cited violation by WHD (in terms of numbers of employees affected) in the course of its investigations o A number of states have recently enacted anti-wage theft laws 26 ©2012 Seyfarth Shaw LLP
- 27. A Few Simple Safeguards • • • Implement strong policies and set expectations. Train managers to look out for and report off the clock work. Train employees on your policies. 27 ©2012 Seyfarth Shaw LLP
- 28. Polling Question • True/False: All managers are exempt and do not need to be paid overtime. 28
- 29. Mistake #7 • • We call them “manager” or “foreman,” so they don’t get overtime. Key Issues: o Recommendations for hiring/firing given particular weight? o Too much work like those who are supervised? o Sufficient pay distinction between hourly employees and manager or foreman? Easy case to certify as a collective/class action. 29 ©2012 Seyfarth Shaw LLP
- 30. Mistake #8 • • They are “engineers,” so they don’t qualify for overtime, either. Key Issues: o Performing work requiring advanced knowledge in science or learning customarily acquired by prolonged course of study? o Is the work intellectual? Do they have independent judgment and discretion? o Do they have an advanced degree? Apprenticeships or on the job training doesn’t cut it. 30 ©2012 Seyfarth Shaw LLP
- 31. Polling Question • True/False: Employers can avoid all of these overtime problems simply by using independent contractors. 31
- 32. Mistake #9 • • Labeling everyone an independent contractor. Key issues: o How much control is there over their work? o How long have they been working with you? o Are they providing a special service or skill? o Does the worker invest in their own equipment and materials? Provide their own employees? o Is the work an integral part of your business? 32 ©2012 Seyfarth Shaw LLP
- 33. A Few Simple Safeguards • • • • Auditing pay practices & exempt status at direction of counsel. Review pay practices. Review exempt status classifications. Know state laws where you operate. 33 ©2012 Seyfarth Shaw LLP
- 34. Mistake #10 • • Paying undocumented workers in cash and off the books. Key issues: o Under the table payments run afoul of state and federal recordkeeping and reporting requirements. o Minimum wage applies. o All hours worked must be paid, including overtime pay. 34 ©2012 Seyfarth Shaw LLP
- 35. A Few Simple Safeguards • • • Always pay hourly, non-exempt employees at least minimum wage for all hours worked and time and a half for overtime. Report and keep records of all hours worked and all wages paid. Ensure compliance with all employment-eligibility laws. 35 ©2012 Seyfarth Shaw LLP
- 36. EPAY Systems Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. 36 ©2012 Seyfarth Shaw LLP
- 37. EPAY -- In Time with You Complex pay rules? Mobile workforce, union contracts, multiple job assignments? No problem! Uniquely flexible 37 ©2012 Seyfarth Shaw LLP
- 38. Reduce your labor costs Eliminate erroneous pay calculations, time rounding, and management inconsistencies Eliminate buddy punching Reduce costs associated with paper checks. Save an average of $2.87 per pay period/per employee. or more! Reduce administration time in preparing payroll Biometric time clocks with camera and finger print reader 38 ©2012 Seyfarth Shaw LLP
- 39. Minimize Compliance Risk • • • • • • Audit Trails Overtime Meal Breaks Pay Differentials Privacy and Security Reduce Workers Comp Claims • Did you have an accident free day? 39 ©2012 Seyfarth Shaw LLP
- 40. Over 40,000 customer sites 40 ©2012 Seyfarth Shaw LLP
- 41. Easy, Anywhere Time Tracking Blueforce adapts to how YOU do business 41 ©2012 Seyfarth Shaw LLP
- 42. Upcoming Education • Public Demonstration: Time & Labor Management for the Distributed Workforce o March 14: 10:00 cst Register at www.EPAYsystems.com 42 ©2012 Seyfarth Shaw LLP
- 43. Upcoming Education Compliance Webinar Series with Seyfarth Shaw LLP • • • • How to Avoid Costly Wage & Hour Pitfalls Employers in the Staffing and Security Industries. May 8: 12:00 cst California Wage & Hour Labor Law--Avoiding Common Pitfalls with a Distributed Workforce. June 26: 12:00 cst How to Avoid Costly Wage & Hour Pitfalls for Healthcare Employers with a Distributed Workforce. Sept 25: 12:00 cst How to Avoid Costly Wage & Hour Pitfalls for Employers in the Hospitality Industry. Nov 6: 12:00 cst Register at www.EPAYsystems.com 43 ©2012 Seyfarth Shaw LLP
- 44. Thank You! Kyle A. Petersen Associate, Seyfarth Shaw LLP Labor & Employment kpetersen@seyfarth.com (312) 460-5000 Rebecca P. Bromet Partner, Seyfarth Shaw LLP Labor & Employment rbromet@seyfarth.com (312) 460-5000 44 ©2012 Seyfarth Shaw LLP
- 45. Connect with us Bonus! Receive Seyfarth Shaw’s newly published report, Trend Watch: The Savvy Employers’ Guide to Wage & Hour Lawsuits. Connect with EPAY on: o LinkedIn – follow our company page at EPAY Systems o Twitter -- @EPAYsystems o Sign up for our e- newsletter at EPAYsystems.com 45 ©2012 Seyfarth Shaw LLP
- 46. Thank You! 46 ©2012 Seyfarth Shaw LLP
Notas do Editor
- Thanks John. Welcome to our webinar in our Compliance Series “How to Avoid Costly Wage & Hour Pitfalls for Construction, Engineering & Landscaping Employers” presented by EPAY Systems. My name is Michelle Lanter Smith. I am the Chief Marketing Officer here at EPAY Systems.I’d like to extend a warm welcome to all of you on the line with us today. We have over __ people joining us . . . From across the nation. As construction, engineering, and landscaping firms, all of you have a couple things in common –You all face a challenging, complex labor environment – one where you workers are distributed across many locations – making it difficult for consistent management policies and proceduresManaging compliance issues – such as Overtime pay, meal breaks, employee travel . . . is a real concern. And because of your distributed workforce, it’s even harder to manage.
- Well, that’s where EPAY comes in. EPAY is in the time and labor management business. And we specialize in dealing with companies that have very complex and distributed labor environments. Our organization understands all of the challenges and limitations a company with employees scattered everywhere deals with as it relates to deploying new technology in the field, as well as managing and tracking it’s labor force.Distributed labor can present many challenges. Yet, labor is probably your largest cost.Complex pay rules, shift differentials, employees working one task in the morning and a different one in the afternoon. Employees working at customer sites or moving from job to job.These are tough for most time and attendance systems. But not for us. Our uniquely flexible pay rules engine can handle complex union rules and state regulations, not to mention your own complexities because of the nature of your business.Our web-based system, Blueforce, drives two main benefits for our clients:We help them reduce their total labor costs by more than 5%We help them lower their overall risk in facing compliancy issues – we have a built-in compliance orientated features . . . Right in our system
- And speaking of compliance, it’s not something to be overlooked in today’s labor environment.Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000.The Department of Labor (DOL) recently increased its investigative staff by 40% to crack down on non-compliant.Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases. And when they do coming knocking on your door, it’s expensive.The average reported settlement is $8.5 million per case, with a per plaintiff average of $5,600. Allegations run the gamut—unpaid overtime; off-the-clock-work; misclassification of exemption status; missed short or late meals and breaks; unpaid donning and doffing time; failure to pay minimum wage, and improper tip pooling. Could you be at RISK?Probably most of you on the line, would say “most definitely”That’s why today, I’m thrilled to introduce to you our guest speakers from Seyfarth Shaw for today’s webinar on compliance. They really do have the Best Tips for Staying out of Trouble.Seyfarth Shaw’s defense of employers in wage and hour litigation has become one of the hallmarks of the firm’s nationally recognized employment law practice. Its Wage & Hour litigation practice group consists of more than 80 attorneys in offices across the country. They have litigated hundreds of complex wage and hour cases in nearly every federal jurisdiction and in courts of almost every state, as well as before administrative agencies and on a multi-jurisdictional basis.Today we are fortunate to have two of the firms prominent partners in the wage and hour space, Rebecca Bromet and Kyle Petersen.
- Kyle Petersen is a member of Seyfarth Shaw LLP’s Labor and Employment Department. She litigates all manner of employment disputes on behalf of employers throughout the country. As a member of the Firm’s Wage & Hour Litigation practice group, Ms. Petersen devotes a significant portion of her practice to representing employers across the United States in court litigation and administrative matters arising under federal and state wage and hour laws, and is a chapter author of the definitive treatise on wage and hour litigation, Wage & Hour Collective and Class Litigation. Kyle’s work on behalf of employers has been recognized by Illinois Super Lawyers, which has named her an Illinois Rising Star (2008-2011).Rebecca Pratt Bromet is a partner in the Labor and Employment Department – also residing in Seyfarth Shaw's Chicago office. Rebecca’s wage and hour practice focuses on defending employers across the country in administrative matters and in collective, class, and individual actions under the Fair Labor Standards Act and state laws in federal and state courts. She frequently speaks at seminars and conferences on all human resources issues, especially wage and hour matters. Rebeccaauthored the Illinois Employer's Guide to Wage and Hour Laws, published by the Illinois Chamber of Commerce (2011). She also contributes to publications such as the Fair Labor Standards Act: Cumulative Supplement, ABA Section of Labor and Employment Law (2006-2012), the Seyfarth Shaw Class Action Report, and Diversity Executive Magazine. Rebecca is a member of the ABA Fair Labor Standards Legislative Committee. Welcome Kyle and Rebecca! Thanks for joining us today.
- Now I’m sure many of you are going to have questions for Rebecca and Kyle today. If you have one, simply type it in the Question box in bottom right section of your screen. We’ll be monitoring the questions and Noah and Rebecca will attempt to answer your questions throughout their presentation.So let’s get started . . .Rebecca, let me turn it over to you to discuss some of the trends you’re seeing in wage and hour litigation.
- In 2010 -$1.5 Million – Cemex (unpaid overtime to 1,705 cement truck drivers)$106,818 – Turf Specialities (misclassification, uniform deductions, deductions for broken equipment)
- Low-wage/high risk industries – high violation with low complaint rates, such as janitorial, construction, and hotel/motel industries.Fissured industries – rely on a wide variety of organizational methods, such as sub-contracting, third-party management, franchising, and independent contractors.“In a typical year, over 35,000 workers contact the Wage and Hour Division for help, including the 25,000 who need assistance with their minimum wage, overtime, or family medical leave claims –and this number does not even include many more workers who do not contact us after their rights have been violated. Although the Wage and Hour Division is able to help the vast majority of these workers recover denied wages or lost jobs through conciliation, settlement, or, with the Solicitor of Labor, litigation, every year there are thousands of workers whose claims we cannot resolve because of limited capacity. Thanks to an unprecedented collaboration between the Wage and Hour Division and the American Bar Association Standing Committee on Lawyer Referral and Information Service (ABA LRIS), the Wage and Hour Division will now connect these workers to a local referral service that will, in turn, provide the workers with access to attorneys who may be able to help. This collaboration will both provide workers a better opportunity to seek redress for FLSA and FMLA violations and help level the playing field for employers who want to do the right thing.” BRIDGE TO JUSTICE: Wage and Hour Connects Workers To New ABA-Approved Attorney Referral System,‖ http://www.dol.gov/whd/resources/ABAReferralPolicy.htm.Id.
- Wow – what a lot of great information you’ve given us in such a short time. Now if you have question for Rebecca or Kyle, just let us know. We’ll see a short survey when you close out today’s session. Just let us know and we’ll try to help get your question answered.I’d like to wrap up our time together today with a few words on EPAY and how we address your compliance needs.
- Since 2001, EPAY has delivered innovative, efficient and effective solutions to address our clients critical time and labor management issues.Our client base is very diverse – serving some of the largest in Janitorial,Building Maintenance – Healthcare –– Security –– Foodservice – and Hospitality. You’ll see our clocks in some of the largest retailers, public sporting venues, and airports in the nation.One of the central themes we hear from our clients is that we can mirror the operating environment. Specifically we can handle all the various payroll permutations to ensure accuracy and compliancy for their organization. The flexibility of Blueforce is built-in; we meet our customers’ business needs without upfront custom costs.
- Upon the implementation of our system, EPAY’s clients see an immediate Return on Investment, through the reduction of the following exposures.Elimination of buddy of punchingEliminate erroneous pay calculations,human error, and time roundingReduce payroll administration and distribution time associated with pay checks and pay stubsBy utilizing our advanced functionality the 5% reduction in Labor can climb to 9%.An example of this would be our real time alerts which can reduce overtime exposure and keep you on budget
- Time and Wage cases in 2012 have surpassed discrimination cases for the most litigated exposure facing corporations. EPAY provides many features and reports that help mitigate exposure and provides access to historical data to dispute labor audit claims.Audit Trails – Changing an employee’s timecard without his/her approval is a surprisingly common FLSA violation. Blueforce flags all unapproved changes, so managers can address them before they become issues. Overtime - Calculating overtime properly is a huge litigation concern for employers. Blueforce tracks work time to the minute and automatically notes when an employee reaches overtime. Better yet, it can even alert managers before an employee hits the OT threshold. Meal Breaks – Improperly tracking or enforcing required meal breaks are another corporate Achilles’ heel. Blueforce asks employees if they’ve taken their proper meal breaks, advises you of deviations, and can even generate real-time alerts when a meal break is missed. Pay Differentials – When a single employee is paid varying hourly rates, depending on shift or task, it can create headaches for your payroll staff. Because we ‘configure’ your pay differentials into Blueforce at the outset, it accurately calculates employee pay effortlessly. Privacy and Security - Our time-tracking system keeps you in complete compliance with the Sarbanes-Oxley Act, which protects employees’ confidential information. We can even provide you with documented proof that your employees and managers only have access to what they should. Workplace Safety – We know on-the-job injuries are a real concern and that Workers’ Compensation claims are a very real expense. That’s why we’ve built a rather unique safeguard into our punch-out procedure. At the end of each shift, employees are asked if they had a “safe day.” The benefits are two-fold: 1) if an accident occurs, you’re instantly in the loop, and 2) if a questionable claim is made later, you have some documentation of your own.
- EPAY has provided solutions to the most complex labor environments, encompassing hundreds of collective bargaining agreements.ABM Industries – 110,000, across 6500 sitesHealthcare Services Group 30,000 eeacroos 3,000 sitesCompass Group – 20,000 across 2500 sites Crothall - 16,000 eeUnicco - 16,000 eeKBS – 15,000 ee
- In working with our clients EPAY has understood the importance of mirroring our clients environment and making our system as user friendly as possible.Upon the tabulation of punch data, EPAY’s pay rules engine allows our system to compute gross payroll regardless of the complexity of the clients pay rule. Our competitors struggle with this development and often time costs their clients hundreds of thousands of dollars in professional services fees.Understanding the challenges that end users face in remote environments, EPAY has developed various forms of data collections methods that ensure two things for our clients:There will always be a way for us to collect and transmit data (Wireless, LAN, WiFi, DialUp)NEXT SLIDE . . .
- Wage and hour cases continue to be a source of potential liability for employers. Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases. Additionally, the Department of Labor has hired more investigators and continues to aggressively investigate company’s wage-hour practices. Companies hit with these cases may face significant exposure and, even if their policies are lawful, defending a class or collective action can cost hundreds of thousands of dollars, if not more. As a result, it is critical for a company facing a lawsuit to quickly assess its risks and determine its litigation “goals.” Even if not currently facing a lawsuit, a company should take measures to avoid litigation and to minimize its legal risks. To do so, companies need to keep abreast of changes in the law and litigation trends. Wage-hour law continues to develop and change, and these developments may impact your organization or industry.
- That’s all the time we have today. Thank you to all of you for joining us today. We’d like to be your time and labor management provider. At EPAY, we’re IN TIME WITH YOU.Until next time, then, have a wonderful rest of your day. Good-bye.