The court in the consolidated case of Texas v. DOL, Case No. 4:4-CV-499-SDJ (E.D. Tex., Nov. 15, 2024), and Plano Chamber of Commerce v. DOL, Case No. 4:24-CV-468-SDJ (E.D. Tex. Nov. 15, 2024), issued summary judgment in favor of the plaintiffs and vacated the 2024 Rule. In reaching its decision, the court applied the Supreme Court’s recent decision in Loper Bright Enters. v. Raimondo, 144 S. Ct. 2444 (2024), which states that “[c]ourts must exercise independent judgment in deciding whether an agency has acted within its statutory authority.” The court also applied a decision from the Fifth Circuit holding that the DOL cannot enact regulations that “replace or swallow the meaning” of the exemptions by instituting a definition that is fundamentally different than the text and structure of the FLSA. Mayfield v. DOL, 117 F.4th 611 (5th Cir. 2024).

The court found that the 2024 Rule improperly “swallow[s]” the meaning of the exemptions. The court reasoned that the text of the FLSA shows that the applicability of the executive, administrative, and professional exemptions are primarily determined by an employee’s duties, not the employee’s salary. The court additionally found that the DOL’s minimum salary threshold increase would reclassify millions of workers from exempt to non-exempt while also causing an additional three million to become non-exempt. The sweeping effect of the rule would suddenly make salary the determinative factor in whether an employee is exempt or not, instead of the employee’s duties as Congress intended.

The court also found the DOL Rule’s “Automatic Indexing Mechanism,” in which the salary threshold would adjust automatically every three years, violates the requirement that the DOL engage in notice-and-comment rulemaking. The Administrative Procedures Act (APA) requires agencies to go through a notice and comment process before enacting a new regulation. This process requires the agency to first publicize and receive comments about the proposed rule. The court found that the DOL Rule’s automatic adjustments to the minimum salary threshold violates the APA because the DOL would not engage in the notice and comment process before each adjustment.

Thus, for now, the minimum salary threshold for executive, administrative, and professional employees to qualify as exempt from overtime remains $684 per week. It must be noted that, on November 26, 2024, the DOL appealed the district court’s order to the Fifth Circuit Court of Appeals. Thus, employers should continue to monitor the Texas and Plano cases as the Fifth Circuit weighs in on the issue.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

According to the Complaint in Harvey, the chef and the business partner entered into a limited partnership agreement in 2019 to open a food hall. A food hall is an establishment where several chefs sell their food in an auditorium setting. The partner would be the primary financier of the business and the chef would manage the day-to-day operations of the food hall as the director of operations. The chef also made cash contributions to the business totaling $215,000, and obtained a loan of $100,000 for the business. The chef then spent the following five years preparing to open the food hall, including organizing, preparing plans, obtaining permits, completing regulatory compliance, hiring employees, arranging for chefs to become tenants at the food hall. He was not compensated for these activities, believing that, pursuant to the partnership agreement, he would be compensated with a share of profits after the food hall opened.

However, things went south in 2024. The partner began to assert more control of the business and usurped the chef’s duties as Director of Operations. This caused disputes between the chef and the partner. The chef claims that, in June 2024, his business partner gave him an ultimatum to sign an amendment to the partnership agreement that substantially changed the terms of the agreement or be terminated. The chef signed the amendment, which reduced his role to Operations Manager, was to receive an LPA distribution share of 23.7% if he remained the Operations Manager through the remainder of 2024, which would then decline to 14.04% on January 1, 2025. He was also entitled to receive a minimum salary of $75,0000 and an allotment of profits from his equity share that exceeded $75,000.00. Yet, shortly after signed this amendment, the partner and the partnership terminated him.

The chef brought counts of breach of contract, unjust enrichment, and failure to pay wages under a Pennsylvania statute. In his count of breach of contract, the chef claims that the partnership and the partner breached the partnership agreement by terminating him without justification, when the partnership agreement only allows for him to be terminated for cause. In his claim of unjust enrichment, he claims that he worked 25 hours per month for the business for several years, but he was never paid. In his claim of failure to remit wages, he claims that he should have been classified as an employee of the business and was therefore entitled to wages which the business never paid. The partner and the partnership have yet to respond to the Complaint.

Harvey is an example of a common business dispute. Partners will enter into an agreement to start a business, but then one partner wants to exert more control and look for ways to push others out. This shows the importance of having well-drafted business agreements to protect oneself from the unscrupulous actions of business partners, and, if necessary, even engage in litigation.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The United States Supreme Court has concluded that “[w]hen an employee communicates to her employer a belief that the employer has engaged in . . . a form of employment discrimination, that communication virtually always constitutes the employee’s opposition to the activity.” Crawford v. Metro. Gov’t of Nashville & Davidson Cnty., Tenn., 555 U.S. 271 (2009). Some federal courts generally recognize “oppositional conduct” as conduct that “encompasses utilizing informal grievance procedures as well as staging informal protests and voicing one’s opinion in order to bring attention to an employer’s discriminatory activities.” Laughlin v. Metro. Wash. Airports Auth., 149 F.3d 253 (4th Cir. 1998).

Other federal courts apply the “manager exception” when determining oppositional conduct and evaluating retaliation claims under the Fair Labor Standards Act (“FLSA”). This exception requires an employee to “step outside his or her role of representing the company” to engage in protected activity. McKenzie v. Renberg’s Inc., 94 F.3d 1478 (10th Cir. 1996). Courts apply this exception because “nearly every activity in the normal course of a manager’s job would potentially be protected activity,” and “[a]n otherwise typical at-will employment relationship could quickly degrade into a litigation minefield.” Hagan v. Echostar Satellite, L.L.C., 529 F.3d 617 (5th Cir. 2008). Several district courts have imported the manager exception into Title VII’s anti-retaliation provision. DeMasters v. Carilion Clinic, 796 F.3d 409 (4th Cir. 2015).

In a recent appellate decision, however, the United States Court of Appeals for the Eleventh Circuit created new legal precedent on this issue. In Patterson v. Georgia Pacific, LLC, et al., the Eleventh Circuit Court of Appeals reasoned that, unlike the managerial exception applicable to the FLSA’s opposition clause, the text and rule concerning Title VII’s opposition clause’s protections extend to “any” employee who “has opposed any practice made an unlawful employment practice.” 2022 WL 2445693 (11th Cir. July 5, 2022). This appellate decision is significant. An implication of this case is there is no exception to protection from retaliation for a human resources manager who opposes his/her employer’s unlawful conduct.

Patterson reasoned that human resources managers fall into the category of “all employees.” The statutory definition of an “employee” does not have any carve out or exclusion of human resources managers that would remove them from the protection of the opposition clause. Thus, Patterson concluded that “[t]he anti-retaliation provision applies the same to all employees.” Patterson v. Georgia Pacific, LLC, et al., 2022 WL 2445693 (11th Cir. July 5, 2022).

Because of the Eleventh Circuit Court of Appeals’ recent holding in Patterson, employers must articulate a legitimate nondiscriminatory reason for its alleged retaliation to defeat a prima facie case of retaliation under Title VII in the Eleventh Circuit. Wolf v. Coca-Cola Co., 200 F.3d 1337 (11th Cir. 2000). Accordingly, the employer will defeat a Title VII retaliation claim if an employee cannot produce evidence showing the employer’s legitimate nondiscrimination reason was pretextual. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000).

Peter Mavrick is a Fort Lauderdale employment lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

Certain employment law claim may seek class action certification under Rule 23 of the Federal Rules of Civil Procedure. The federal Fair Labor Standards Act (FLSA) does not allow such class action claims for overtime or minimum wages, but instead has its own procedure called “collective actions.” “The certification requirements for a Rule 23 class action are more demanding” than the collective action process under the FLSA. Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016). A plaintiff seeking to certify a class must first show that the case meets the prerequisites of Rule 23(a), namely:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

As explained by the Eleventh Circuit Court of Appeals (the federal appellate court in charge of the federal courts in the State of Florida) in Piazza v. Ebsco Inds., Inc., 273 F.3d 1341 (11th Cir.2001), these four legal requirements “are designed to limit class claims to those ‘fairly encompassed’ by the named plaintiffs’ individual claims.” An employer may successfully stop the certification of a class action by showing that any one of these requisites are not met. Furthermore, a plaintiff must usually show that issues common to the class predominate over issues that are dependent on each individual class-member’s personal circumstance. See Rule 23(b)(3).

For a plaintiff to prevail over the first requirement under Rule 23(a), i.e., “numerosity,” a plaintiff is required to “show some evidence of or reasonably estimate the number of class members” beyond “[m]ere speculation, bare allegations, and unsupported conclusions.” Barlow v. Marion County Hosp. Dist., 88 F.R.D. 619 (M.D.Fla.1980). “[A] numerical yardstick is not the determinant for class certification; rather a court should examine the numbers involved to see if joinder of all is impossible or impracticable.” Hastings–Murtagh v. Texas Air Corp. 119 F.R.D. 450 (S.D.Fla.1988). In general terms, “‘less than twenty-one [prospective class members] is inadequate [while] more than forty [is] adequate.’” Kubiak v. S.W. Cowboy, Inc., 312-CV-1306-J-34JRK, 2014 WL 2625181 (M.D. Fla. June 12, 2014), citing Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546 (11th Cir.1986).

A Florida employer that can show that there are significant distinctions in the claims between each potential plaintiff may successfully persuade the trial court to deny class “certification.” See e.g. Bennett v. Hayes Robertson Group, Inc., 880 F. Supp. 2d 1270 (S.D. Fla. 2012) (denying a request for class certification for a restaurant in part because the question of whether a tip pool applied was not truly shared between each of the waiters). Furthermore, if a Florida employer can show that it has defenses that apply to some plaintiffs but not others, that may convince a trial court to deny class certification. White v. Deltona Corp., 66 F.R.D. 560, 564 (S.D. Fla. 1975). A plaintiff must show that a proposed class has sufficient “commonality” and “typicality” to justify certifying it. “Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury,” and the plaintiff’s common contention “must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Bennett v. Hayes Robertson Group, Inc., 880 F. Supp. 2d 1270 (S.D. Fla. 2012), quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). “What matters to class certification … is not the raising of common ‘questions’—even in droves—but rather, the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).

A Florida employer seeking to defeat class certification will want to show that the named plaintiffs’ claims are not truly representative of the class and therefore class certification should be denied.

A plaintiff must also show that the named members of the class have issues which are typical for the whole class. See Fed.R.Civ.P. 23(a)(3). “[T]ypicality measures whether a sufficient nexus exists between the claims of the named representatives and those of the class at large.” Cooper v. Southern Co., 390 F.3d 695 (11th Cir.2004). “A class representative must … possess […] the same injury as the class members” in order to be typical under Rule 23(a)(3). Prado–Steiman ex rel. Prado v. Bush, 221 F.3d 1266 (11th Cir.2000). “Typicality” can be proven when the claims of the named plaintiffs and those of the class “arise from the same event or pattern or practice and are based on the same legal theory.” Kornberg v. Carnival Cruise Lines, Inc., 741 F.2d 1332 (11th Cir.1984). The focus of the typicality requirement is whether the plaintiffs’ efforts to advance their own interests will simultaneously advance the interests of the other putative class members. Agan v. Katzman & Koor, P.A., 222 F.R.D. 692 (S.D.Fla.2004).

In defending against class certification, an employer will want to show likelihood of conflicts among class members and that, due to such conflicts, a class action would not be warranted. In this regard, the legal element of “adequacy” requires that a plaintiff show that there is no “substantial conflicts of interest exist between the representatives and the class” and that the representative parties “will adequately prosecute the action.” Valley Drug Co. v. Geneva Pharm., Inc., 350 F.3d 1181(11th Cir.2003). In other words, the named plaintiffs must share common interests with the class members and seek the same type of relief for themselves as they seek for the class. Pottinger v. City of Miami, 720 F. Supp. 955 (S.D. Fla. 1989). In addition, a Florida employer may prevail on the issue of adequacy by showing that plaintiff’s counsel is ill equipped to handle such litigation. E.g. Bennett v. Hayes Robertson Group, Inc., 880 F. Supp. 2d 1270 (S.D. Fla. 2012). The requirement of adequacy applies to both the named plaintiffs and to their counsel. London v. Wal–Mart Stores, Inc., 340 F.3d 1246 (11th Cir.2003).

Finally, a Florida business may prevail in contesting class certification by showing there are individual issues in the case which outweigh the issues shared by the class. A plaintiff seeking to certify class also must that the plaintiffs’ collective issues predominate over each class member’s individual concerns. “Common issues of fact and law predominate if they have a direct impact on every class member’s effort to establish liability and on every class member’s entitlement to injunctive and monetary relief.” Williams v. Mohawk Indus., Inc., 568 F.3d 1350 (11th Cir.2009). By contrast, “‘common issues will not predominate over individual questions if, ‘as a practical matter, the resolution of [an] overarching common issue breaks down into an unmanageable variety of legal and factual issues.’” Kubiak v. S.W. Cowboy, Inc., 312-CV-1306-J-34JRK, 2014 WL 2625181 (M.D. Fla. June 12, 2014). Therefore,

Peter Mavrick is Fort Lauderdale, employment lawyer who also represents the interests of businesses and their owners in Miami and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

At the initial stage of an FLSA collective action, a court will consider whether to grant “conditional certification.” Conditional certification is a legal decision that will allow a plaintiff’s lawyer to seek discovery of other possible plaintiffs, and invite potential plaintiffs to join the lawsuit. This is a very important threshold legal decision, and strategically an employer will want to work to persuade the Judge to refuse conditional certification. A court will grant conditional certification if a plaintiff demonstrates a reasonable basis to believe that: (1) there are other employees of the Defendant who desire to opt-in and (2) that these other employees are “‘similarly situated’ with respect to their job requirements and with regard to their pay provisions.” Dybach v. State of Fla. Dep’t of Corrs., 942 F.2d 1562 (11th Cir.1991); see Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016) (“To maintain an opt-in collective action under § 216(b), plaintiffs must demonstrate that they are ‘similarly situated”). The employee-plaintiff has “the burden of demonstrating a reasonable basis for crediting [his] assertions that aggrieved individuals existed in the broad class that [he] proposed.” Haynes v. Singer Co., Inc., 696 F.2d 884 (11th Cir.1983). Opt-in plaintiffs “need show only that their positions are similar, not identical, to the positions held by the putative class members.” Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001). While there is no bright line test in determining whether plaintiffs are sufficiently similar, the more legally significant differences that exist among the opt-in plaintiffs, the less likely it is that the court will determine that the group of employees is similarly situated. Anderson v. Cagle’s, 488 F.3d 945 (11th Cir. 2007).

A plaintiff must also show that there are other employees who wish to opt-in to the suit before a collective action may be certified. Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562 (11th Cir.1991). In making this showing, a plaintiff cannot rely on speculative, vague, or conclusory allegations. Alvarez v. Sun Commodities, Inc., 12-60398-CIV, 2012 WL 2344577 (S.D. Fla. June 20, 2012). An employer may prevail and avoid conditional certification by providing affidavits which are not sufficiently rebutted by the plaintiff’s affidavits. Grayson v. K Mart Corp., 79 F.3d 1086 (11th Cir.1996); Kubiak v. S.W. Cowboy, Inc., 2014 WL 2625181 (M.D. Fla. June 12, 2014) (an employer may prevail on decertifying the class by showing that only a relatively small proportion of members of a class wish to opt-in). The Mavrick Law Firm has successfully defended attempted collective actions by proving to federal and state Judges that the plaintiffs have not presented sufficient evidence that there is a true class of similarly situated plaintiffs.

If the employee prevails in showing that the plaintiffs are sufficiently similar at this stage, “notice is provided to the proposed group of employees, who must affirmatively opt-in to join the suit.” Roberson v. Rest. Delivery Developers, LLC, 320 F. Supp. 3d 1309 (M.D. Fla. 2018).

While it is strategically important for an employer to advocate against conditional certification, the employer will always have a second line of defense by “de-certifying” the class. Courts refer to consideration of whether to de-certify the class as the “second stage” of the collective action. A court order “de-certifying” the collective action will terminate the collective action. “This second stage is less lenient, and the plaintiff bears a heavier burden.” Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008). At this stage, the court considers “(1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant[s] [that] appear to be individual to each plaintiff; [and] (3) fairness and procedural considerations[.]” Id. The decertification stage is especially important to successful defense against a collective action. The attorney needs to assemble evidence and carefully identify evidentiary holes in the plaintiffs’ lawsuit that will demonstrate to the Judge that the alleged “collective action” is a pretext for joining a group of plaintiffs with disparate claims.

Peter Mavrick is a Fort Lauderdale employment lawyer and a Miami employment lawyer who represents the interests of businesses and their owners. This article does not serve as a substitute for legal advice tailored to a particular situation.

As discussed in further detail herein, many federal courts have rejected United States Department of Labor regulations interpreting this exemption. The regulations often do not make sense either because they are contradictory or are outdated in light of the modern economy. Many of the regulations were issued before globalization and the transition of the American economy from a manufacturing to a service economy.

Consequently, federal courts have recognized that Department of Labor regulations applying the commission-sales exemption are arbitrary and not deserving deference. Some of the regulations are either contradictory or make no sense. For example, one regulation (29 C.F.R. § 779.319) states that a refrigerator repair shop has a retail concept even if orders are taken over the telephone and work is done in the home, but another regulation (21 C.F.R. 779.317) somehow states that air conditioning contractors do not have a retail concept. These two businesses perform the exact same job, on essentially the same equipment, for the exact same customers and are distinguishable only by the scale and degree of cooling that are provided by the machines being repaired. There is no apparent reason for distinguishing these two businesses. Successful defense of a business when the regulations lack apparent rational basis can lead federal courts to rule in favor of the business despite clear violation of the Department of Labor’s regulation.

For example, the federal appellate court in Reich v. Delcorp, Inc., 3 F.3d 1181 (8th Cir. 1993), ruled in favor of the employer business even though the employer clearly violated the Department of Labor’s regulation (29 C.F.R. 779.317) stating that laundries cannot exempt commission-sales employees from overtime because laundries do not have a “retail concept.” However, the federal appellate court in Reich held that the Department of Labor’s regulation is not worth following, and the commission-sales employee lost the overtime wage case. Federal courts in other cases, including Martin v. Refrigeration Sch., Inc., 968 F.2d 3, 7 (9th Cir. 1992) and Viciedo v. New Horizons Computer Learning Ctr. of Columbus, Ltd., 246 F. Supp. 2d 886, 893 (S.D. Ohio 2003), have ruled in favor of businesses and rejected the Department of Labor’s regulations in the context of commission sales of educational services. Similarly, the federal court in Buttita v. DIRECTV LLC, 3:14CV566/MCR/EMT, 2017 WL 10456972 (N.D. Fla. Sept. 28, 2017), rejected the Department of Labor’s regulation and ruled in favor of the business, i.e., a cable and satellite installation company because the employee was exempt from overtime wages.

In Alvarado v. Corp. Cleaning Services, Inc., 782 F.3d 365 (7th Cir. 2015), the federal appellate court rejected the Department of Labor’s regulation and ruled in favor of the employer in the context of window washers for high-rise buildings qualified as a retail or service establishment. Alvarado mocked the Department of Labor’s regulation requiring “retail concept” for a business to qualify for the overtime wage exemption. The appellate court explained that “[t]he plaintiffs argue that the sale of window-washing services to managers of tall buildings ‘lacks a retail concept,’ whatever that might mean.” Alvarado stated that the regulations contain “no explanation for the choice of which firms to describe as lacking a retail concept. Most of them sell goods and services to the actual user of the service or product, rather than wholesaling them to a retailer who will resell them to the actual user.”

Effective defense of employers requires examination of whether the applicable regulation makes sense, especially in the context of many courts rejecting the Department of Labor’s regulations.

Peter Mavrick is a Fort Lauderdale employment attorney who represents the interests of businesses and their owners. This article does not serve as a substitute for legal advice tailored to a particular situation.

The FLSA (at 18 U.S.C. § 207(i)) explains the commission-based employee exemption:

No employer shall be deemed to have violated [overtime law] by employing any employee of a retail or service establishment for a workweek in excess of the applicable workweek specified therein, if (1) the regular rate of pay of such employee is in excess of one and one-half times the minimum hourly rate applicable to him under [federal minimum wage law], and (2) more than half his compensation for a representative period (not less than one month) represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.

Thus, the FLSA exemption for commission-based employees requires that the employee’s hourly rate after commissions must be at least $10.88 per hour (i.e., 1.5 times the current federal law minimum wage of $7.25/hour), and more than half of the employee’s total compensation must be from commissions. In many cases, however, application of this commissioned-based employee exemption depends on whether the employer qualifies as a “retail or service establishment.”

As explained by one South Florida federal court Judge, in Ebersole v. Am. Bancard, LLC, 08-80703-CIV-MARRA, 2009 WL 2524618 (S.D. Fla. Aug. 17, 2009), “[n]o statutory definition of ‘retail or service establishment’ currently exists.” Historically, federal law defined the meaning of this term at 18 U.S.C. § 213, which exempted “any employee employed by any retail or service establishment, more than 50 per centum of which establishment’s annual dollar volume of sales of goods or services is made within the State in which the establishment is located.” However, in 1990 Congress amended the FLSA to eliminate the § 213 exemption for particular categories of small businesses, and replaced it with an exemption for employers making less than $500,000 in yearly revenue. Along with this amendment, Congress deleted the definition of “retail or service establishment.”

To clarify, the United States Department of Labor issued regulations defining this statutory term to include “mom and pop” type small businesses that a typical consumer might have expected to encounter in daily life in the mid-twentieth century United States. These regulations (set forth in part at 29 CFR § 779.316) required that a qualifying business to have a “retail concept” to qualify as a retail or service establishment. The Department of Labor justified the retail concept interpretation by relying on United States Supreme Court precedent in the Mitchell v. Kentucky Fin. Co., 359 U.S. 290 (1959). Mitchell held held that certain types of businesses are inherently not retail due to their industry. The Department of Labor also relied on another Supreme Court decision, Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190 (1966), where the Supreme Court explained that “it is generally helpful to ask first whether the sale of a particular type of goods or services can ever qualify as retail whatever the terms of sale; if and only if the answer is affirmative is it then necessary to determine the terms or circumstances that make a sale of those goods or services a retail sale.” The Department of Labor, however, never clearly defined what it means to be a “retail concept.” The applicable Department of Labor regulation, 29 C.F.R. § 779.318, states in pertinent part:

(a) Typically a retail or service establishment is one which sells goods or services to the general public. It serves the everyday needs of the community in which it is located. The retail or service establishment performs a function in the business organization of the Nation which is at the very end of the stream of distribution, disposing in small quantities of the products and skills of such organization and does not take part in the manufacturing process. […] Such an establishment sells to the general public its food and drink. It sells to such public its clothing and its furniture, its automobiles, its radios and refrigerators, its coal and its lumber, and other goods, and performs incidental services on such goods when necessary. It provides the general public its repair services and other services for the comfort and convenience of such public in the course of its daily living.

In a related regulation (29 C.F.R. § 779.319), the Department of Labor stated that a business “will not be considered a retail or service establishment within the meaning of the Act, if it is not ordinarily available to the general consuming public.” The Department further attempted to clarify the definition by listing businesses that have a retail concept, 29 C.F.R. § 779.320, and listing those that do not, 29 C.F.R. § 779.317. These lists purportedly illustrate which businesses serve the “everyday needs of the community.” These descriptions mainly are from the viewpoint of mid-twentieth century United States, instead of the rapid economic changes in the late twentieth century through the present. In the modern economy that includes e-commerce and hybrid e-commerce/”brick and mortar” businesses, the Department of Labor regulations are ambiguous. Although the regulations have not kept pace in bringing clarity in view of the substantial economic changes for businesses and consumers, employers can successfully assert the commission-based exemption based on the evolution of how consumers view “retail” and “services” businesses in the twenty-first century. This should include businesses that are not traditional “brick and mortar” businesses and instead are web-based businesses. In the second part of this article, the Mavrick Law Firm discusses application of the commission-based employee overtime wage exemption to web-based and other “non-traditional” businesses.

Peter Mavrick is a Fort Lauderdale employment lawyer who defends and represents businesses and business owners accused of violating Florida and federal employment and labor laws. This article does not serve as a substitute for legal advice tailored to a particular situation.

The Eleventh Circuit Court of Appeals (“Eleventh Circuit”), i.e., the appellate court governing federal labor and employment lawsuits in the State of Florida, recently ruled in favor of an employer who properly classified a worker as an independent contractor instead of as an employee. The Eleventh Circuit held that the employer owed the worker no overtime wages because he was an independent contractor. In J. L. Nieman v. National Claims Adjusters, Inc., et al., Case No.: 3:17-cv-01430-HES-JRK (11th Cir. 2019), insurance adjustor J. L. Nieman (“Nieman”) sued National Claims Adjusters, Inc.’s (“National”) and David Ierulli’s (collectively “NCAI”) for failure to pay wages and for retaliatory discharge under the FLSA.

Neiman did not state many facts in his complaint that would support his claim for employee status. The allegations in his complaint suggested that nothing prevented Neiman from working for other insurance companies, and he did in fact do so during his relationship with NCAI. Neiman’s allegations did not allege that NCAI controlled the number of hours he worked, supervised him, or paid for his professional licensing. Also, Neiman alleged that his belief that his temporary role with NCAI might have “potentially” become a permanent one did not suggest economic dependence. The district court granted NCAI’s motion to dismiss and found such factors to be indicative of the lack of an employment relationship. Nieman’s appeal followed.

On appeal, Nieman argued that the district court erred in dismissing his FLSA claims because he was NCAI’s employee, rather than an independent contractor. The Eleventh Circuit disagreed. Courts consider several factors to determine the economic reality of the relationship between the alleged employee and employer, namely “(1) the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of workers; (4) whether the service rendered requires a special skill; (5) the degree of permanency and duration of the working relationship; [and] (6) the extent to which the service rendered is an integral part of the alleged employer’s business.” Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013).

The Eleventh Circuit reasoned that each of these factors are important, however the overarching focus of the inquiry is economic dependence. In other words, the question is ultimately, “whether the individual is ‘in business for himself’ or is ‘dependent upon finding employment in the business of others.’” J. L. Nieman v. National Claims Adjusters, Inc. supra. Applying the six factors of the economic reality inquiry, the Eleventh Circuit found that the first, third, fourth and fifth factors favored independent contract status and the remaining factors did not weigh in favor of either status. The first factor indicated independent contractor status because Neiman controlled his schedule, set up his own appointments and inspection, controlled the geographic location within which he took assignments. While National controlled the software Neiman used for his reports, Neiman ultimately controlled the methods by which he completed his reports and how he performed each job. Neiman controlled how and when he completed his assignments and whether he would take on more or less of them, showing that he was essentially “in business for himself.” The third factor also indicated independent contractor status because Neiman invested in his own equipment and materials for work. Neiman worked from his home and used his own laptop and iPad for field work and was equipped with a vehicle, ladder, measuring tools, digital voice and photographic equipment, and “other similar tools of the trade.” The fourth factor also indicated independent contractor status because Neiman’s job required a professional license. The fifth factor also indicated independent contractor status because Nieman alleged that National hired him for “special projects” including claims arising from Hurricane Irma, but there was no indication of any permanency of his position.

The Eleventh Circuit found significant the fact that Nieman completed work for another company after he responded to National’s initial advertisement and looked for and interviewed for other jobs to perform while he was still engaged with National. This demonstrated that Neiman was not economically dependent on National. The Eleventh Circuit concluded that upon review of all the factors viewed in the light most favorable to Nieman, four of the six factors weighed strongly in favor of independent contractor status. The district court’s dismissal of Neiman’s claims was affirmed.

Peter Mavrick defends businesses and their owners in employment lawsuits in Broward, Miami-Dade, and Palm Beach Counties, Florida. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

A relatively recent decision from the United States Court of Appeals for the Eighth Circuit in Williams v. Central Transport International, Inc., 830 F.3d 773 (8th Cir. 2016), rejected the DOL’s reference to “exercising judgment and discretion” set forth in 29 C.F.R. § 782.5(a) as “not the governing standard.” Citing the Supreme Court’s decision in Levinson v. Spector Motor Serv., 330 U.S. 649, 67 S.Ct. 931 (1947), the Eighth Circuit in Williams stated that “the DOL has no authority to define what employees are subject to the Secretary of Transportation’s jurisdiction and therefore fall within the MCA Exemption … Accordingly, we give no weight or deference to the DOL’s regulation purporting to define who is an exempt loader.” Williams further explained that:

“the DOL regulation, 29 C.F.R. 782.5(a), is contrary to the Supreme Court’s governing standard. The ICC asserted jurisdiction over loaders because ‘a motor vehicle must be properly loaded to be safely operated on the highways’ … ‘What the [ICC] intended to cover was the physical act of loading freight in a safe manner.’ … ‘[L]oaders, even if closely supervised, remain within I.C.C. jurisdiction.’ … Thus, Pyramid’s de minimus exception ‘is not based upon whether the worker was supervised in activities that have an undeniable, direct effect on safety,’ such as loading a trailer bound for interstate travel. … [¶] Based on the Supreme Court’s controlling precedents, we conclude that, if an employee spends a substantial part of his time (as defined in Levinson, Pyramid, and Morris) participating in or directing the actual loading of a motor vehicle’s common carrier’s trailers operating in interstate or foreign commerce, the Secretary of Transportation has the authority to regulate that employee’s hours of service and the MCA Exemption applies, regardless of the employee’s precise role in the loading process.”

A more recent decision by the United States District Court for the Southern District of Florida in Mendoza v. Quirch Foods Co., 2017 Wage & Hour Cas.2d (BNA) 348 (September 30, 2017), agreed with the analysis in Williams. Mendoza stated in pertinent part that the court “finds the decision in Williams v. Central Transport International, Inc. … to be persuasive.”

Several other federal appellate and district courts also have rejected the DOL’s authority to issue a regulation purporting to define when a loader is exempt from overtime wages because of the Motor Carrier Act Exemption. Packard v. Pittsburgh Transportation Co., 418 F.3d 246 (3d Cir. 2005); Troutt v. Stavola Bros., 107 F.3d 1104 (4th Cir. 1997); Benson v. Universal Ambulance Serv., Inc., 675 F.2d 783 (6th Cir. 1982); Khan v. IBI Armored Servs., Inc., 474 F.Supp.2d 448 (E.D.N.Y. 2007).

It appears that the of legal authorities is that the Department of Labor overstepped its authority in issuing its regulations defining when loaders are exempt from overtime and minimum wages under the Motor Carrier Act.

Peter Mavrick has successfully defended many businesses against employment lawsuits in Miami-Dade County, Broward County, Palm Beach County, Collier County, and Lee County, Florida. This article does not serve as a substitute for legal advice tailored to a particular situation.

To understand the Motor Carrier Act exemption to the FLSA, it is important to understand its enactment vis-à-vis the FLSA. Enacted in 1935, the Motor Carrier Act authorized the Interstate Commerce Commission (ICC) to set the “qualifications and maximum hours of service” for employees of motor vehicle common carriers. See 49 U.S.C. § 304(a), which was later repealed. Congress transferred the ICC’s functions to the Secretary of Transportation with some revision of the statute, and this jurisdiction remains. See 49 U.S.C. § 31502(b). In 1938, Congress enacted the FLSA, which empowered the Secretary of Labor to regulate, inter alia, the maximum hours of covered employees. See 29 U.S.C. § 207(a)(1). Congress included the Motor Carrier Act Exemption to the FLSA to avoid potentially overlapping jurisdictions. In the following years, the United States Supreme Court issued a series of decisions interpreting the Motor Carrier Act Exemption.

In United States v. American Trucking Ass’ns, 310 U.S. 534, 60 S.Ct. 1059 (1940), the Supreme Court rejected the contention of interstate truckers that all their employees are exempt, concluding that the ICC’s jurisdiction to regulate maximum hours “is limited to those employees whose activities affect the safety of [motor vehicle] operation.” In Southland Gasoline Co. v. Bailey, 318 U.S. 44, 63 S.Ct. 917 (1943), the Supreme Court held that the Motor Carrier Act Exemption applies whenever the Secretary of Transportation has the authority to regulate the maximum hours of motor carrier employees, regardless of whether that authority has been exercised. It is therefore irrelevant that the Secretary of Transportation has never set maximum hours for motor carrier employees.

In Levinson v. Spector Motor Serv., 330 U.S. 649, 67 S.Ct. 931 (1947), the Supreme Court explained that before and after enactment of the FLSA, the ICC issued numerous reports and regulations dealing “so thoroughly and expertly with the safety of operation of interstate motor transportation as to entitle them to especially significant weight in the interpretation of [the Motor Carrier Act].” Following the Supreme Court’s decision in American Trucking, the ICC after extensive hearings ruled that motor carrier drivers, mechanics, loaders, and drivers helpers “perform duties which affect the authority conferred [by the Motor Carrier Act] to prescribe qualifications and maximum hours of service.” MC-2, 28 M.C.C. 125, 126 (1941).

In Levinson, the Supreme Court upheld the ICC’s conclusion that loaders affect safety of operation of motor vehicles on the public roadways:

The evidence makes it entirely clear that a motor vehicle must be properly loaded to be safely operated on the highways of the country. If more weight is placed on one side of the vehicle than on the other, there is a tendency to tip when rounding curves. If more weight is placed in the rear of the vehicle, the tendency is to raise the front wheels and make safe operation difficult. Further, it is necessary that the load be distributed properly over the axles of the motor vehicle.

The Levinson case clarified that the Motor Carrier Act Exemption applies even if a loader does not spend all or even most of his time on safety-affecting activities. To fall within the ICC’s (now the Secretary of Transportation’s) jurisdiction, it is enough that an employee devote “a substantial part of his [work] time to activities directly affecting the safety of operation.” In so ruling, the Supreme Court rejected the contrary position of the United States Department of Labor (DOL), appearing as amicus curiae (i.e., “friend of the court”):

It is important to recognize that, by virtue of the unique provisions of [the Motor Carrier Act Exemption], we are not dealing with an exemption to [the FLSA] which is to be measured by regulations which Congress has authorized to be made by the Administrator of the Wage and Hour Division, United States Department of Labor. Instead, we are dealing here with the interpretation of the scope of the safety program of the [ICC], under § 204 of the Motor Carrier Act, which in turn is to be interpreted in the light of the regulations made by the [ICC] pursuant to the [Motor Carrier] Act.

In a companion case to Levinson, the Supreme Court in Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695, 67 S.Ct. 954 (1947), held that whether a particular employee falls within an exempt class, such as loader, “is to be determined by judicial process.” The Supreme Court further explained that:

In contrast to the loading activities in the Levinson case, the mere handling of freight at a terminal, before or after loading, or even the placing of certain articles of freight on a motor carrier truck may form so trivial, casual or occasional a part of the employee’s activities … that his activities will not come within the kind of “loading” which is described by the [ICC] and which, in its opinion, affects safety of operations.

The final Supreme Court decision relevant to construing the Motor Carrier Act Exemption is Morris v. McComb, 332 U.S. 422, 68 S.Ct. 131 (1947), where the Supreme Court held that the ICC had jurisdiction to regulate the maximum hours of all randomly assigned drivers and mechanics of a motor carrier whose operations were only 3-4% in interstate commerce, and therefore the Motor Carrier Act Exemption applied to those employees. As in Levinson, the Supreme Court rejected the DOL’s contrary contention.

Thereafter, the DOL issued regulations interpreting the Motor Carrier Act Exemption set forth at 29 C.F.R. § 782.5. The regulations (at § 782.5(a)) define “loader” under the Motor Carrier Act to mean “an employee of a carrier [under the Motor Carrier Act] … whose duties include … the proper loading of his employer’s motor vehicles so that they may be safely operated on the highways of the country.” The regulations explain that a loader’s work “directly affects ‘safety of operation’ [of a motor vehicle] so long as he has responsibility when such motor vehicles are being loaded, for exercising judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate commerce will not be jeopardized.”

Most recently, the United States Court of Appeals for the Eighth Circuit in Williams v. Central Transport International, Inc., 830 F.3d 773 (8th Cir. 2016), rejected the DOL’s reference to “exercising judgment and discretion” set forth in 29 C.F.R. § 782.5(a) as “not the governing standard.” Citing the Supreme Court’s decision in Levinson, the Eighth Circuit in Williams explained that the DOL has no authority to define what employees are subject to the Secretary of Transportation’s jurisdiction and therefore fall within the MCA Exemption … Accordingly, we give no weight or deference to the DOL’s regulation purporting to define who is an exempt loader.” Williams explained that:

the DOL regulation, 29 C.F.R. 782.5(a), is contrary to the Supreme Court’s governing standard. The ICC asserted jurisdiction over loaders because “a motor vehicle must be properly loaded to be safely operated on the highways” … “What the [ICC] intended to cover was the physical act of loading freight in a safe manner.” … “[L]oaders, even if closely supervised, remain within I.C.C. jurisdiction.” … Thus, Pyramid’s de minimus exception “is not based upon whether the worker was supervised in activities that have an undeniable, direct effect on safety,” such as loading a trailer bound for interstate travel. … [¶] Based on the Supreme Court’s controlling precedents, we conclude that, if an employee spends a substantial part of his time (as defined in Levinson, Pyramid, and Morris) participating in or directing the actual loading of a motor vehicle’s common carrier’s trailers operating in interstate or foreign commerce, the Secretary of Transportation has the authority to regulate that employee’s hours of service and the MCA Exemption applies, regardless of the employee’s precise role in the loading process.

A recent decision by the United States District Court for the Southern District of Florida in Mendoza v. Quirsch Foods Co., 2017 Wage & Hour Cas.2d (BNA) 348 (September 30, 2017), agreed with the analysis in Williams, stating in pertinent part that the court “finds the decision in Williams v. Central Transport International, Inc. … to be persuasive.”

Several other federal appellate and district courts also have rejected the DOL’s authority to issue a regulation purporting to define who is an exempt loader under the Motor Carrier Act Exemption. Packard v. Pittsburgh Transportation Co., 418 F.3d 246 (3d Cir. 2005); Troutt v. Stavola Bros., 107 F.3d 1104 (4th Cir. 1997); Benson v. Universal Ambulance Serv., Inc., 675 F.2d 783 (6th Cir. 1982); Khan v. IBI Armored Servs., Inc., 474 F.Supp.2d 448 (E.D.N.Y. 2007).

Peter Mavrick has represented many South Florida businesses in their successful defense against employment law claims, including claims brought in Fort Lauderdale, Miami, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

One of these exemptions is the “professional exemption,” which was analyzed by the United States Court of Appeals for the Eleventh Circuit in Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562, 1564 (11th Cir. 1991). In Dybach, the employee was an adult probation officer employed by the Department of Corrections of the State of Florida, who alleged that her employer violated the FLSA by not paying overtime wages. She filed a lawsuit seeking unpaid overtime wages and liquidated damages. The employer fought the lawsuit and contended it owed nothing because the employee was an exempt professional.

The DOL has recognized four distinct types of exempt professional employees: (1) “learned” professionals; (2) “artistic” or “creative” professionals; (3) “teachers”; and (4) employees engaged in the practice of law or medicine. See 29 C.F.R. § 541.301-304. It is important to note, however, that this list is not exhaustive as the DOL is constantly continuing its efforts to recognize other types of “professional employees,” such as the computer professionals exemption. For the employee to be employed in a bona fide professional capacity under the FLSA, the employee’s primary duty must be work requiring advanced knowledge in a specialized field acquired by prolonged study. This primary duty must meet three requirements pursuant to 29 C.F.R. § 541.301(a)(1)—(3): (1) the employee must perform work requiring advanced knowledge; (2) the advanced knowledge must be in a field of science or learning; and (3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

The first criterion pertaining to the employee performing work which requires “advanced knowledge” is often assessed by examining whether the employee exercises intellectual discretion and judgment as opposed to work involving routine mental, manual, mechanical, or physical work. Id. § 541.301(b). The work requiring “advanced knowledge” is much more intellectual in character. In Dybach, although the employee was a probation officer and obtained her Bachelor of Arts degree in the specialized field of criminal justice, the U.S. Court of Appeals for the Eleventh Circuit ruled that the job position itself did not require a specialized college degree, but rather a generalized degree which need not correlate to the field of law enforcement or similar specialty. Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562 (11th Cir. 1991).

Ultimately, the Court of Appeals for the Eleventh Circuit reversed the trial court which had concluded that the employee was an exempt professional. The appellate court held that the job description of the position could have been satisfied by a degree in “nuclear physics, or be in corrections, or be in physical education, or basket weaving.” Thus, the determinative factor is the job requirement itself and not the educational level of the employee. The appellate court concluded that since the job did not require advanced knowledge or an advanced degree, the employee was not exempt.

The existence of an FLSA overtime wage exemption is a mixed question of fact and law. The Mavrick Law Firm has substantial experience in successfully defending businesses in overtime wage and other labor and employment law cases.

Peter Mavrick is a Fort Lauderdale labor and employment lawyer who has successfully represented many clients in Florida overtime wage litigation in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

The two-tier approach is a method of determining whether collective actions should proceed under Section 216(b). The first phase uses a very lenient standard to determine whether the named plaintiffs are similarly situated to the putative opt-in plaintiffs and whether there are similarly situated individuals who want to join the litigation. Most plaintiffs clear the low bar of the first phase, just to, in most cases, have their classes de-certified in second phase when the court makes a factual determination on the “similarly situated” issue. See Hipp 252 F.3d at 1218 (“Based on our review of the case law, no representative class has ever survived the second stage of review”).

The conflation of Rule 23 class action standards with the application of 216(b) to collective actions can traced to the 1976 enactment of the Age Discrimination Enforcement Act (“ADEA”). The ADEA authorized similarly situated plaintiffs to aggregate their claims by incorporating 216(b) as its enforcement mechanism. As a result of the proliferation of ADEA lawsuits, the leading cases that address collective action proceedings under section 216(b) are ADEA actions, rather than actions brought under the FLSA. Moreover, because ADEA 216(b) cases often import Title VII discrimination standards that are subject Rule 23 class certification. Thus, what should be a relatively straightforward analysis of wage and overtime claims under the FLSA, is now a confounding analysis that assesses wage and overtime claims with the Rule 23 like two-tiered method, which was designed to address patterns and practices of discrimination. See Turner 123 F. Supp. 3d at 1305–06 (finding that reliance on Rule 23 “class certification” concepts in true 216(b) FLSA cases to be the result of a confluence of factors, including haphazard terminology, a misunderstanding of precedent and legislative intent, and excessive path dependence in the application of stare decisis.) “Rule 23 actions are fundamentally different from collective actions under the FLSA,” Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1530 (2013), as such, courts should not default to the use of the two-tier method when determining if a class should be conditionally certified.

The use of the formulaic two-tier system to authorize court facilitated notice or conditional certification of a “class” under 216(b) wastes resources. Congress authorized collective treatment of actions under 216(b) for the purposes of judicial economy. See Holt v. Rite Aid Corp., 333 F. Supp. 2d 1265, 1269 (M.D. Ala. 2004) (““the judicial system benefits by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged discriminatory [or illegal] activity.”) However, the pervasiveness of the two tiered method has made the “[s]eeking out and notifying sleeping potential plaintiffs”- an activity that “was once demeaned as a drain on judicial resources” – into a misguided “tool of judicial administration.” See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (SCALIA, J., dissenting). As many courts grant conditional certification without “cognizan[ce] of the factual and legal issues presented by the case,” West v. Verizon Communications, Inc., WL 2957963, at *4 (M.D. Fla. Sept. 10, 2009), the goal of judicial economy is vitiated by the futile litigation regarding class certification. “To create a collective action class, including the cost associated with that when a Court is convinced that there is insufficient support for the same prior to certification would be an exercise in futility and wasted resources for all parties involved.” Hart v. JPMorgan Chase Bank, N.A., WL 6196035, at *6 (M.D. Fla. Dec. 12, 2012). Thus, courts should use their discretion to practically assess the appropriateness of conditional certification. See id. at *4 (“[d]istrict [c]ourts enjoy broad discretion in deciding how best to manage the cases before them”). For a discussion regarding how employers can successfully defend against Section 216(b) collective actions, please our article addressing this topic and the defense of “individualized” claims.

Peter T. Mavrick has successfully represented many businesses in labor and employment law litigation. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website:www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

To determine whether 216(b) collective actions are appropriate, most courts utilize the two-tier method. See Hipp. at 1208. At the first “notice stage,” the district court makes a decision—usually based only on the pleadings and any affidavits which have been submitted— as to whether the putative class should be conditionally certified. See id. When assessing the pleadings and affidavits, courts in the Southern District of Florida satisfy themselves that “(1) there are similarly situated with regard to their job requirements and pay provisions; and (2) there is a desire among similarly situated individuals to opt-in to the class.” See Martinez at 1853. Put another way, there is a two-part analysis to assessing the first tier, which determines whether conditional certification will be granted.

A defendant that successfully highlights the differences in pay and job requirements between the putative plaintiffs will probably defeat a Motion for Conditional Certification. Defendants should contrast on the job requirements and pay provisions of the named plaintiff with those that the named plaintiff seeks to represent. Thus, defendants should bring attention to inconsistencies in the pleadings and affidavits or declarations to establish that plaintiff differences in pay provisions and job requirements: defendants should highlight differences such as exempt status, job duties, and schedules, among other things. See Palacios v. Boehringer Ingelheim Pharm., Inc., WL 6794438, at *1 (S.D. Fla. Apr. 19, 2011) (denying first stage “notice” authorization because an individualized analysis was required to determine whether putative class members are exempt from the FLSA overtime provisions); Holt v. Rite Aid Corp., 333 F. Supp. 2d 1265, 1272 (M.D. Ala. 2004) (denying conditional certification because “similarly situated” inquiry must be analyzed in terms of the nature of the job duties performed by each putative plaintiff); Udo v. Lincare, Inc., WL 5354589, at *11 (M.D. Fla. Sept. 17, 2014) (denying notice authorization partly due to the variance in schedules among the potential opt-in plaintiffs.)

Moreover, even if named plaintiffs prove that they are similarly situated in pay provisions and job requirements, a Motion for Conditional Certification can still be defeated if the defendant can prove that there are no similarly situated individuals who wish to join the litigation. Statements or claims that reference that plaintiffs have “spoken to multiple other employees… who advised that, if given formal notice in this case, they would opt-in….” are insufficient as they are hearsay. See Davis v. Charoen Pokphand (USA), Inc., 303 F.Supp.2d 1272, 1277 (M.D.Ala.2004) (holding that plaintiff failed to demonstrate other plaintiffs exist who want to opt-in when only evidence was that plaintiff spoke to employees who stated that they would join the suit.) Further, unsupported assertions that are based on “beliefs” “anticipation” and “conversations” are considered to be conclusory and fall short of the “substantial” and “detailed” allegations necessary to satisfy the “similarly situated” element. See Louis–Charles v. Sun–Sentinel Co., 2008 WL 708778 (S.D.Fla. Mar.14, 2008) (holding that plaintiff’s “anticipation” is merely his own opinion and, therefore, insufficient to certify the class); see also Hipp at 1219.

Peter T. Mavrick has successfully represented many businesses in labor and employment law litigation. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website:www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

Some federal courts have held that a successor corporation could, as a matter of federal law, acquire the FLSA liabilities of its predecessor despite state law to the contrary. Under federal law, courts consider the following factors, or slight variants thereof, to determine whether a successor corporation acquired its predecessor’s FLSA liabilities: (1) whether the successor corporation had notice of the predecessor’s liabilities; (2) whether there is continuity in operations and work force of the successor and processor; and (3) whether the predecessor has the ability to directly provide adequate relief.

In March 2013, the Seventh Circuit applied those factors, among others, in Teed v. Thomas & Betts Power Solutions, L.L.C., 711 F.3d 763 (7th Cir. 2013), and found the successor corporation liable for its predecessor’s FLSA violations. The successor corporation in Teed purchased the assets of its predecessor through an auction. The asset transfer agreement contained a specific condition that the transfer be “free and clear of all Liabilities” including any liabilities stemming from the predecessor’s pending FLSA litigation. The federal appellate court noted that if “state law governed the issue of successor liability, [the successor corporation] would be off the hook.” Teed, 711 F.3d at 765. However, the court held that federal law, not state law, governed. Consequently the court found that the successor corporation acquired its predecessor’s FLSA liabilities despite the exclusion in the the asset transfer agreement. The court in Teed found that “[i]n the absence of successor liability, a violator of the [FLSA] could escape liability … by selling its assets without an assumption of liabilities by the buyer … and then dissolving.” Teed, 711 F.3d at 766.

On April 3, 2014, the Third Circuit also applied those factors to find that the successor corporation could have acquired its predecessor’s FLSA liabilities. Thompson v. Real Estate Mortg. Network, 2014 U.S. App. LEXIS 6150 (3d Cir. Apr. 3, 2014). The court based its decision on the fact that the successor corporation might have “had knowledge of [the predecessor]’s allegedly improper overtime practices prior to the transfer”; that “all facets of the [predecessor’s] business … including operations, staffing, office space, email addresses, employment conditions, and work in progress, remained the same”; and that the predecessor was defunct, which meant that “it is likely incapable of satisfying any award of damages.” Thompson, 2014 U.S. App. LEXIS 6150, at *22-24.

As the above cases demonstrate, a corporation’s liability under the FLSA should be a factor to consider when determining the purchase price in any asset purchase agreement. Judging from the Seventh Circuit’s decision in Teed, even if the asset purchase agreement expressly states that the successor corporation does not assume any liabilities, and even if state law imposes a contrary rule, federal law could impose such liabilities on the successor corporation. Although neither the Sixth Circuit nor the Third Circuit incorporates Florida, some federal courts in Florida have found that if the Eleventh Circuit—i.e., the circuit court of appeals incorporating Florida—were “faced with the issue, the Eleventh Circuit Court of Appeals would find that successor liability exists under the FLSA.” Cuervo v. Airport Servs., 2013 U.S. Dist. LEXIS 163239, at *5-6 (S.D. Fla. Nov. 15, 2013).

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

A “protected activity” can be either formal or informal. For example, if the employee formally files a complaint against the employer in court alleging unpaid wages, the employer cannot thereafter fire the employee for filing that complaint. However, “informal” complaints could also lead to an FLSA retaliation claim. For example, the employee may orally complain to the employer about unpaid overtime wages. If the employer thereafter fires or takes other adverse action against the employee, the employer could be held liable for unlawfully retaliating against the employee. The bottom line is: if the employee makes some form of complaint (either written or oral) that puts the employer on notice that the employee is asserting his or her rights under the FLSA, then the employee’s complaint will likely be considered “protected activity.” The employee does not need to mention the FLSA by name. However, the employee’s complaint also cannot be a general grievance; it must be sufficient in both content and context to put the employer on notice that the employee was asserting his or her rights under the FLSA. A federal court in Florida recently found that the employees’ complaints that they were “improperly paid” were too vague to constitute “protected activity.” Barquin v. Monty’s Sunset, L.L.C., 2013 U.S. Dist. LEXIS 144076, at *8-9 (S.D. Fla. Oct. 2, 2013).

An “adverse action” is any action taken by the employer that causes some injury or harm to the employee. The most straight-forward example of “adverse action” is an employer terminating or firing the employee. However, demotions or pay cuts could also constitute “adverse action.” Other employment actions, such as job transfers or reassignments, will generally not be considered “adverse actions” on their own, but could rise to the level of “adverse action” under certain circumstances. In general, if the employer’s actions would dissuade a “reasonable worker” from making or supporting a charge against the employer, then the employer’s actions would likely be considered “adverse.”

Finally, the employee must establish “a causal connection” between the protected activity and the adverse action. Unless the employer explicitly states, “I am firing you because you filed an FLSA complaint,” it is unlikely that the employee can show direct evidence of the existence of a “causal connection.” However, the employee could show a “causal connection” through circumstantial evidence. For example, if the employer took adverse action against the employee within days after the employee engaged in protected activity, the close temporal proximity could serve as circumstantial evidence of a “causal connection” between the protected activity and the adverse action.

Employers should keep in mind that the FLSA retaliation provision also covers employees who are exempt from the FLSA’s minimum wage and overtime wage provisions. In other words, even when the employer is not required to pay the employee minimum or overtime wages, the employer might still be held liable for retaliating against the employee if the employer took adverse action against the employee based on the employee’s mistaken but reasonable complaint that the employer was violating the FLSA’s minimum or overtime wage provisions.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

Courts look to the “economic realities” of the relationship between the company and the individual the company hired to determine whether the individual is an “employee” or an “independent contractor.” To determine whether the individual is an employee as a matter of economic reality, courts consider the following 6 factors: (1) the degree of control exercised by the company on the individual; (2) the individual’s opportunity for profit and loss based on managerial skills; (3) the individual’s investment in equipment or personnel; (4) the skill required to perform the work; (5) the duration of the relationship between the company and the individual; and (6) whether the services performed by the individual are integral to the company’s business.

As the 6 factors suggest, the determination of whether an individual is an “independent contractor” or “employee” depends on the specific facts of each case. Adding more complexity to the analysis, courts do not mechanically apply the six factors. The weight that courts attribute to each factor ultimately depends on the court’s analysis and on the facts of each case. A good example of the distinction between “employee” and “independent contractor” is detailed in recent cases regarding adult entertainers. For example, in Stevenson v. Great Am. Dream, Inc., 2013 U.S. Dist. LEXIS 181551 (N.D. Ga. Dec. 31, 2013), a class of adult entertainers sued the nightclub that hired them (the “Nightclub”) for minimum and overtime wages. The court analyzed the facts in the case in relation to the six factors detailed above and found that the entertainers were “employees” because 5 of the 6 factors of the economic reality test suggested “employee” status.

As to the first factor (i.e., degree of control) the court found that while the entertainers were allowed to set their own schedules, the Nightclub possessed substantial control over them. The Nightclub made and enforced rules regarding the entertainers’ dress and makeup, the entertainers’ conduct with customers, the music that the entertainers would perform to, and the procedure for settling disputes arising with the Nightclub.

As to the entertainers’ opportunity for profit and loss, the Court found that the Nightclub bore the vast majority of the overhead costs in comparison to the entertainers. While the entertainers paid a daily fee to the Nightclub, the Nightclub was responsible for attracting customers, and making decisions regarding marketing, promotions, location, and pricing. The entertainers could increase their profit depending on their interactions with customers, but the court found that such opportunity for profit and loss was minimal.

The court also found that although the entertainers spent their own money on hair, makeup, clothing, and styling, the Nightclub spent substantially more money on necessary personnel and equipment. The third factor (i.e., investment in equipment) therefore suggested “employee” status.

The Nightclub argued that because the entertainers get better as they gain more experience, the work the entertainers performed required special skill. The court disagreed. The court acknowledged that different entertainers may possess varying degrees of skill, but found nothing to indicate that special skill was necessary for the work. As the court noted, “[t]aking your clothes off on a nightclub stage and dancing provocatively are not the kinds of special skills that suggest independent contractor status.” Stevenson, 2013 U.S. Dist. LEXIS 181551, at *15.

The court found that the fifth factor (i.e., the duration of the relationship between the company and the individual it hired) was the only factor that suggested “independent contractor” status because some of the entertainers’ relationships with the Nightclub were relatively short. However, because this was the only factor that suggested “independent contractor” status, this factor alone could not nudge the entertainers out of their status as “employees.”

Finally, the court found the last factor (i.e., whether the work performed by the entertainers was integral to the Nightclub’s business) to be “most definitive.” Because the Nightclub was an adult entertainment club, it required adult entertainers. Without the entertainers, the Nightclub could not conduct tis business. The entertainers’ work was therefore integral to the Nightclub’s business. Finding that 5 of the 6 factors suggested “employee” status, the court held that the entertainers were “employees” and not “independent contractors.”

The Stevenson case serves as an example that even when a company labels the individuals it hires “independent contractors,” courts might nonetheless consider those individuals “employees” under the FLSA. Companies could be required to pay those individuals unpaid minimum and overtime wages dating as far back as 3 years. The potential liability to the company can increase significantly if, as in Stevenson, several workers collectively sue the company in a class action. It is also important for companies to note that courts will generally not consider whether the hired individual signed a contract with the company wherein he or she agreed to be an “independent contractor.” For those reasons, companies should consider all aspects of an individual’s work and consult with an experience labor and employment attorney before deciding to treat a hired worker as an independent contractor.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

In Brown v. ScriptPro, LLC, 700 F.3d 1222, 1230 (10th Cir. 2012), the employee, Mr. Brown, claimed that he worked overtime hours from home. Neither ScriptPro, LLC, (“ScriptPro”) the employer, nor Mr. Brown kept time records for the hours that Mr. Brown allegedly worked from home. Through his and his wife’s testimony, Mr. Brown provided uncontroverted evidence that he worked overtime at home. However, Mr. Brown also had to prove the amount and extent of the overtime worked. Mr. Brown argued that because ScriptPro violated its statutory duty to maintain proper and accurate time records, Mr. Brown’s burden prove the amount and extent of his uncompensated overtime work should be relaxed. The court disagreed.

As the court noted, “courts only relax the plaintiff’s burden to show the amount of overtime worked where the employer fails to keep accurate records.” Brown, 700 F.3d at 1230. The court held that ScriptPro did not fail to maintain proper and accurate time records because ScriptPro had implemented a time-keeping system that employees were required to use to record their hours worked, and becuase ScriptPro’s time-keeping system was accessible to employees from their respective homes. “Mr. Brown easily could have entered his hours; in fact, he was required to do so. … There was no failure by ScriptPro to keep accurate records, but there was a failure by Mr. Brown to comply with ScriptPro’s timekeeping system.” Brown v. Scriptpro, LLC, 700 F.3d 1222, 1230 (10th Cir. 2012). Under those circumstances, the court found that ScriptPro did not violate the FLSA.

Although the Brown case was decided in the Tenth Circuit—covering Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming—it nonetheless should encourage all employers with workers who allegedly work from home to implement a time-keeping system that its employees can readily access from home.

With the proliferation of overtime wage law cases in Miami-Dade, Broward, and Palm Beach counties, it is critical that employers be aware of the record-keeping requirements of the Fair Labor Standards Act.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

To qualify as an exempt “retail service commission” employee, three elements must be satisfied: (1) the employer is a retail or service establishment; (2) the employee’s regular rate of pay exceeds 1.5 time the applicable minimum wage; and (3) more than half of the employee’s compensation in a “representative period” must consist of commissions. If the employee does not satisfy all three elements, the employer must pay overtime wages for those hours worked over 40 per workweek.

To satisfy the first element, the employer must be a retail or service establishment. A retail or services establishment is one which sells goods or services to the general public. Under federal regulation, typical retail or services establishments are as follows: “Grocery stores, hardware stores, clothing stores, coal dealers, furniture stores, restaurants, hotels, watch repair establishments, barber shops, and other such local establishments.” 29 C.F.R. § 779.318(a). If the employer falls under any of those categories, the employer will likely qualify as a retail or service establishment.

Next, the employee’s regular rate of pay must exceed 1.5 times the applicable minimum wage. The minimum wage may vary from year to year and from state to state. Furthermore, while federal law establishes a federal minimum wage, states including Florida have established a minimum wage higher than the federal requirement. If the employee’s regular hourly rate is greater than 1.5 times the applicable minimum wage, then the second element of the “retail service commission” exemption is satisfied.

Finally, more than half of the employee’s total compensation must be composed of “commissions” for a “representative period.” A representative period can be anywhere from one month to one year. If the employee is paid entirely by commission, then he or she will satisfy the third element of the exemption. If the employee is paid a salary plus commission, then the commission must make up more than half of the employee’s total compensation to satisfy the third element.

Tips do not count as commission for the purpose of the retail service commission exception. However, it is important to keep in mind that mandatory “tips” are not true tips. Under the FLSA, a mandatory “tip” is considered a service charge and will count as “commission” for the purpose of this exemption. While the FLSA has considered mandatory “tips” to be service charges for some time, effective January 2014, mandatory “tips” are also considered service charges for tax purposes.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

Generally, a “fee-splitting” provision is a contractual provision requiring that the parties to an arbitration agreement share (or “split”) the costs of arbitration. Moreover, a “fee-shifting” provision is a contractual provision that requires the losing party in an arbitration proceeding to pay the prevailing party’s fees and costs associated with the arbitration, i.e., the costs of arbitration “shifts” to the losing party. “Fee-splitting” and “fee-shifting” provisions would normally not render an arbitration agreement unenforceable. However, the analysis changes when federal statutory rights are subject to arbitration. The rule is as follows: an arbitration agreement is unenforceable if the cost of arbitration effectively precludes the employee from vindicating his federal statutory rights. One such federal statutory right is the right to payment of minimum and overtime wages under the Fair Labor Standards Act (FLSA).

In Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000), the U.S. Supreme Court held that the “risk” that a party will be saddled with prohibitive arbitration costs is too speculative to render an arbitration agreement unenforceable. Following Green Tree, several federal court have upheld the validity of arbitration agreement containing fee-splitting provision. For example, in Maldonado v. Mattress Firm, Inc., 2013 U.S. Dist. LEXIS 58742 (M.D. Fla. Apr. 24, 2013), an employee argued that the arbitration agreement’s fee-splitting provision rendered the agreement unenforceable against his FLSA claim. The federal court held that in order to prevail on his argument, the employee was required to present evidence of (1) the amount of costs he is likely to incur and (2) his inability to pay those costs. A showing of the “possibility” of incurring prohibitive costs is not sufficient. The federal court held that the arbitration agreement was enforceable despite the employee’s FLSA claim.

Several months later, a Florida state court held that a fee-shifting provision rendered an arbitration agreement unenforceable against the employee in an FLSA case. In Hernandez v. Colonial Grocers, Inc., 124 So. 3d 408 (Fla. 2d DCA 2013), the Florida state court held that an arbitration agreement containing a fee-shifting clause was unenforceable because the fee-shifting provision was directly at odds with the FLSA’s remedial purpose. The FLSA allows the prevailing employee to recover his attorney’s fees and costs. However, the FLSA does not have a similar provision favoring the employer. Therefore, the Florida state court in Hernandez held that the fee-shifting provision “renders the potential cost of arbitration to be far greater to [the employee] than the potential cost of civil litigation” and that the arbitration agreement exposes the employee “to a potential liability to which he would not be exposed if the litigation occurred in civil court because the federal statute specifically protects him from such liability.” Hernandez, 124 So. 3d at 410. The state court therefore found that the arbitration agreement was unenforceable.

Arbitration can be a much cheaper and quicker alternative to litigation. However, arbitration is a creature of contract. If not properly drafted, a court may find that the arbitration agreement is unenforceable and require that the parties litigate their case in court. Although every case is different, proper drafting is essential to an enforceable arbitration agreement.

Peter T. Mavrick has successfully represented many employers in labor and employment matters. This article is not a substitute for legal advice tailored to a particular situation. Employment attorney Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.