Category: Employment Law

OVERTIME WAGE LAW: EMPLOYEES WORKING FROM HOME

When an employee brings a claim for unpaid overtime under the Fair Labor Standards Act (“FLSA”), the employee must prove that he or she worked overtime without proper compensation.  If the employer kept accurate records of the employee’s work hours, the employee could easily prove his or her case by referring to those records.  For that reason, the FLSA requires that employers keep proper and accurate records of the hours its employees work.  However, employers sometimes fail to keep accurate time records.  As the Supreme Court has held, “[t]he solution … is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work.  Such a result would place a premium on an employer’s failure to keep proper records.”   Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946).  Instead, when the employer fails to maintain accurate records, the employee could prove its case by (1) proving that he or she has in fact performed work without proper compensation and (2) producing sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.

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.

ARBITRATION AGREEMENTS AND THE FLSA: THE EFFECT OF FEE-SPLITTING AND FEE-SHIFTING PROVISIONS

Because arbitration usually is cheaper and faster than litigation, employers often include arbitration agreements in their employment contracts.  However, courts do not always enforce arbitration agreements.  Although federal law favors arbitration, state and federal courts may find an arbitration agreement unenforceable for several reasons.  One such reason is when the arbitration agreement contains a provision that contrary a federal statutory remedy.

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.

 

UNPAID OVERTIME: THE RETAIL SERVICE COMMISSION EXCEPTION AND TIPPED EMPLOYEES

The Fair Labor Standards Act (FLSA) requires that all employers covered by the FLSA pay their employees overtime wages for hours worked over 40 hours per workweek.  Generally, “overtime” wages are 1.5 times the regular wage.  The FLSA, however, identifies several classes of employees who are exempt from the overtime provision.  One such class of exempt employee is the “retail service commission” employee.

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.

PERSONAL USE OF ELECTRONIC EQUIPMENT IN THE WORKPLACE

The use of computers in the workplace has become so pervasive that, whether or not employers officially permit personal use, such use has become the norm.  Where “reasonable” personal use is allowed, the lines between excessive use and acceptable or normal use may not always be easy to draw.

For example, Coleman v. Review Bd. Of the Ind. Dep’t of Workforce Dev., 905 N.E.2d 1015 (Ind. App. 2009), held that an employee who was discharged for violating the employer’s e-mail policy forbidding more than “de minimus use,” was entitled to unemployment compensation because the policy provided no ascertainable standard and the employee’s e-mail traffic was scarcely excessive.

Another example, Bowman v Butler Twp. Bd. Of Trs., 923 N.E.2d 663 (Ohio App. 2009), held that a town could not discharge its firefighter employees for viewing violent, but non-pornographic videos.  The court explained that the town provided no guidance other than that “ethical standards should be observed,” and also permitted its firefighters to use firehouse computers for personal use in their downtime.  Undefined “ethical standards” were too vague to be enforceable against the employees.

The situation becomes a bit more complicated when it involves a public sector workplace, because a government employer’s monitoring of its own employees’ electronic communications is subject to scrutiny under the Fourth Amendment.  In City of Ontario, California v. Quon, 130 S.Ct. 2619 (2010), the United States Supreme Court recognized that it must proceed with care when considering the whole concept of privacy expectations in communications made on electronic equipment owned by a government employer.  The Supreme Court explained that applying too broad a holding concerning employees’ privacy expectations would “risk error by elaborating too fully on the Fourth Amendment implications of emerging technology before its role in society has become clear.”  The Supreme Court made it clear that the result in Quon is to be interpreted narrowly, to avoid unintended implications on future cases that cannot be predicted.  Quon dealt with a governmental employer asserting that it had the right to read text messages sent and received on a pager the employer owned while issued to an employee. There were “reasonable grounds for suspecting that the search was necessary for a non-investigatory work-related purpose.”  The Supreme Court held that, while the employee did have a reasonable expectation of privacy as to the content of his text messages, the search by the employer was reasonable under the “special needs” of the workplace exception.  That exception applied because the city was seeking to ensure it was not paying for extensive personal communications.  

In the age of thriving technological advances and the prevalence of many different social media outlets, the question of the reasonableness of an employee’s personal use of computers in the workplace, or other electronic communication devices, is one that ripe for debate.

The Mavrick Law Firm represents employers in labor and employment law 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.

PRIVACY RIGHTS IN AN EMPLOYEE’S PERSONNEL FILE

Is there a right to privacy in an employee’s personnel file?  A recent Florida appellate court case Walker v. Rout, 2013 Fla.App. Lexis 6466 (Fla. 5th DCA 2013), analyzed this subject in depth.  The court observed that personnel files undoubtedly contain private information.  See, for example, Regan-Touhy v. Walgreen Co, 526 F.3d 641 (10th Cir. 2008), which explained that, while not categorically out of bounds, personnel files contain sensitive personal information, and trial courts are not unreasonable when being “cautious about ordering their entire contents disclosed willy-nilly.”  In Walker, the employee’s whereabouts were unknown and therefore, he did not have the opportunity to personally assert a privacy objection. The court explained that the employee’s absence did not necessarily mean that such important non-party rights should not be considered, or that the right to privacy and the right to knowledge should not be weighed during the discovery process.  When privacy rights are implicated, discovery should be narrowly tailored to provide access to discoverable information while safeguarding privacy rights.

The court observed that it was likely that the employee’s personnel file contained information about his compensation, benefits, pension, and the like which would not be relevant to the lawsuit, but would be highly intrusive to the employee’s privacy interests if disclosed.  In contrast, any information regarding the employee’s training, competence, abilities, and disciplinary history may be relevant to the underlying action.  Therefore, the appellate court in Walker concluded that the trial court erred when it allowed all of the contents in the personnel file to be disclosed without first conducting an in camera inspection to segregate the relevant documents which were discoverable from the irrelevant documents which were not.  See, for example, Beverly Enters. Fla, Inc. v. Deutsch, 765 So.2d 778 (Fla. 5th DCA 2000).

An employer has no privacy rights in an employee’s personnel file.  Although an employer lacks standing to assert its employee’s privacy rights in the employee’s personnel file, an employer has standing to oppose the production of private information within the file on the ground that the information was not relevant to the litigation.  See, for example, Alterra Healthcare Corporation v. Estate of Shelley, 827 So.2d 936 (Fla. 2002).

Peter T. Mavrick represents businesses in commercial litigation, labor/employment law, and real property 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; Email: peter@mavricklaw.com.

FLORIDA LAW CONCERNING AN EMPLOYER’S JOB REFERENCE IMMUNITY

When a prospective employer contacts a potential employee’s former employer for a job reference, what liability does the former employer potentially face when responding?  And is it prudent for a former employer to create potential liability issues by commenting on a former employee?

Prior to 1990, employers had a common law qualified privilege to discuss former employees with prospective employers without liability.  Thereafter the Florida Legislature enacted Florida Statutes section 768.095, which is the Legislature’s codification of the common law.  The statute provides that:

An employer who discloses information about a former employee’s job performance to a prospective employer of the former employee upon request of the prospective employer or of the former employee is presumed to be acting in good faith and, unless lack of good faith is shown by clear and convincing evidence, is immune from civil liability for such disclosure or its consequences.  For purposes of this section, the presumption of good faith is rebutted upon a showing that the information disclosed by the former employer was knowingly false or deliberately misleading, was rendered with malicious purpose, or violated any civil right or the former employee protected under chapter 760.

The statute is an affirmative defense, so a former employee must first demonstrate the basic elements of a defamation case, i.e., a false and defamatory statement about another.  As one Florida appellate court explained, “[a] defamatory statement is one that tends to harm someone’s reputation in the community to deter others from associating with that person.”  Thomas v. Jacksonville Television, Inc., 699 So.2d 800, 803 (Fla. 1st DCA 1997).  If a statement is both false and defamatory, then the employee must also show by clear and convincing evidence that the employer’s statement to the prospective employer was “knowingly false,” “deliberately misleading,” or “rendered with a malicious purpose.”

Even if an employer defeats a defamation claim, it still could be sued for tortious interference with an advantageous business relationship.  The elements of the tort of intentional interference with an advantageous business relationship are (1) the existence of a business relationship not necessarily evidenced by an enforceable contract, (2) the knowledge of the relationship on the part of the defendant, (3) an intentional and unjustified interference with that relationship by the defendant, and (4) damage to the plaintiff as the result of the breach of that relationship.  In other words, even if a job reference does not rise to the level of a defamatory statement, it might constitute tortious interference with an advantageous business relationship.  A recent appellate court decision addressed this issue.

Linafelt v. Beverly Enterprises-Florida, Inc., 745 So.2d 386 (Fla. 1st DCA 1999), concluded there was no defamation when a former employer spoke negatively about the plaintiff’s job performance because the evidence demonstrated that the former employer did not make any false statements.  However, the appellate court in Linafelt allowed the employee to have another jury trial on the issue of tortious interference with an advantageous business relationship.  The appellate court suggested there was enough evidence for a reasonable jury to find the employer made a deliberately misleading or malicious statement about the former employee, even though the statement was “technically true.”

Due to the potential for costly lawsuits pertaining to job references, many employers decide the most prudent course is simply to disclose the former employee’s dates of employment and last position held, with no further comment.  While the employer could succeed in defense against a lawsuit asserting defamation or tortious interference with an advantageous business relationship, it is often more prudent to avoid the potential lawsuit altogether.  There are times, however, when moral reasons dictate that one should warn a prospective employer if the former employer is asked for a reference.  That of course is within the discretion and judgment of the business owner.

Peter T. Mavrick represents business owners in labor/employment and business litigation.  Mr. Mavrick has successfully represented many businesses in negotiations, in response to threatened legal action, and in court.  This article is intended for information purposes only and is not legal advice.  This article is not a substitute for legal advice tailored to a particular client’s 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.

 

RECENT CASE HOLDS PREGNANCY IS NOT A “DISABILITY” UNDER THE AMERICANS WITH DISABILITIES ACT

The United States Court of Appeals for the Fourth Circuit, interpreting the Americans With Disabilities Act (“ADA”) before its 2008 amendments, recently ruled in Young v. United Parcel Service, Inc., 707 F.3d 437 (4th Cir. 2013), that an employee’s pregnancy does not justify a disability discrimination lawsuit.  The ADA is a federal law that prohibits discrimination against persons who are disabled, have  a record of being disabled, or are regarded as disabled.  An employee has three avenues to establish the existence of a disability under the ADA:

(1) a physical or mental impairment that substantially limits one or more major life activities of the employee;

(2) a record of such an impairment; or

(3) the employee is regarded as having such an impairment.

The appellate court initially explained that pregnancy is not a “disability” under the ADA, and cited the fact that this interpretation of the statute is nearly uniform under federal case law.

The the appellate court next addressed the employee’s contention that her situation implicated the third prong under the ADA, i.e., being regarded as having an impairment.  The employee argued that UPS “regarded her pregnancy-related work limitations” as a disability.  A “regarded as” disabled claim includes the circumstance when the employer mistakenly believes that an actual, non-limiting impairment substantially limits one or more life activities.  For an employee’s lawsuit to succeed, the employer must believe that an individual has a substantially limiting impairment when, in fact, the impairment is not so limiting.  Major life activities under the ADA are “those activities that are of central importance to daily life,” such as walking, seeing, and hearing.  Where an employee contends he or she was discriminated against by being regarded as disabled, the courts focus on the reactions and perceptions of the employer’s decision-makers.  The appellate court explained that the employee’s claim did not establish a violation of the ADA “[b]ecause UPS possessed objective facts suggesting that Young might have lost the ability to perform central job functions, [and therefore] it had a legitimate reason to seek some verification that Young had recovered her ability to perform those duties.  The appellate court relied in part on analogous precedent in Porter v. U.S. Alumoweld Co., 125 F.3d 247 (4th Cir. 1997), holding that an employer’s medical inquiry was job-related and consistent with business necessity when the employee returned to the job involving lifting after back surgery.

The appellate court also disagreed with the employee’s second contention, that UPS had a duty to seek additional information from her healthcare providers and independently evaluate her ability to return to work.  The employee argued on appeal that UPS “should have engaged in an interactive process to determine whether Young was capable of performing her job.”  Although the ADA does advise employers to initiate “an informal, interactive process” when determining whether an individual with a disability needs an accommodation, no such counsel applies to the determination of whether an employee is disabled in the first instance.  The appellate court explained that the employee presented no valid reason to conclude that an employer acts inappropriately in relying on the employee’s own objective evidence.  The appellate court found persuasive the case of Breitkreutz v. Cambrex Charles City, Inc., 450 F.3d 780 (8th Cir. 2006), which held that “[i]f a restriction is based on the recommendation of physicians, then it is not based upon myths or stereotypes about the disabled and does not establish a perception of disability.”  Because the employee pointed to no more than the objective fact of her pregnancy, and offered no evidence tending to show that UPS management subjectively believed the employee was disabled, the employee did not present sufficient evidence to raise a factual issue of her “regarded as” claim.

Peter T. Mavrick and the Mavrick Law Firm represent businesses and management in Fort Lauderdale, Miami, and Palm Beach, Florida.  The Mavrick Law Firm practices law in South Florida in labor/employment disputes, and in business and real estate litigation.  The Mavrick Law Firm has successfully represented many businesses in negotiations, in response to threatened legal action, and in court.  This article is intended for information purposes only and is not legal advice.  This article is not a substitute for legal advice tailored to a particular client’s 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.

MARCH 2013 TRIAL VICTORY FOR PETER T. MAVRICK’S CLIENT

In March 2013, Mr. Mavrick successfully represented a corporate employer at trial in a worker’s compensation case in Broward County, Florida.  Mr. Mavrick presented testimony from four witness and conducted an extensive cross-examination of the Claimant-employee.  Crucial credibility problems emerged with the former employee’s case.  The Judge ruled in favor of Mr. Mavrick’s client.  In denying the former employee’s claim, the Judge cited inconsistencies in the  former employee’s testimony that became apparent at trial.