Last week, I wrote about the dangers of using unpaid interns, including claims for wages and benefits. According to the Hollywood Reporter, a judge granted summary judgment IN FAVOR OF 2 INTERNS alleging violations of the FLSA. In 2011, 2 interns, Alex Footman and Eric Glatt, who both worked on Black Swan, claimed the unpaid internship program run by Fox Serachight was ddone in violation of minimum wage and overtime laws. The court found that the Fox Searchlight was their employer, and they failed to meet the 6 criteria set forth by the DOL that are examined to determine whether an internship could be unpaid. These 6 factors were set forth in last week's blog. The judge also certified the case as a class action, and the case will proceed at this point in time.
Recently, I wrote about a logger who got bit by a rattlesnake and had his workers' compensation claim denied. This week, we switch gears to talk about exotic dancers and their misclassification as independent contractors. Karenza Clincy, with other dancers, sued the Onyx, an adult club in Atlanta for wage and hour violations: i.e. seeking minimum wage and overtime. Ms. Clincy and her co-workers danced, in the nude, in an exotic fashion. According to TLNT some of the pertinent facts are:
* Nude dancing is featured at Onyx
* Dancers on the main stage are visible throughout most of the club
* The dancers are assisted by "House Moms" hired by the club
* Rules of the house are provided to dancers in a "Dance Packet"
* The adult entertainment licenses are paid for by the dancers
* Onyx is paid a fee by the dancers
* The money thrown on stage by the customers is divided evenly between the dancers and the house gets a cut
* Dancers have limited discretion over scheduling and are fined for missing work or violating certain house rules.
TLNT sums up the finding by the court holding the dancers are employees, not independent contractors, by quoting from the Overtime Law Blog as follows:
"However, based on evidence that the defendants set the prices for tableside dances and how much of their gross receipts dancers were required to turn over in the form of "house fees" and disc jockey fees, as well as the fact that the defendants set specific schedules for the dancers, created rules of conduct (subject to discipline), check-in and check-out procedures and otherwise controlled the method and manner in which plaintiffs worked, the court held that the defendants were plaintiffs' employers under the FLSA."
The entire order entered by Judge Story can be read here. For a very funny, clean and explanatory video see YouTube. Although I do not know the terms of the settlement, the case was resolved in June, 2012.
Practice pointers. Although Judge Story entered his order last year, the facts of this case can be instructive for any business. If the employer controls the time and manner of work, the worker is an employee, not an independent contractor, no matter what you call them. This is a very complex and fact specific area of the law, there continue to be many cases filed in Alabama alleging violations of the FLSA.
Social Media Update. BirminghamMedicalNews.com is a website that refers to itself as "your primary source for professional healthcare news." They have a blog, and I was asked to submit an entry on the impact of social media in the medical profession. The blog entry can be viewed here. The lessons learned in the medical profession apply as well in any work setting. People continue to do very stupid things on social media sites, and their conduct can have an adverse impact on their employment status.
Happy New Year to everyone. 2012 begins with more weird stuff in the employment world, which is actually pretty normal.
Lady Gaga sued for overtime. In New York, Lady Gaga has been sued by her ex-personal assistant for overtime. Jenifer O'Neill sued Mermaid Touring, Inc, Lady Gaga's company, on December 14, 2011, seeking almost $380,000 in unpaid overtime for 4 weeks in 2009 and 52 weeks in 2010 and 2011. The allegations in the suit are Ms. O'Neill was responsible for attending to Lady Gaga's needs "not only in her home, but also during her travels for her global concert tours, from city to city throughout the world, at locales, including stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses. Plaintiff was always behind the scenes, and figuratively, if not literally, always at her side." Her job duties included confirming Lady Gaga's schedule, reviewing and reconciling her credit card statements, "ordering meals and ensuring that they were correctly prepared and served at specific times; maintaining the principal's personal supplies, ensuring the availability of chosen outfits; ensuring the promptness of a towel following a shower; and serving as a personal alarm clock to keep [Lady Gaga] on schedule". Ms. O'Neill is alleging that she was on call 24 hours a day, seven days a week: she was responsible for "maintaining [Lady Gaga] on her desired schedule from the earliest waking hour, for being responsive to the slightest need throughout the day, and for addressing spontaneous, random matters in the middle of the night." O'Neill was paid a salary of $75,000 per year. This lawsuit sheds some light into the glamorous life of a pop star, and it will be interesting to see how it is resolved.
President Obama announces 3 recess appointments to NLRB. On a more serious note, the NLRB issued a press release on January 4 announcing President Obama's intent to recess appoint Sharon Block(a democrat), Terence Flynn(a republican) and Richard Griffin(a democrat) to fill the 3 vacant seats on the NLRB. Ms. Block worked for Senator Kennedy, was a senior attorney at the NLRB for a number of years, and currently serves as Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor. Mr. Flynn is currently serving as Chief Counsel to NLRB Board Member Brian Hayes. Mr. Griffin is General Counsel for the International Union of Operating Engineers. Since 1983, he has served on the board of directors for the AFL-CIO Lawyers Coordinating Committee.
Practice pointer. These appointments will give the Board it's 5 members, 3 democrats and 2 republicans. Over the past year, the NLRB has been very active and, in my opinion, very pro-Labor. I anticipate these recess appointments will be contested, but if they stand, the NLRB will continue to be active and pro-Labor.
Did ICE Mistakenly Deport a 14 year old runaway? WFAA in Dallas broke a story this week about 14 year old Jakadrien, a 14 year old who ran away from her Dallas area home in the fall of 2010. She ended up in Houston, where she was arrested by police for theft. She provided the police a fake name, and when the name was run through the computer system, it was the name of a 22 year old illegal immigrant from Colombia, who had outstanding warrants for her arrest. ICE was called in, and although she spoke no Spanish, she was deported to Colombia. Upon her arrival in Colombia, she was provided a work card by the government and released. U.S. authorities got involved, and asked the Colombian police to pick her up. She is currently in a Colombian detention facility, and the Colombian government won't release her at this time.
Practice pointer. Although this story is just breaking and a lot of information is still sketchy, questions are being raised over how and why ICE deported a 14 year old U.S. citizen to Columbia. You can read more about it at WFAA, NY Daily News, andUSA Today.
Before I get started, I would like to thank all of our Veterans and active service members, and their family members, for their service to our country and the sacrifices they have made to make our country a better and safer place.
You can now follow me on Twitter @DanielBurnick.
FLSA Issues continue to plague employers. Over the years, I have written about the problems associated with employers not properly paying their employees. (October 18, 2011, May 10, 2011, August 17, 2010, July 2, 2010, June 3, 2010 and February 21, 2010). Recently, the Mobile Press Register ran a story pointing out that wage and hour litigation was up 18% in 2010, and the upward trend is expected to continue during 2011 and into 2012. The problems include misclassification of employees as exempt when they should be non-exempt, the misclassification of employees as independent contractors, and failure to pay overtime for any work performed in excess of 40 hours a week. As pointed out in the Mobile Press Register's article, "review your compensation practices", "verify your record keeping", make sure your records are accurate, and make sure overtime is paid properly.
Practice pointer. As we head towards the end of another year, now is the time to do an audit of your policies and procedures to verify compliance with the FLSA, and train all your employees on these issues.
E-VERIFY and unintended consequences. Recently, Bloomberg Businessweek ran an article entitled "A Verification System for New Hires Backfires". In this article, a number of examples are given where employers who have enrolled in the E-Verify system have had trouble finding enough workers to do the work. About 5% of the companies, around 300,000, use E-Verify. This number will go up as states around the country implement the mandatory use of E-Verify for all employers. In North Carolina, a local flower wholesaler implemented E-Verify, and the owner reports that he could not find enough workers: "Those who want to work fail to pass E-Verify, and those who pass fail to work." In Arizona, which made E-Verify mandatory in 2008, worker shortages have been reported in the construction industry and the food service industry. One way employers are trying to avoid the mandatory use of E-Verify is to misclassify workers as independent contractors. A Congressional Budget Office report from 2008 estimates that the mandatory use of E-Verify on a national basis would result in the loss of over $17 billion in federal tax revenue.
Practice pointer. Employers who attempt to avoid the mandatory use of E-Verify in Alabama are subjecting themselves to potential exposure under many different laws: Alabama's Immigration law, which may result in the loss of business licenses, claims for overtime under the FLSA, and tax liability under both state and federal laws.
Unusual excuses to take a sick day. CBS Moneywatch had an interesting article discussing the most unusual excuses to take a sick day. Some of them I have actually seen being used. The article refers to a CareerBuilder survey showing that 29% of employees admitted to calling in sick when they were fine. I expect the actual number to be higher. The study also showed that 15% of employers have fired an employee for calling in sick when they were not, and 28% of employers admitted to checking up on employees who they thought may not have been sick. Checking up included requiring a doctor's note (69%), calling the employee at home (52%), having another employee call (19%), and driving by the employee's house (16%). Some of the unusual excuses listed included a deer bite during hunting season, the kidnapping of a relative in Mexico, drinking anti-freeze by mistake and going to the hospital, and an employee's 12 year old daughter stealing a car so the employee could not get to work.
"Son" and "daughter" under the FMLA
The DOL recently gave a broad definition to "sons and daughters" under the FMLA. The DOL subtitles the announcement by saying "Interpretation is a win for all families no matter what they look like." Secretary of Labor, Hilda Sols, is quoted as saying "No one who loves and nurtures a child day-in and day-out should be unable to care for that child when he or she falls ill. No one who steps in to parent a child when that child's biological parents are absent or incapacitated should be denied leave by an employer because he or she is not the legal guardian. No one who intends to raise a child should be denied the opportunity to be present when that child is born simply because the state or an employer fails to recognize his or her relationship with the biological parent. These are just a few of many possible scenarios. The Labor Department's action today sends a clear message to workers and employers alike: All families, including LGBT families, are protected by the FMLA."
Practice pointer. Although courts have not yet had time to determine if the DOL's broad definition of son and daughter will be applied, it is likely to lead to litigation throughout the country. Employers should examine carefully requests for FMLA leave by non-biological and non-legal parents on a case by case basis.
More Strange Stories
On June 2nd, I published an entry entitled"Two discrimination complaints where truth is stranger than fiction" which addressed a woman's claim that she was fired because she was too hot and an ex-football coach, who is white, suing the historical black university that dismissed him. This week, Susan Antilla, with Bloomberg, published an article entitled "Sex harassment at work gets weirder, scarier." She reviewed EEOC press releases, and come up with some of the stranger complaints made by employees. I cannot do justice to them, so I would recommend that you read her article.
Practice pointer. Truth is stranger than fiction. I routinely see allegations that make you go Duhhhh. HR professionals need to continue to monitor the workplace, train the entire workforce on a regular basis, and take every complaint seriously, no matter how strange it may seem.
BlackBerries and Overtime
Last year, I wrote about the possible exposure to claims for overtime pay for the use of PDA's outside the regular 40 hour workweek. A suit had been filed by various T-Mobile employees claiming that they were entitled to overtime pay since they had to use their PDA's after regular work hours. NPR recently ran a story about a new class action lawsuit filed in Chicago by police officers. Cheryl Corley's article, entitled "Using Your Blackberry Off-Hours Could Be Overtime" discusses a lawsuit filed by Sgt. Jeffrey Allen against the Chicago Police Department alleging that he, together with other officers, had been given BlackBerries by the department and were using them routinely while off duty at the behest of the department, and not being compensated for it. While using the BlackBerry for a minimal amount of time while off duty may not result in overtime, using 15 minutes a night may, and adds up in a hurry, especially in a class action suit. Mayor Daley's reaction, as quoted in the article, is somewhat concerning, as he said the suit is "silliness in time of economic crisis" and "We're public servants. If I asked for that, I'd be paid millions of dollars. We'd have to take all the BlackBerrys away from the workforce." Mayor Daley's quote is followed by a quote from Sean Rogers, an arbitrator who happens to be a former Washington D.C. police officer and is now the head of an arbitration firm: "I don't think that any mayor would say that anti-discrimination laws are silly. There are similar laws....I had one arbitration that involved 7,000 employees and they ultimately settled for something over $23 million."
As I have written and talked about in the past, it is important for companies to have electronic communications policies, including the use of PDA's away from work. Companies that permit, or even require the use of PDA's away from work may be subjecting themselves to overtime claims by non-exempt employees.
Additionally, employers should have a policy concerning who will deal with the press. In my opinion, I would not want a corporate CEO making the statements that were attributed to Mayer Daley: they may come back to haunt him as this case progresses through the court system.
I have regularly reported that FLSA overtime cases continue to be filed in large numbers. Recently, the New York Times published an article addressing overtime issues in hospitals and nursing homes. Robert Pear wrote that the Obama administration is looking into pay practices throughout the health care industry. The investigation was prompted after a finding that many hospitals and nursing homes do not properly pay overtime to nurses and other employees who work in excess of 40 hours per week. The Department of Labor has recently recovered more than $1.7 million in back wages for approximately 4,000 employees of SSM Health Care, a Roman Catholic system. Partners HealthCare System in Boston paid more than $2.7 million in back overtime wages to 700 employees. There is a proposed class action settlement in California involving Kaiser Permanente, requiring payment of $7.25 million to hundreds of medical workers who were allegedly classified as exempt. Mr. Pear notes that "The Labor Department has hired 250 new wage-and-hour investigators, representing a staff increase of one-third. The government wants to make sure workers get "every penny they earn," said Kenneth Stripling, a Labor Department official leading enforcement efforts in Birmingham, Ala.....Nursing assistants, licensed practical nurses, janitors and cooks "are particularly vulnerable to wage violations," Mr. Stripling said." The president of the Greater New York Hospital Association is quoted as saying: "Hospitals are complicated organizations, and record-keeping for employees is astronomically complicated...Workers cannot just drop patient care when the lunch hour arrives. We are not like an assembly line, which can shut down at lunchtime, or a bank, where people work 9 to 5."
Practice pointer. As the DOL continues to increase enforcement of the FLSA, especially as it pertains to overtime, many industries, including health care, will be subject to increased scrutiny. Now is a good a time as any for employers to review the classification of their employees to make sure that those entitled to overtime receive it if they work over 40 hours per week.
Recently, the 2nd Circuit Court of Appeals, which governs New York, Connecticut and Vermont, found that pharmaceutical reps employed by Novartis are not exempt under the FLSA and are entitled to overtime for any hours worked exceeding 40 in a week. The court, on the same day, ruled against Schering on the same issue. The court found that these reps are not exempt from overtime as outside sales persons or as administrative employees under the FLSA. Earlier this year, the 3rd Circuit Court of Appeals, covering Delaware, New Jersey, Pennsylvania and the US Virgin Islands, found that a pharmaceutical sales rep for Johnson & Johnson and AstraZeneca reps were exempt under the administrative exemption. The 3rd Circuit did not address the outside sales exemption. A key factor in the 2nd Circuit's decision was the fact that the Department of Labor filed an amicus brief, arguing that the pharmaceutical reps were entitled to overtime. The court granted "controlling deference" to the DOL's position since it was not "plainly erroneous or inconsistent with" the DOL's regulations on the issue. It is important to keep in mind that the pharmaceutical industry is somewhat unique since the reps are barred by federal law from making actual sales to physicians. They can give samples to physicians, but cannot take orders for the purchase of drugs, and they cannot obtain a binding commitment from a physician to prescribe their particular drug. The 3rd Circuit, in reaching the opposite conclusion, found that pharmaceutical reps "make sales in the sense that sales are made in the pharmaceutical industry" and were entitled to overtime. Having been married to a pharmaceutical sales rep, I know that they do work long hours, usually over 40 per week, and their income is quite substantial, with many experienced and successful reps making over $100,000. The amount of overtime they would be entitled to, if the 2nd Circuits opinion stands, will be astronomical.
Practice Pointer. Although these cases deal with a very specific and highly regulated industry, there may be implications for other marketing jobs where actual sales are not made: such as those who may promote products sold by others, or marketing type employees who may not fall under the FLSA's administrative exemption. I anticipate that with the split among the circuits, and the wide ranging implications of the split, there is a good chance that this issue will make it's way to the Supreme Court, although it may take a number of years.
On March 9, 2009, the 11th Circuit decided the case of Sahyers v. Prugh, Holliday & Karatinos, and this week, the 11th Circuit denied a request for rehearing en banc. In the Sahyers case, Ms. Sahyers worked as a paralegal for the Prugh law firm. After she left the firm, she retained a lawyer and sued alleging she was not paid overtime for working more than 40 hours a week. Before filing suit, no written demand was made seeking a resolution of the dispute, and her lawyer made no attempt to inform the defendants of the claim. During the course of litigation, although disputed, a settlement demand was made for either $35,000 or $25,000. After discovery was completed, Prugh tendered an offer of judgment for $3,500, plus any attorney's fees and costs awarded by the court. Prugh accepted the offer, and applied for attorney's fees and costs. The trial court scheduled oral argument on its own, and Sahyers's lawyer admitted that there was no notice of the claim made to Prugh before the lawsuit was filed, and did so at the direction of his client. The trial court concluded that Sahyers had prevailed on the case, but found that "there are some cases in which a reasonable fee is no fee" and did not award Sayhers attorney's fees or costs. On appeal, the 11th Circuit affirmed the trial court's decision, finding that "Defendants are lawyers and their law firm. And the lawyer for Plaintiff made absolutely no effort-no phone call; no email; no letter-to inform them of Plaintiff's impending claim much less to resolve this dispute before filing suit. Plaintiff's lawyer slavishly followed his client's instructions and without a word to Defendants in advance-just sued his fellow lawyers. As the district court saw it, this conscious disregard for lawyer-to-lawyer collegiality and civility caused...the judiciary to waste significant time and resources on unnecessary litigation and stood in stark contrast to the behavior expected of an officer of the court."
Practice pointer. As I have blogged about before, there are many cases being filed in the Federal Courts throughout Alabama making claims for overtime under the FLSA. Many of these claims are nominal ones, such as in Prugh, which settled for $3,500. Yet many of the plaintiff's attorneys do not notify the defendants until the lawsuit is filed, while seeking attorney's fees. Perhaps if the logic of the Sahyers' decision was followed in cases that did not involve claims against law firms, many of the FLSA cases would be resolved quicker, without the necessity of filing a lawsuit and wasting a great deal of time and resources of the courts.
The case of Ricci v. Destafano continues to make the news. I have reported on this case in several blog entries, and the most recent activity involves the white and Hispanic firefighters filing papers to pursue their claim for back pay, interest and attorney fees. This case started in 2003 when the city refused to promote the 14 white and Hispanic firefighters: even though the test they took was race neutral, the city felt the results discriminated against black firefighters since none of the black firefighters who took the test scored high enough to get promoted. The Supreme Court, in June, ruled in favor of the white and Hispanic plaintiffs, finding that New Haven violated their civil rights by disregarding the test results. Recently, the plaintiffs received their promotions, and the black firefighters filed suit claiming they were discriminated against. Now, the attorney for the plaintiffs is pursuing claims for back pay, interest and attorney fees. According to theAP, Karen Torre, the attorney for the plaintiffs, they were subject to "the humiliation and economic hardship of prolonged career stagnancy in a rancorous atmosphere fostered by raw racial divides." I will continue to keep you posted as this case progresses.
Also in the news, President Obama signed into law the 2009-2010 spending bill for the Department of Defense, which includes a provision prohibiting most military contractors from enforcing mandatory arbitration provisions in their employment contracts. The provision prohibiting arbitration came about as the result of a female employer of a defense contractor, working in Iraq, who claimed she had been raped by co-workers, and the employer attempted to enforce the arbitration provision in her employment contract. In 6 months, this restriction will also apply to subcontractors.
Finally, on the overtime front, the New York Times reported this week that a lawsuit filed on behalf of 27 Mexican farm workers in Mississippi for overtime has been settled. The employees were working under the federal H-2 Visa program, and claimed they were not paid for hours worked in excess of 40 hours a week. The amount of the settlement was not disclosed.
I hope all of you have a Joyous Holiday Season and a Happy New Year.
A number of issues continue to arise in the employment context. I expect you will be seeing more of these in 2010. They include the following:
Overtime. A California court preliminarily approved a $12.8 million settlement involving 650 potential class members claiming overtime. According to Law.com, Lynn Farris ""who is lead counsel in a similar case against FedEx Ground in the Northern District of Indiana, said companies considering whether to classify people as independent contractors "are likely to take this settlement as further indication that that's a risky business choice.""
City of New Haven. I have previously written about the City of New Haven fire department case, Ricci v. Destafano. The City of New Haven has promoted the 10 firefighters (white and Hispanic)based on a 2003 test and the Supreme Court's decision. Now, an attorney for New Haven's black firefighters is quoted by the AP as saying that "the fight is not over because the black firefighters were not heard." I cannot even imagine the amount of legal fees incurred in taking the case to the Supreme Court and now it will have to be fought all over again by the city.
Jury Duty. Since I just received my own notice to appear for jury service the first week in January, I found the following case interesting. In Florida, a supervisor for a security guard company was awarded $150,000 by a jury who found that she was wrongfully terminated after serving on a jury, not being paid $400 for the first 3 days she missed from work(pursuant to county law) and the judge gave the plaintiff a copy of the law protecting jurors and a letter vouching for her jury service. The jury awarded $30,000 for lost wages emotional distress and $120,000 in punitive damages.
Cool website. Ebosswatch.com has published it's Worst Bosses of 2009 list. Included on the list is Mike Swindle, who, while working at Hyundai Motor Manufacturing Company in Montgomery, was found to have harassed a female subordinate, resulting in a verdict in excess of $5 million. I wrote about this case in my blog on May 4, 2009.
Wal-Mart agreed to settle a class action suit by as many as 87,000 current and former associates in Massachusetts for $40 million. The suit, filed in 2001, alleged that Wal-Mart refused to pay overtime, denied rest and meal breaks, and changed time cards. Each class member will receive between $400 and $2,500. This settlement comes on the heels of Wal-Mart agreeing to settle 63 other state and federal class actions suits for up to $640 million.
Practice pointer. As the world's largest retailer, Wal-Mart's settlement numbers are extremely large. However, as I have discussed before, there are numerous lawsuits being filed weekly in Alabama against much smaller companies claiming overtime is due to employees. I am involved in a number of these cases, and they are worrisome to small business's because of the time it takes to gather information, the potential for liquidated damages, and the fact that plaintiff's are entitled to attorney's fees if they are successful. I would strongly urge all companies to audit how they classify their employees to make sure they are in compliance with wage and hour laws.
Many of us have read or heard about a number of the big box stores, such as Wal-Mart and Dollar General, that have been sued for overtime by managers and assistant managers. These suits have resulted in judgments or settlements in the millions of dollars. Recently, I have noticed a great deal of FLSA overtime lawsuits being filed in Alabama against "mom and pop" stores: such as small or medium size restaurants, many of which are franchisees of larger chains. Several plaintiff's law firms are specializing in filing these suits. In fact, during this week alone, I have seen at least 10 such suits that have been filed this week against such businesses as Flying J, Tire Engineers, Hambo Inc. dba Hamburger Heaven and Stough Convenience Store, Inc.. In these businesses, many managers, and especially assistant managers, are misclassified as exempt and are not being paid overtime when they work more than 40 hours a week. These cases can be crippling for small businesses: liability is often fairly easy to prove, it takes a great deal of time to review payroll records for several years, attorney's fees can be assessed if the case is tried and lost, and there is the possibility of liquidated damages. For a small business in these economic times, it is difficult to come up with several thousand dollars just to attempt to settle the case, let alone litigate and incur a great deal more in attorney's fees and expenses just to get the case to trial.
Practice pointer. As we reach the end of the year, now is a good time to review the classification of employees to make sure that they are properly classified as exempt or non-exempt. Merely calling a person a manager or assistant manager does not, in and of itself, make that employee exempt. This can be a very complicated area of the law, and legal counsel is recommended when classifying employees for FLSA purposes.
On Monday, August 10, Michael Sanserino wrote an article for the Wall Street Journal entitled: "Lawsuits question after-hour demands of email and cellphones". In it, Mr. Sanserino examines the T-Mobile case that I addressed on my July 20th blog entry. He also reports on a second case, out of California, where the appellate court recently reinstated a case involving an employee of Lincare who is claiming he is owed compensation for responding to customer's telephone inquiries while on call. The Lincare case is just another example of how technology has outpaced the law in this area. Ashby Jones also addressed the T-Mobile case for the Wall Street Journal Law Blog on August 10th. Although the courts have not yet reached a final decision on whether employees such as those working for T-Mobile and Lincare are entitled to overtime for working with their cellphones, blackberries, I-phones, personal computers, etc., employers must be prepared to address these issues now. I anticipate that it will be many more months, and maybe even years, before these questions are resolved by the courts. In the meantime, employers must make the decision to compensate non-exempt employees for time spent on after hour conduct beneficial to the employer, or face the risk of a lawsuit seeking overtime compensation.
The third and final increase in minimum wage over the past three years will become effective on Friday, July 24, 2009. Yes, only the government can implement such a major change to become effective on a Friday. The minimum wage is going from $6.55 to $7.25 an hour for non-exempt workers. This will result in an annual increase of nearly $1,500 per minimum wage worker, if there is no overtime. As the country continues to work its way through these tough economic times, I believe that the $.70 an hour increase will put an additional financial strain on many small, medium and even large businesses.
Practice pointer. Now is a good time for employers to review the classification of their employees for FLSA purposes. One of the most frequent problems I see, and one of the most frequent type of lawsuits being filed, involve claims for overtime.
Over the last several weeks, both the Alabama Court of Civil Appeals and the 11th Circuit Court of Appeals have issued a number of cases that impact the employment arena. In my opinion, the most important ones are the following:
1. Duran v. Goff Group: Silva was working in Alabama for Jarman Construction when he died as the result of an on the job accident in 2003. He was survived by a wife and two minor children, both of whom resided in Mexico at the time of his death. The workers' compensation carrier, Goff Group, filed for a declaratory judgment that death benefits were not payable to Silva's dependents because they were nonresident aliens. The Court of Civil Appeals found that since the dependents were neither citizens nor resident aliens in the United States, they were not afforded Constitutional guaranties to equal protection and due process. The Court further found that the rights of dependents are separate and distinct from the rights of the deceased employee rather than derivative of the employee's rights. As such, the non-resident alien dependents were not entitled to death benefits under Alabama's workers' compensation statute.
2. Allmond v. Akal Security Inc.: Allmond applied for a job with Akal Security Inc. which, among other things, provided security officers at federal courthouses under contract with the U.S. Marshals Service. Allmond was employed as a security officer in Columbus, Georgia. One of the prerequisites of holding this job was to pass a hearing test, without the use of a hearing aid since the security officers must "be able to clearly understand directions in time of crisis....must be able to hear communication at a level of sound that does not inform persons causing an incident of the [officers'] response plans...[and] must be able to discern the direction of a disturbance or detect an approaching threat". The hearing aid ban ensures that the officers can perform their job duties in the event the hearing aid fails or becomes dislodged. Allmond failed the hearing test, and filed his lawsuit under the ADA and Rehabilitation Act. The 11th Circuit, upholding the trial court's granting of summary judgment against Allmond, found that the hearing aid ban was job related and was consistent with a business necessity. "When considered in the light of the tremendous harm that could result if a security officer could not perform the essential hearing functions of his job at a given moment, we accept this justification as legitimate and wholly consistent with business necessity".
3. Gregory v. First Title of America Inc.: Gregory worked as marketing representative for First Title, a title insurance company. After she left her employment, she sued for overtime pay under the FLSA, seeking $10,000 in unpaid overtime compensation. Her allegations included the fact that she never consummated a sale, that she was employed only to promote the company's services and to stimulate sales. At her deposition, she testified that she did in fact obtain orders for title insurance and was paid a commission on her successful sales. The 11th Circuit found that she was exempt under the FLSA as an oustside sales employee: she was customarily and regularly performing her duties away from her employer's place of business, free from direct supervision, that her primary duty was to obtain orders for title insurance, and her income was directed related to the number of orders she brought in or obtained.
Seminar Update. Due to an overwhelming response, my firm, Sirote & Permutt will conduct a second seminar addressing actual and anticipated changes in employment law on March 11, 2009 at Vulcan Park in Birmingham. If you are interested in attending please contact email@example.com or call 205.930.5494 to RSVP.