Miami Employment Lawyer Blog

As a Miami employment attorney, I am often asked whether an employee can be made an independent contractor in order to avoid employment-based issues that arise because of the employer-employee relationship. Specifically, some employers seek to avoid the payment of employment taxes that must be paid for the benefit of employees. Others attempt to avoid the liability that may exist under employment laws such as the Fair Labor Standards Act ("FLSA"), which requires the payment of a minimum wage and overtime pay for all hours worked over 40 per week. Still others seek to shield themselves from the civil liability that may attach by virtue of having employees, such as tort liability. Employers use various strategies to implement this legal fiction. Some use payroll companies, while others engage staffing companies so that these companies become the "technical" employer of their employees, at least on paper. Others attempt to have their employees sign independent contractor agreements. However, all of these strategies generally fail to make an employee an independent contractor and exposes the employer to liability.

Under Florida law, the fact that an individual signed an agreement stating that he or she is an independent contractor or received a Form 1099-Misc. is not determinative regarding the issue of whether that individual is an independent contractor. The courts have held time and time again that an employee cannot simply waive his or her status as an employee by signing a document stating the he or she is an independent contractor. Such a contract is not controlling although it may be evidence. Also, labeling an individual an employee of a staffing or payroll company does not work either.

Florida courts have held that whether an employer-employee relationship exists is based on the test of "economic reality" and not by applying "technical concepts." Each case must be examined carefully. There is no single factor that determines whether a person is an independent contractor or an employee. The totality of the facts and circumstances of each case must be taken into consideration.

For example, factors that are significant are (1) whether the relationship is permanent, (2) whether the work is performed on the employer's premises, (3) whether the employer has the ability to control how the work is performed, (4) whether the work is a critical aspect of the business, (5) whether the alleged contractor invested money in equipment and facilities, and (6) whether the alleged contractor also renders the same services to other companies.

It does not matter where the payment to the individual comes from. Many companies nowadays use payroll companies or staffing companies. However, Florida courts have repeated that the important point is the substance of the relationship, not the form of the relationship as may be reflected in documents (e.g., independent contractor agreements). Thus, even if the individual performing the work has signed an agreement stating that he or she is an independent contractor, courts may decide that the individual is an employee based on the factors indicated above.

Continue reading "Florida Employers that Claim an Employee is an Independent Contractor may be Violating the Law" »

The Florida Private Sector Whistleblower Act, Fla. Stat. §448.102 et seq. (FWA) provides protection to employees who have complained about an employer's illegal or wrongful conduct. However, it is not sufficient under the FWA for an employee to merely state that the employer is doing something illegal.

There are several strict requirements that employees must prove under the FWA. Specifically, an employee must not only complain about illegal conduct, he or she must also prove the following. First, the employee must prove that he or she disclosed or threatened to disclose to a governmental agency, in writing and under oath, an activity, policy or practice of the employer that was in violation of a law, rule or regulation. This requires the employee to not only make or threaten to make a report in writing and under oath, but also requires the employee to prove that the activity, policy or practice is, in fact, illegal under federal or local law. A mere belief that conduct is illegal is not sufficient. In addition, the disclosure must be to a governmental agency and must be in writing and under oath. Thus, a letter to a state health department may not be sufficient if it is not made under oath.

Second, the employee must provide that the employer retaliated against the employee because of the protected activity, e.g., the disclosure. This means that the employer must have known or been informed of the disclosure. This requirement in itself will mean that only extremely recalcitrant employers will become subject to an FWA claim.

Third, the employee must prove that the employer not only knew of the disclosure, but that the employer was given written notice of the activity, policy or practice that was illegal, thereby giving the employer a reasonable opportunity to correct the activity, policy or practice. Such written notice must be specific and not just simply "rantings" about the circumstances at work. This is to prevent mere employment disputes from reaching the level of an FWA claim.

Therefore, as many have already guessed by reading the foregoing, in real world circumstances, only the very astute private sector employees will be able to prevail under these standards. However, employees and employers alike must be aware of these requirements and should be always vigilant when illegal activity is suspected or when an employee raises the aspect of illegal activity occurring.

Continue reading "Florida's Whistleblower Law Requires Strict Compliance with Requirements" »

Miami and South Florida employers and employees are anxiously awaiting an appeal of a case for overtime compensation under the Fair Labor Standards Act (FLSA). Several recent cases decided by the U.S. District Court for the Southern District of Florida are part of a consolidated appeal to the Eleventh Circuit Court of Appeals in Atlanta, Georgia. The issue is whether a small employer that does business locally, such as a dry cleaner, body shop, landscaping company, security company, or swimming pool installation company, is subject to the FLSA. The analysis is somewhat complex because it involves consideration of what constitutes "interstate commerce." Basically, since 1974 the courts have held that under the "enterprise coverage" standard of the FLSA, virtually every business whose annual gross volume of sales is over $500,000 is subject to the FLSA. That means that practically all employees are covered by the FLSA.

However, recent cases decided in South Florida have now come to the conclusion that some businesses whose activities are wholly local or intrastate in nature, are not covered by the FLSA even if their annual gross volume of sales is over $500,000. The reasoning used by these courts is that where a business does not move goods in interstate commerce, then that business should not be subject to the FLSA. Courts have traditionally stated that in these modern times all businesses use goods that at one point in time moved in interstate commerce. However, these recent decisions now reason that even if a business like a landscaping company uses or purchases goods that have moved in interstate commerce (e.g., lawnmowers, fertilizers, gloves, etc.), those goods were no longer in interstate commerce when the landscaping company purchased them for use. They had come to rest and thus were not moving in interstate commerce. As such,theses courts reason, that the FLSA does not apply to them.

Many South Florida lawyers, however, contend that these decisions are incorrect. Indeed, some judges in the Southern District of Florida have disagreed with the recent decisions. For example, Judge Marcia Cooke recently wrote that "[i]t is notable how many courts in the past three-and-a-half decades have concluded that virtually any enterprise that meets the statutory [$500,000] gross sales requirement is subject to [enterprise coverage]." See Galdames v. N & D Investment Corp., No. 08-20472-CIV, 2008 WL 4372889, at *4 (S.D.Fla. Sept. 24, 2008).

Therefore, several of these recent decisions that have decided that small employers are not involved in interstate commerce are now being appealed to the Eleventh Circuit Court of Appeals. The decision could have major ramifications for small employers and the employees who work for those companies.

Continue reading "South Florida Overtime Cases Under the Fair Labor Standards Act Being Appealed" »

Employers of undocumented or illegal immigrants in Miami and South Florida should be aware that the Fair Labor Standards Act (FLSA) applies to undocumented workers as much as it does to legal permanent residents and citizens. This means that illegal aliens are entitled to be paid the federal minimum wage and to receive overtime compensation of one and one-half times their regular rate of pay.

Recent federal court decisions in South Florida have reinforced this principle. For example, in Galdames v. N & D Investment Corp., No. 08-20472-CIV, 2008 WL 4372889, at *4 (S.D.Fla. Sept. 24, 2008), the Court held that undocumented workers and illegal aliens may bring claims for unpaid wages, overtime compensation and liquidated damages. The Court's holding was largely based on the Eleventh Circuit Court of Appeal's decision in Patel v. Quality Inn South, 846, F.2d 700 (11th Cir. 1988) where the Court held that "undocumented workers are 'employees' within the meaning of the FLSA and that such workers can bring an action under the act for unpaid wages and liquidated damages."

Therefore, employers in areas like Miami and South Florida, where there is a high population of undocumented workers, must remember that the FLSA as well as other employment and labor laws, apply with equal force to undocumented workers. Indeed, the rationale for applying these laws to illegal aliens is, among other reasons, because to not enforce these laws with respect to undocumented workers, would merely encourage the hiring of more undocumented workers, which flies in the face of current immigration policy.

On July 24, 2009, the federal minimum wage will increase to $7.25 per hour for all employers. For restaurants that apply the "tip credit," the new direct minimum wage will go up to $4.19 per hour, with the "tip credit" remaining at $2.13 per hour.

Continue reading "Undocumented Illegal Immigrants are Entitled to Overtime Compensation" »

Basic Energy Services, a Texas-based oil well contractor, has agreed to pay $250,000 to settle a sex discrimination and retaliation suit brought by the U.S. Equal Employment Opportunity Commission ("EEOC"). The lawsuit alleged that the company discriminated against a former field attendant because of her sex and then fired her because she complained about sexual harassment and a promotion denial.

According to the complaint, which was filed in U.S. District Court for the Western District of Louisiana, the plaintiff Tawnya Smith alleged that she was subjected to months of sexual harassment by her immediate supervisor and, when she filed a charge of discrimination with the EEOC, the company discharged her in retaliation. The complaint also alleged that Basic Energy Services denied Smith, who worked for the company as a field disposal attendant, a promotion to field supervisor in 2006 because of her gender.

As part of the settlement, the company agreed to pay Tawnya Smith $250,000 in damages. They also agreed to post and disseminate new anti-discrimination and anti-retaliation policies and have many of its corporate officers and managers undergo annual training on sex discrimination and the anti-retaliation provisions of Title VII of the Civil Rights Act of 1964. The company also agreed to develop and implement a recruiting and/or job training program designed to increase a pool of female candidates for promotion in all the company's field positions over the next three years.

The EEOC's regional attorney in Houston, Texas stated that "This resolution not only benefits Ms. Smith, but also serves the interests of all working women, particularly in industries and jobs that remain dominated by men. This suit reminds employers yet again that, regardless of the industry or job in question, qualified female workers must be granted the same opportunities as qualified males and be free to work without bias, harassment or fear of retaliation. Employers who refuse to grant female workers equal opportunities in the workplace and retaliate against them for lodging discrimination complaints clearly do so at their peril."

Continue reading "Sexual Harassment Lawsuit Settled by EEOC" »

Businesses in Miami and throughout South Florida need to take note of Secretary of Labor Hilda L. Solis' recent comments that she will make wage and hour law enforcement a priority during her term. She recently stated that "As Secretary of Labor, I am committed to ensuring that every worker is paid at least the minimum wage, that those who work overtime are properly compensated, that child labor laws are strictly enforced and that every worker is provided a safe and healthful environment."

In connection with this initiative, the Department of Labor's Wage and Hour Division has stated that it will be adding 150 new investigators to its field offices to refocus the agency on these enforcement responsibilities. Secretary Solis added that under the American Recovery and Reinvestment Act, the Department of Labor will hire 100 investigators to ensure that contractors on stimulus projects are complying with the laws.

The addition of these 250 new field investigators constitutes an increase of more than one-third for the Wage and Hour Division. This staff increase is expected to reinvigorate the work of the Wage and Hour Division, which had suffered a loss of experienced personnel recently.

In July 2009, the federal minimum wage will increase to $7.25 per hour for all employers. In January 2009, all Florida employers were required to pay at least $7.21 per hour to all covered employees. Therefore, this is an increase from the Florida minimum wage for all covered employees. For restaurants that apply the "tip credit," the new direct minimum wage will go to $4.19 per hour, with the "tip credit" remaining at $2.13 per hour. See Wage and Hour Poster.

Continue reading "Wage and Hour Enforcement will be a Priority" »

The U.S. Equal Employment Opportunity Commission ("EEOC") has settled a case of employment discrimination against Nordstrom Department Stores in Florida. In that case, which was filed on September 27, 2007 in the Southern District of Florida, Palm Beach Division, the EEOC brought suit on behalf of 10 former employees. See EEOC v. Nordstrom, Inc., Case No. 07-80894-Civ-Ryskamp/Vitunac. The EEOC charged that a department store manager harassed Hispanic and black employees based on their national origin, race, and color, and retaliated against those who complained about the harassment.

According to the EEOC's lawsuit, an alterations department manager had complained that she "hate[d] Hispanics," and that Hispanics were "lazy" and "ignorant." Hispanic tailors were allegedly chastised by the alterations manager for speaking to each other in Spanish. The same manager made other derogatory remarks such as "I don't like blacks" and "you're black, you stink."

The employees complained to Nordstrom about the harassment, but the harassment allegedly continued. Furthermore, the alteration's manager allegedly retaliated against those who complained by continuing the racially offensive comments, unfairly berating employees and citing them for alleged performance problems.

Nordstrom agreed to settle the case for $292,500 in damages, as well as agreeing to (i) provide harassment training, (ii) distribute its policy addressing unlawful harassment to all employees in the Wellington and Palm Beach stores, and (iii) submit semi-annual reports to the EEOC on all harassment complaints received during the next two years.

Upon announcing the settlement, the EEOC stated that "[e]mployers must act swiftly to correct harassment and prevent abusive conduct. Instead of dealing with the despicable racial and ethnic comments, Nordstrom management allowed the harasser to retaliate against the complaining employees for complaining."

Continue reading "Florida Employment Harassment Case against Nordstrom Stores Settles" »

As a Miami employment attorney, I am often asked questions about the coverage of the Fair Labor Standards Act ("FLSA") as it may apply to managers. The Eleventh Circuit Court of Appeals in Atlanta recently affirmed a jury verdict of over $35 million against Family Dollars Stores, Inc. in favor of a group of store managers that sued for overtime compensation under the FLSA. In that case, the store managers filed a lawsuit for unpaid overtime compensation under the FLSA, which ultimately triggered a collective action that included 1,424 store managers. Family Dollar Stores claimed that the store managers were not entitled to overtime pay because they were exempt executives. The jury initially deadlocked, but after a second trial, the jury returned a verdict finding that the store managers were not exempt from the FLSA and that Family Dollar Stores willfully denied them overtime pay.

At trial, Family Dollar Stores argued that the store managers should be exempt because their primary duty was managerial in nature, principally because the store managers were "in charge" of the stores. However, the Court rejected those arguments because the evidence presented at trial demonstrated that store managers actually spent very little time exercising discretion and spent 80 to 90 percent of their time performing manual tasks, such as running the cash registers, unloading trucks, stocking shelves, and cleaning the floors and bathrooms.

In its 47-page opinion, the Court specifically noted that company executives testified that they never conducted a study to analyze the duties of the store managers and that all store managers were considered exempt regardless of the store size, sales volume, or number of employees. One company executive testified that the company categorically classified all store managers as exempt executives regardless of how they spent their workdays. This was fatal to the company's arguments.

Continue reading "Overtime Compensation payable to Store Managers under the FLSA" »