Miami Employment Lawyer Blog

Although many people think that wage and hour complaints are numerous in South Florida, it appears that employers all across the country are not paying their employees as required by federal law. Specifically, the Fair Labor Standards Act, 29 U.S.C. §201(b), et seq., requires covered employers to pay their non-exempt workers at least $7.25 per hour and at least $10.88 per hour for every hour worked over forty in a workweek. Unfortunately, many employers (large and small) are still not following this mandate.

For example, just last week the U.S. Department of Labor announced that Husk Energy, a petroleum refinery in Lima, Ohio, agreed to pay nearly $1,000,000 in back wages after an investigation by the Department of Labor in which it was found that its employees were not being paid overtime compensation. The company was also found to have not included a "shift differential" in calculating the regular rate for purposes of determining the overtime rate. As another example, Peach Tree Maintenance, Inc., a landscaping company in Nashville, Tennessee, also recently agreed to pay almost $450,000 in back wages after an investigation by the U.S. Department of Labor. According to the Department of Labor, many of the employees were being paid a flat daily rate with no overtime compensation. And, in Pine Bluff, Arkansas, a health care company was also recently required to pay over $61,000 in back wages for the failure to pay overtime compensation to its employees. There, according to the Department of Labor, the company failed to combine the hours that the employees worked at two locations. In January of this year, the U.S. Department of Labor filed a lawsuit against Security Express Inc. and Broadway Protection, two security companies in Little Rock, Arkansas for the failure to pay minimum wages and overtime compensation under federal law. Finally, the Department of Labor announced two weeks ago that it will be conducting a probe of Utah restaurants in order to battle suspected violations of minimum wage and child labor provisions of federal law.

As these examples show, violations of the Fair Labor Standards Act and wage and hour laws are widespread across the country and the U.S. Department of Labor has apparently increased its enforcement of these laws. Employees must stay vigilant to ensure that employers are paying them as required by law.

Continue reading "Failure to Pay the Required Minimum Wage and Overtime Compensation Still Rampant in Many Parts of the U.S." »

A common practice among employers in South Florida seems to be making deductions from employee wages for mistakes made by employees. For example, if machinery breaks down due to employee misuse, many employers make deductions from the employee's wages to pay for the repair. Another example is the case where an employer makes deductions from wages because an employee shipped incorrect products to a customer or damaged merchandise or product, such as in the case where a waiter accidentally drops and breaks an expensive bottle of wine. Such deductions, however, are illegal and constitute a violation of the Fair Labor Standards Act (FLSA) if they result in the employee receiving less than the minimum wage, which is currently $7.25 per hour.

The seminal case with respect to this issue is Mayhue's Super Liquor Stores, Inc. v. Hodgson, 464 F.2d 1196 (5th Cir. 1974). That case involved a Broward County based liquor store that required all employees to sign an agreement (as a condition of employment) that any cash register shortages would be deducted from the employee's wages. The trial court upheld the validity of the agreement, but the Fifth Circuit Court of Appeals declared that the agreement requiring repayment of cash register shortages was invalid because it violated the FLSA. In doing so, the Court held that (1) an employer cannot make deductions that result in the employee receiving less than the minimum wage and (2) the right to a minimum wage cannot be waived by agreement. The Court also noted that the agreement had the effect of impermissibly shifting part of the employer's business expense to the employee, which was inappropriate as a "kick-back" under the regulations.

Another common practice is for employers to make deductions for uniforms. However, under the FLSA if the uniforms are required by the employer, by law or due to the nature of the job, or if the uniforms are specially-branded clothing that must be worn by all employees, deductions for the cost of such uniforms may not reduce an employee's wage below the minimum wage.

Finally, it should be noted that this rule cannot be circumvented by requiring an employee to purchase his or her own uniforms or, in the case of merchandise damage (such as in the case of a broken bottle of wine), by requiring the employee to replace such merchandise. These would all be considered impermissible "kick-backs" that would be unlawful under the regulations.

Continue reading "Many Employer Deductions from Wages are Illegal if such Deductions reduce an Employee's Wages to Below the Minimum Wage" »

Two weeks ago, Plattner Automotive Group, which operates 11 dealerships in the State of Florida, agreed to settle a U.S. Department of Labor investigation and pay $71,129.00 in back wages to its employees. The Department of Labor determined that the company had violated provisions of the Fair Labor Standards Act (FLSA). One of the points stressed by the Department of Labor in that case was that while there is an overtime exemption for commissioned automobile salespersons, such salespersons must still be paid at least the federal minimum wage for all of the hours that they work.

Most clients believe that most commissioned employees are not entitled to overtime pay. However, that is not true. Some retail sales employees are exempt from overtime pay, but these exemptions require specific compliance with certain requirements. The classic example is the case of automobile dealerships, where sales personnel are exempt from the overtime pay requirement. Yet, this exemption is absolute. There are certain requirements that must be met. In addition, with respect to automobile salespersons, they must be paid at least the minimum wage for all hours that they work, regardless of whether or not they make a sale.

Typically, automobile salespersons are paid a set "draw" which is usually based on working forty hours per week at the minimum wage or slightly above the minimum wage. Problems arise if the salesperson either works more than forty hours per week or does not sell any automobiles. The problem is compounded if the salesperson works more than forty hours per week and does not sell any automobiles. The salesperson receives the draw, but does not receive any compensation for work performed over forty hours per week.

Another exemption for commissioned salespersons is the retail sales exemption. Typically, salespersons in a retail store are not entitled to an overtime premium. However, in order to qualify for the exemption, the following requirements must be met: (1) the employer must be a retail store, with 75% of the annual sales being retail sales; (2) the employee's regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked; and (3) more than half of the employee's compensation must be in the form of commissions. If all of these requirements are not met, then the employer does not qualify for the retail sales exemption and an overtime premium must be paid for all hours worked over forty per week.

Continue reading "Department of Labor Found that Florida Automobile Dealership Violated Wage and Hour Laws and Required Back Wages to be Paid" »

Many prospective clients have asked whether they are entitled to be paid when they are simply waiting to work or are "on-call." For example, the classic case is where the employer calls the employee in to work but, because of various circumstances, the employee is then told to wait before commencing work either because a table has not been seated, customers have not yet arrived, or other similar type of matter. The general rule under the Fair Labor Standards Act (FLSA) is that if the waiting time is spent primarily for the benefit of the employer, then it is compensable. However, whether waiting time is primarily for the benefit of the employer is dependent on the circumstances of each case. The question is whether the employee was "engaged to wait," which is compensable, or whether the employee was "waiting to be engaged," which is not compensable. See Armour & Co. v. Wantock, 323 U.S. 126, 65 S.Ct. 165, 89 L.Ed. 118 (1944), rehearing denied, 323 U.S. 818, 65 S.Ct. 427, 89 L.Ed. 649 (1945), and Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (establishing "waiting to be engaged" doctrine).

In Florida, the courts have established several factors that are analyzed in determining whether waiting time is spent for the benefit of the employer. The factors attempt to discern how much restraint is placed on the employee's use of the time. The question is "Can the employee dedicate that time to personal activities?" The factors considered in this analysis are (1) whether there was a requirement that the employee stay or live on the premises, (2) whether there were excessive geographical restrictions on the employee's movements, (3) whether the frequency of calls into work were unduly restrictive, (4) whether a fixed time limit for response was unduly restrictive, (5) whether the on-call employee could easily trade on-call responsibilities, (6) whether use of a pager could ease restrictions, and (7) whether the employee had actually engaged in personal activities during call-in time.

Under this analysis, if an employee is required to remain on the employer's premises, or so close to the employer's premises that he or she cannot use the time effectively for personal matters, then such waiting time would be compensable. In fact, even time spent at home could be compensable if the restrictions placed on an employee's activities are so restrictive that the employee cannot use the time effectively for personal matters. The typical example is the case of forest rangers who engaged in fire protection activities for their employer. They were required to monitor hand-held radios twenty-four hours per day during on-call periods and respond immediately to emergencies. In that case, the court found that the employees were entitled to compensation under the FLSA.

Therefore, the analysis will initially turn on where the employee is required to wait. Almost invariably, if the employee is required to wait on the employer's premises, then the time waiting to work would be compensable. If the employee can leave the employer's premises, then the question is whether or not the employee can use the time effectively for personal matters. This will depend on the restrictions placed on the employee's use of the time.

Continue reading "Florida Courts Hold that Waiting Time is Compensable if Spent Primarily for the Benefit of the Employer Even if the Employee Does Nothing" »

Two women from Peru who were brought to Miami to work as domestic employees were recently awarded $125,000 by a South Florida jury for the failure of their domestic employer to pay them the required minimum wage. The domestic employees, who lived with the domestic employer, filed a five-count complaint in U.S. District Court for the Southern District of Florida claiming, among other things, violations of the Fair Labor Standards Act (FLSA) and violations of federal human trafficking laws. According to the complaint, the domestic employees worked anywhere between 15 and 19 hours per day and were paid less than the minimum wage. The complaint further alleged that the domestic employer confiscated the domestic employees' passports and forced the domestic employees to live in a closet next to the trash chute. After a five-day jury trial, the jury found that the domestic employers failed to pay the domestic employees minimum wages and awarded them approximately $125,000 in back wages.

The regulations under the FLSA specifically cover domestic employees. The term domestic employment refers to all services performed in a household or in a private home. Domestic employment includes cooks, waiters, butlers, valets, maids, housekeepers, nurses, janitors, caretakers, handymen, gardeners, animal groomers and chauffeurs of automobiles that are used by the family. Furthermore, the regulations specifically provide that all domestic employment affects interstate commerce. Therefore, domestic employers cannot defend on the basis that they are not covered employers by virtue of not having handling goods or materials in interstate commerce.

With respect to wages, the regulations provide that all domestic employees must be paid the federal minimum wage and, to the extent that the domestic employees works over forty hours per week, the employee must be paid overtime compensation at the rate of one and one-half times the regular rate of pay. However, if the domestic employee resides in the household where they are employed, the FLSA provides an exemption for overtime pay so long as all of the hours worked are compensated at least at the minimum wage.

In meeting the wage responsibilities, a domestic employer may take credit for the reasonable cost of food, lodging and other facilities provided to the domestic employee. However, the credit may only be taken where the employee's acceptance of the facilities is voluntary and not coerced. The confiscation of passports or other items may be deemed to be coercion sufficient to prevent the domestic employer from taking the credit for food and lodging. Finally, where uniforms are required by the domestic employer, the cost of the uniforms and their care must be paid by the employer and the employer cannot take a credit for the cost of such uniforms.

The calculation of hours worked by domestic employees is generally a tricky issue because, normally, an employee who remains on an employer's premises and is "on-call" must be paid for those hours. Yet, when it comes to domestic employees, the employee and employer may agree as to the time periods that are not included as hours worked, such as meal times and other time periods where the domestic employee is free to pursue his or her own interests. However, for periods of free time to be excluded from hours worked, the period must be long enough in duration to enable the employee to make effective use of the time to pursue his or her own interests.

Continue reading "South Florida Court holds that Domestic Employees are Entitled to be Paid Minimum Wage for all Hours that they Work" »

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" »

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" »

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" »

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" »