Miami Employment Lawyer Blog

Now that summer is coming, many clients that come into our Miami office have asked whether or not summer interns must be paid the federally mandated minimum wage as well as overtime compensation. The U.S. Department of Labor has recently answered that question in the affirmative and has stated that it is increasing its enforcement efforts aimed at unpaid internships.

Under the Fair Labor Standards Act (FLSA), a student intern must be paid the federally mandated minimum wage of $7.25 per hour and overtime compensation of one and one-half the regular rate for all hours worked over forty (40) per week. However, if the internship is similar to an "educational environment" and is merely an extension of the student's academic educational experience, then the FLSA would not apply and neither the minimum wage nor overtime pay would be required. The following six factors are used to determine whether or not there is truly an "educational environment" so that the FLSA would not apply:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the factors listed above are all met, then it is deemed that an employment relationship does not exist under the FLSA, and therefore, the employer need not pay minimum wage and overtime compensation.

Continue reading "Student Interns Must Be Paid Minimum Wage and Overtime Pay" »

A recent opinion of the Deputy Administrator of the U.S. Department of Labor states that mortgage loan officers are not exempt workers and must be paid the minimum wage and overtime pay as required by the Fair Labor Standards Act (FLSA). A previous opinion stated that mortgage loan officers were exempt administrative employees and therefore employers were not required to pay them the minimum wage and overtime pay.

However, the recently issued opinion states that mortgage loan officers are more like "production" employees that actually produce the primary output of the business as opposed to "administrative" employees that perform work directly related to the management of the business. The opinion identified the following duties performed by mortgage loan officers: (i) responsible for receiving internal leads and contacting potential customers or receiving contacts from customers generated by direct mail or other marketing activity; (ii) collect required financial information from customers they contact or who contact them, including information about income, employment history, assets, investments, home ownership, debts, credit history, prior bankruptcies, judgments, and liens. (iii) run credit reports; (iv) enter the collected financial information into a computer program that identifies which loan products may be offered to customers based on the financial information provided; (v) assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products; (vi) compile customer documents for forwarding to an underwriter or loan processor, and (vii) may finalize documents for closings.

Based on the foregoing duties, the Deputy Administrator's opinion states that mortgage loan officers are generally non-exempt production employees that are covered by the FLSA and, as such, must be paid the federally mandated minimum wage and one and one-half times their regular rate for all hours that they work over forty (40) in a workweek unless another exemption applies.

Continue reading "Department of Labor Opinion Holds that Mortgage Loan Officers Are Not Exempt and Must be Paid Minimum Wage and Overtime Compensation" »

We continue to see clients come into our Miami office alleging the failure of their employer to pay the federal minimum wage. Apparently, this is not unusual, especially in low wage industries, such in the food service, child care, construction and janitorial industries. Indeed, yesterday the U.S. Department of Labor announced that it will increase enforcement efforts in those industries, especially in western States in order to curb minimum wage and overtime pay violations.

Under the Fair Labor Standards Act of 1938 (FLSA), covered employers must pay a minimum wage of $7.25 per hour and, when their employees work over forty (40) hours per week, employers are required to pay at least one and one-half times the minimum wage for all such hours over forty. Tipped employees, meaning those who receive more than $30 per month in tips, may be paid a reduced direct wage of $4.23 per hour. However, certain other rules apply in order for an employer to take advantage of this so-called "tip credit." Specifically, the law provides that the employer must inform each tipped employee that it will be taking the tip credit before the "tip credit" is taken and must allow all tipped employee to retain all of their tips. In this respect, the practice of requiring tipped employees to "tip-out" other non-tipped employees (such as kitchen workers) could be a violation of the law. In addition, reductions for mistakes, such as breakages, spills, etc., could also result in a violation of the law if it causes the direct wage to be reduced below the federal minimum wage.

Continue reading "Failure to Pay Minimum Wage is Still a Problem According to U.S. Department of Labor" »

Under a new Miami-Dade County Ordinance (Chapter 22 of the Miami-Dade County Code of Ordinances), if an employer fails to pay its employees within a "reasonable time" after they performed the work; the employer will be guilty of "wage theft." The ordinance goes on to provide that a "reasonable time" shall be presumed to be no later than 14 days from the date that the work is performed. Although the time period can be modified to no more than 30 days, there must be an express agreement in writing between the employer and the employee to do so.

If an employer is found to have violated the ordinance, that employer may be required to pay the employee an amount equal to three times the amount of back wages that the employer failed to pay. An employer may also be required to pay reasonable attorneys' fees costs in connection with an action brought to recover wages under the ordinance.

An employee may file a complaint with the county or may also bring a private action in a court of competent jurisdiction to redress a violation of the ordinance. With respect to records, where an employer has failed to show that it has maintained appropriate records of the hours worked by its employees, the ordinance provides that the employer shall have the burden of negating the evidence presented by the employee of the hours the he or she worked.

Continue reading "Miami-Dade County Wage Theft Ordinance Requires Workers to Be Paid No More 14 Days After They Perform the Work" »

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" »

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" »

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" »