DOL Expands FMLA Eligibility to Families of Eligible Veterans and Military Families


Military family leave, enacted in 2009, provides for two forms of Family Medical Leave Act (FMLA) leave benefits related to military service: Qualifying Exigency and Military Caregiver Leave.  On February 5, 2013, on the twentieth anniversary of the FMLA, the U.S. Department of Labor (DOL) issued a Final Rule expanding FMLA protections. One of the expansions provides families of eligible veterans with the same job-protected FMLA leave currently available to families of military service members. The expansion also enables more military families to take leave for activities that arise when a service member is deployed.  The expansions will go into effect March 8, 2013.

Current FMLA Military Family Leave Benefits:

FMLA Qualifying Exigency Leave:

  • A non-medical activity that is directly related to the covered military member's active duty or call to active duty
  • Seven categories of qualifying exigencies include:
    • Short notice deployment
    • Military events and related activities
    • Childcare and school activities
    • Financial and legal arrangements 
    • Counseling
    • Rest and recuperation
    • Post-deployment activities

FMLA Military Caregiver Leave:

  • Twenty-six workweeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness.
  • Employee must be the son, daughter, spouse, parent or the "next of kin" of the covered service member

The 2013 Final Rule highlights include: 

  • Expansion of the definition of a covered service member: Includes veterans who are undergoing medical treatment, recuperation, or therapy for a serious injury or illness incurred or aggravated in the line of duty on active duty and that manifested before or after the veteran left active duty.
  • Definition of a covered veteran: The Final Rule defines a covered veteran as a veteran who has been discharged or released under conditions other than dishonorable within the five-year period preceding the date the employee first takes military caregiver leave to care for the veteran.
  • Inclusion of Pre-Existing Injuries:  Expands the military caregiver leave provision to provide leave to eligible family members if the veteran was a member of the Armed Forces at any time during the period of five years preceding the date of the medical treatment, recuperation, or therapy.
  • Expansion of qualifying exigency leave for employees with family members in the Regular Armed Forces: The Final Rule expands the qualifying exigency leave entitlement to employees whose spouse, son, daughter, or parent serve in the Regular Armed Forces, and incorporates the statutory requirement that the military member, whether in the Regular Armed Forces or the Reserve components, must be deployed to a foreign country.
  • Certain changes to the categories of qualifying exigency leave, including:
    • Increasing the amount of time an eligible employee may take qualifying exigency leave related to the military member's Rest and Recuperation to a maximum of 15 calendar days. This leave may only be used while the military member is on Rest and Recuperation leave.
    • Creating a new qualifying exigency category that allows an eligible employee to take FMLA leave for certain activities related to the care of the military member's parent who is incapable of self-care where those activities arise from the military member's deployment or impending deployment, such as arranging for alternate care for the parent; providing care for the parent on an urgent, immediate need basis; admitting or transferring the parent to a care facility; and attending certain meetings with staff at a care facility.
  • Expansion of health care providers authorized to certify a current service member's or veteran's serious injury or illness: The Final Rule expands the list of health care providers who can provide a medical certification to support FMLA military caregiver leave to include health care providers who are not affiliated with the military. 
  • If a medical certification is obtained from a non-military affiliated health care provider, the employer may request a second (or third) opinion from the employee. The Final Rule retains the provisions that healthcare certifications obtained from healthcare providers associated with the military may not be subject to second and third opinions.


Employers Must Examine Their Employee Agreements for Compliance With the National Labor Relations Act


Recently, an Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB) issued a decision in Quicken Loans, Inc., which found confidentiality and non-disparagement provisions to be unlawful under the National Labor Relations Act (NLRA). The decision is not surprising, and is in accord with the trend of the NLRB to find common employer conditions to violate the NLRA.  

When Quicken Loans sued former employees for asserted violations of a "Mortgage Banker Employment Agreement," which all mortgage bankers had signed during their employment, one of the defendants filed an unfair labor practice charge, alleging that certain provisions of the Agreement violated the NLRA. Specifically, the former employee challenged a provision that required employees to "hold and maintain all Proprietary/Confidential Information in the strictest of confidence" and stated that employees could not "disclose, reveal or expose any Proprietary/Confidential Information to any person, business or entity." The agreement broadly defined "Proprietary/Confidential Information" to include "any non-public information relating to or regarding the Company's . . . personnel," including "personal information of co-workers . . . such as home phone numbers, cell phone numbers, addresses, and email addresses" as well as "personal financial information, . . . background information, personal activities, information pertaining to work and non-work schedules, contacts, meetings, meeting attendees, [and] travel[.]" In addition, the former employee asserted that a provision, which prohibited employees from "publicly criticiz[ing], ridicul[ing], disparag[ing], or defam[ing]" Quicken or its "products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image (including . . . any statements made via websites, blogs, postings to the internet, or emails . . . )" was also  overbroad in violation of the NLRA

The ALJ concluded that the two provisions at issue violated the NLRA because they "would reasonably tend to chill employees in the exercise of their Section 7 rights." The first provision would have unlawfully prevented employees from discussing with others, including fellow employees or union representatives, the wages and other benefits that they receive and the names, wages, benefits, addresses or phone number of fellow employees.  As these types of communications are protected by the NLRA, the provision was unlawful.  Further, the provision that prohibited public criticism of the employer violated the employees' protected concerted rights under the NLRA to make public statements against the employer and its products in order to appeal to the public, or their fellow employees, to gain support. 

But, what was the impact of this decision?  The ALJ ordered Quicken to cease and desist from maintaining these provisions and to notify its mortgage bankers that the provisions would not be enforced.  Further, Quicken was required to notify employees that it would not prohibit discussions of terms and conditions of employment, as protected by the NLRA.  Effectively then, Quicken' s lawsuit, at least as to these two provisions, was terminated, because Quicken would be in violation of the Order if it were to continue to pursue the asserted violations.

The case demonstrates that it is not enough for employers to simply examine their social media and other policies for compliance with the NLRA.  Rather, employers must re-examine all of their employee agreements to identify any that may be overbroad.  Employers may then need to have employees sign revised agreements in accordance with the applicable state law or be subject to having enforcement barred. As I will discuss at the Akerman Annual Labor & Employment Law Seminar, the NLRA has definitely invaded the non-union workspace.



Health Care Reform - Should Employers Reduce Expected Health Costs in 2014 by Transitioning Some Full Time Employees to Part Time Status Now?


2013 is shaping up to be a very busy year for employers in all industries, with the continued implementation of the Patient Protection and Affordable Care Act ("ACA"). Recognizing that in 2014, applicable large employers will avoid ACA-related penalty taxes by offering required affordable group health plan coverage just to full-time employees (i.e., those working an average of 30 hours or more per week, as calculated in a number of permitted ways), some applicable large employers have already begun examining whether to cut their employees' hours.  

Considerations in the reduction of hours decision will vary by industry and by employer, and there is no one-size-fits-all approach.  Some of the factors to weigh should include the following:

  • How much will the costs of health coverage continue to rise for this employer? What portion of those costs are expected to be specifically attributable to these employees?
  • What tax savings are currently available for the employer-sponsored coverage for these employees?
  • Are there employee morale, recruitment, productivity, and/or retention issues to consider?
  • Are there public relations or government relations issues to consider?
  • How many part-time employees does the company currently have?  Does the company's business model permit a shift away from full time employment?
  • Will salary increases be needed if no insurance is offered to these employees?
  • How many of these employees are expected to be eligible for subsidized health insurance coverage in a state or federal exchange?  (Note that employers are not advised to solicit pledges from employees to not seek a subsidy in exchange for continued full time employment.)

Members of Akerman's Employee Benefits, Labor and Employment, and Healthcare Practice Groups are constantly monitoring ACA regulations and other guidance as it is issued.  More detailed descriptions of various ACA issues impacting employer sponsored group health plans are available.  For example, please see our Practice Update entitled "Health Care Reform: Recent Guidance on 'Play or Pay' Rules for Applicable Large Employers in 2014".  


Recess Appointments To Board Invalid - Summary Of Affected Decisions


The United States Court of Appeals for the District of Columbia Circuit issued an order on January 25, 2013, which struck, as unconstitutional, President Obama's recess appointments to the National Labor Relations Board ("NLRB"). Noel Canning v. NLRB (Case No. 12-1115) Typically, recess appointments to the NLRB,  pursuant to the Recess Appointments Clause of the Constitution, are made during Senate recess.  In its Opinion, the D.C. Circuit Court held that because the appointments at issue were not made during the intersession recess (the President made his three appointments to the Board on January 4, 2012, after Congress began a new session on January 3 and while that new session continued), these appointments were invalid from their inception. Therefore, because the Board lacked a quorum of three members when it issued its decision in Noel Canning, the D.C. Circuit Court vacated the holding.

In response, Chairman Mark Gaston Pearce issued the following statement: "The Board respectfully disagrees with today's decision and believes that the President's position in the matter will ultimately be upheld. It should be noted that this order applies to only one specific case, Noel Canning, and that similar questions have been raised in more than a dozen cases pending in other courts of appeals. In the meantime, the Board has important work to do. The parties who come to us seek and expect careful consideration and resolution of their cases, and for that reason, we will continue to perform our statutory duties and issue decisions."  

Regardless, this is a major development that could invalidate all NLRB decisions during the time in which President Obama's appointees were on the NLRB.  Below are summaries of the major decisions in 2012 that may be impacted by this ruling:

  • In Hispanics United of Buffalo, the NLRB held that the discharges of five employees regarding posts made on Facebook violated the NLRA. The NLRB indicated that the Facebook posts and comments were protected under the NLRA because they concerned job performance, and because they involved the preparation of co-workers to defend against allegations of poor work performance.  
  • In Costco Wholesale Corp. and United Food and Commercial Workers Union, Local 371, the NLRB held that Costco's policy prohibiting employees from making statements that "damage the Company, defame any individual or damage any person's reputation" violated the NLRA.  The NLRB reasoned that the policy was broad enough to chill employee rights under the NLRA.
  • In WKYC-TV, Inc., the NLRB overruled fifty years of its own precedent holding that a union dues check-off provision in a collective bargaining agreement, which provides for the automatic deduction of union dues from unionized employees' paychecks, survives the expiration of a collective bargaining agreement.  
  • In D.R.Horton, Inc., the NLRB held that it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court. Employees cannot be asked to waive a judicial form and to not bring class or collective claims in arbitration. Arbitration may be individual, as long as judicial forum is open to class or collective actions, or judicial may be prohibited as long as class and collective arbitration is open.  
  • In Latino Express, the Board decided to require respondents to compensate employees for any extra taxes they have to pay as a result of receiving the backpay in a lump sum. The Board will also require an employer ordered to pay back wages to file with the Social Security Administration a report allocating the back wages to the years in which they were or would have been earned.
  • Finally, in Banner Health System, the Board held that an employer's policy of asking its employees involved in an investigation into an internal complaint to its human resources division to refrain from discussing that ongoing investigation with co-workers, violated the NLRA.  The NLRB held that this policy was overbroad and violated employees' rights under Section 7 of the NLRA because it prevented employees from discussing discipline and investigations of discipline.



ADA Pool and Spa Accessibility Compliance Deadline is Rapidly Approaching


The current compliance date for making swimming pools and spas ADA accessible is January 31, 2013, although the deadline could be further extended by the U.S. Department of Justice.  (DOJ has extended the compliance deadline on two occasions, but not for pools and spas constructed or altered on or after March 15, 2012). The requirements may include installing an independently usable pool lift in some circumstances.  Public accommodations should be aware of any state and local government codes requiring greater access than the federal requirements.  The risks of noncompliance include possible private lawsuits and DOJ investigations.

As background, DOJ published revised Regulations for Titles II and III of the ADA in the Federal Register on September 15, 2010.  The 2010 standards revised the ADA's rules for accessible design in places of public accommodation to assist in meeting the practical needs of persons with disabilities and to better align with other existing building and accessibility codes. Compliance with the 2010 standards was generally required by March 15, 2012 (except for auxiliary aides which had a stricter deadline for compliance). The 2010 Standards set minimum requirements – both scoping and technical -- for newly designed and constructed or altered state and local government facilities, public accommodations, and commercial facilities to be readily accessible to and usable by individuals with disabilities.  The regulation includes Appendix A to Part 36 - Standards for Accessible Design establishing minimum standards for ensuring accessibility when designing and constructing a new facility or altering an existing facility. 



OSHA Releases Regulatory Agenda and Projects that Final Action Will Be Taken on 10 Regulations in 2013


The federal government, including agencies such as OSHA, are required to give notice of significant regulatory activity by publishing a "semi-annual" regulatory agenda that outlines the status of on-going and planned regulatory activity.  Apparently, OSHA doesn't understand the meaning of "semi-annual" because it long delayed the publication of a regulatory agenda for 2012, waiting to the final days of the year, and just in time for 2013.  Congressional Republicans had been pressing the Administration for a regulatory agenda since late summer, believing the delay was because the President didn't want to stir up controversy in an election year.

However, the wait is finally over, and OSHA projects that during 2013, final agency action will be taken on 10 regulations, including:

  • A new Confined Spaces in Construction standard (by July 2013);
  • An updated Electric Power Transmission and Distribution standard (by March 2013);
  • Eliminating many of the incentives of the Cooperative Programs (by April 2013);
  • Consensus Standard Update – Signage (April 2013);
  • Vertical Tandem Lifts (May 2013);
  • Updating the Walking Working Surfaces standard, i.e., Fall Protection (by August 2013);
  • Changes to the Injury & Illness Recording/Reporting requirements (by May 2013), including moving from the SIC system to the NAICS and revising the criteria to increase the incidents that are required to be reported directly to OSHA;
  • Three new standards for whistleblower enforcement.

Additionally, OSHA has proposed regulations in the pipeline that will require more time to be completed:

  • Review/look back of OSHA Chemical standards;
  • New Beryllium standard;
  • New Bloodborne Pathogen standard;
  • New comprehensive Combustible Dust standard;
  • New Injury & Illness Prevention Program rule (I2P2), which has been a top priority for OSHA (targeted for SBREFA by end of this month and NPRM to be published by end of 2013 – both which are nearly impossible to meet since SBREFA has not started yet).

Although the timelines laid out in the regulatory agenda often are delayed, the list does provide the public some insight into what priorities OSHA has set for itself.  If you have any questions regarding any specific proposal, please contact your legal counsel.


Yes, Dear, I Will Fire My Employee Because She is "Hot"


Can a boss fire an employee simply because he finds her attractive?  Yes, according to the Iowa Supreme Court in a recent decision, Nelson v. James H. Knight, DDS (Iowa, December 21, 2012).  And, lest you conclude that the case is an anomaly, the decision relies heavily on a 1990 decision by the Eleventh Circuit Court of Appeals (which covers Florida, Georgia and Alabama), Platner v. Cash & Thomas Contractors, Inc., 908 F.2d 902, 903–05 (11th Cir. 1990)).

Melissa Nelson was a dental assistant for Dr. Knight’s practice for ten years.  On several occasions Dr. Knight complained to Nelson that her clothing was too tight and revealing and "distracting."  Dr. Knight and Nelson also began texting each other on both work and personal matters. The texts typically involved updates on their kids’ activities and other innocuous matters; neither objected to the other’s texting. While Dr. Knight made a couple of inappropriate comments to Nelson (such as saying that she would know her clothing was too revealing if she saw his pants bulging), Nelson did not complain of sexual harassment.  However, Dr. Knight’s wife complained about their relationship when she discovered they were texting each other, and she demanded that he fire Nelson.  Dr. Knight and his wife consulted with the senior pastor of their church, who agreed that Nelson should be fired.  Dr. Knight fired Nelson, gave her a month’s severance pay, and replaced her with another female assistant.  Nelson sued, claiming that she was the victim of gender discrimination.

The Iowa Supreme Court disagreed. The court cited several cases in which courts have held that that an employer does not engage in unlawful gender discrimination by discharging a female employee who is involved in a consensual relationship that has triggered personal jealousy, absent allegations that the relationship stemmed from unwelcome sexual advances or a hostile work environment.  The court also cited the Eleventh Circuit’s decision in Platner, where the court upheld the termination of a female employee who worked on the same crew as the business owner’s son, after the wife of the business owner’s son became jealous of her.  The logic of all these decisions, the Iowa Supreme Court observed, is that it is not unlawful to make a decision "driven entirely by individual feelings and emotions regarding a specific person. Such a decision is not gender-based, nor is it based on factors that might be a proxy for gender." 

But isn’t it illegal sexual harassment for a boss to terminate an employee for refusing his sexual advances, even if the employee is the only target of his affections? Yes, but the Iowa Supreme Court rejected this analogy by noting that "sexual harassment violates our civil rights laws because of the 'hostile work environment' or 'abusive atmosphere' that it has created for persons of the victim's sex.  On the other hand," the court observed, "an isolated decision to terminate an employee before such an environment arises, even if the reasons for termination are unjust, by definition does not bring about that atmosphere." 

As the Nelson case illustrates, the line between illicit gender discrimination and lawful favoritism (or, in this case "un-favoritism") is not always clear.  Dr. Knight won his case and may have saved his marriage in the process, though it was probably a costly victory.  Employers with a similar issue should consult with an employment lawyer, not just a pastor. 


'Tis The Season To Review Company Vacation Policies - Is Your Company's Vacation Policy In Tip-Top Shape?


Being that we are in the midst of the holiday season, it seems quite appropriate to address employer vacation leave and pay policies. It may be a surprise that The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays. Likewise, Florida, like most states, does not require employers to provide employees with either paid or unpaid holiday leave or to pay out accrued vacation time at the end of the year or upon termination of employment.  Holiday or vacation pay, if it exists, is optional, and is a benefit provided as part of an agreement between the employer and employee.  Therefore, employers are free to establish the vacation leave policy of their choosing as long as it stays within the boundaries of other labor and employment regulations (e.g. it cannot be applied in a discriminatory manner).  It is important to note, however, that such a policy should be clear and instructive.  

Below are a few specific questions to ask while reviewing your company's vacation policy.  If your policy does not provide an answer to any one of these questions, it may be time for you to consider adding or revising language in the policy so that these benefits may be implemented in a seamless manner without unnecessary confusion, stress and potential liability.

  • Who gets vacation time?  It is not unusual to see policies in which higher level executives, full-time employees and/or employees with more years of service are afforded more vacation days. However, an employer must decide in advance who will be included in the vacation policy.  Regardless of the employer's decision, it is important to make sure that similarly-situated employees are provided the same amount of vacation time, and the impact of the policy does not discriminate against members of a protected class. 
  • How much vacation time do employees get?  An employer may give employees vacation time based on an escalated method - one week off for the first year, two weeks off for the second year and three weeks off after five years of service.  On the other hand, an employer may give two weeks paid vacation for all employees regardless of years of service.  The amount of vacation time afforded employees should be laid out in detail in the policy.
  • Does Vacation Time Accrue?  If so, how and when does vacation time start to accrue?  Some employers provide vacation time, or "paid time off," that accrues on a bi-monthly or monthly basis. There could also be an accrual system in place based on the number of hours worked.  Additionally, vacation time can start to accrue immediately upon employment or it may begin after an employee has worked for the company for a prescribed period of time.  Make sure that the policy is very clear regarding how and when the vacation time accrues and any circumstances that may affect the accrual.    
  •  How is accrued vacation time paid?  For administrative ease, many employers choose to pay out accrued vacation leave at the employee’s current rate of pay.  However, other employers may choose to pay out vacation leave at the earned rate of pay (i.e. the rate of pay at the time the vacation time accrued).  The policy should detail how the employee will be paid.
  • What do employees do with unused vacation time? Employees may forfeit vacation time at the end of the year or may carry a balance of vacation days to the next year, with or without  a cap on the amount of time that can rollover.  If vacation days do not rollover, be sure to include a specific date on which any accrued vacation time will be forfeited.
  • Is approval required for employees to use vacation time? Most employers require that vacation requests be approved in advance.
  • By who, and how far in advance must employees obtain approval?  It is important that the policy detail the process for the submission and approval of vacation requests - Who must approve vacation requests? Is it a department head (e.g. someone in management who is not the employee's direct supervisor)? How far in advance must an employee request approval?  Be clear and concise on how requests are handled once they are received.  For example, are requests approved on a "first come-first serve" basis or are request forms processed in a random drawing based on years of service?  Understandably, employers cannot grant all employee vacation requests and still efficiently run a business.  
  • How can the vacation time be used?  Some policies describe vacation time in days, while others describe the time in hours.  Either way, a policy should include the minimum increment of time that can be used at once.  For example, a policy may not allow an employee to take less than 30 minutes vacation time at once.  Similarly, an employer may require vacation time to be taken in full-day intervals.
  • Are there blackout dates? It is advisable that a vacation policy reiterate that a company's needs take priority.  Therefore, if the business is seasonal, the vacation policy may require employees to schedule time off in non-peak months. Likewise, if there are certain days of the year on which your company requires more staff than usual because of a significant influx of business (e.g. Black Friday, Christmas Eve, Cyber Monday), it may be advisable to include these days as "blackout" dates in the policy.

Certainly there are enormous benefits to implementing a fair and solid vacation policy. Not only will such policies boost employee morale but they will also keep your company competitive in a diverse marketplace vying for the top employees.  The list of issues provided above is important to establishing a good policy, but is by no means exhaustive of the issues that may need to be addressed.  If you should have any questions or concerns regarding your specific vacation policies, please contact legal counsel for assistance.


Who Is Really A Supervisor? Employer liability for hostile work environment claims


The Supreme Court recently held oral arguments in the case Vance v. Ball State University, 646 F.3d 461 (7th Cir. 2011), which addresses the meaning of a "supervisor" in hostile work environment claims.  If the Court applies a broad definition, the decision may have negative implications for employers defending against hostile work environment claims.

When faced with a hostile work environment claim, employers may be vicariously liable for harassment against an employee.  The status of the alleged harasser is key in determining liability.  If the alleged harasser is a co-worker of the plaintiff, the employer will be vicariously liable for the misconduct only if it was negligent in either discovering or remedying the offending behavior.  However, if the alleged harasser is a supervisor, the employer will be vicariously liable for the harassment, and can avoid liability only by proving that it: (1) exercised reasonable care to prevent and correct any harassing behavior; and (2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities.  This defense, known as the Faragher/Ellerth defense, was articulated in the Supreme Court cases Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998).  

Although employers may think the definition of "supervisor" is straightforward, there has been a split among the courts as to what a supervisor is.  Some courts narrowly define a supervisor as an individual who has the authority to hire, fire, demote, promote, transfer or discipline an employee.  Other courts broadly define a supervisor as any person with authority to direct an employee's daily activities.  

In Vance, the plaintiff was at one point the only black employee working for Defendant Ball State University's Banquet and Catering Department.  Over several years, Vance had various issues with co-workers and supervisors, but one person did not neatly fit into either category – Saundra Davis.  Davis was allegedly a member of "management," but did not have the power to hire, fire, promote, demote, transfer or discipline employees.  However, Davis did have the authority to direct Vance's day-to-day activities, and she was not required to clock in and out like the hourly employees in the department.  Vance claimed that Davis was one of her supervisors and that Ball State should be held liable for Davis’ alleged harassment.  The trial court, applying a narrow definition of a supervisor, disagreed.  The court held that Davis was Vance's co-worker and that Ball State would be liable only if it was negligent in discovering or remedying the offending behavior.  There was no evidence of such negligence, so the court granted Ball State's motion for summary judgment. The Seventh Circuit upheld the decision.

This scenario is just one of many that employers may have without even realizing it. Is the "shift manager" who assigns tasks to employees on her shift a supervisor for purposes of a hostile work environment claim?  What about the assistant "supervisor" who makes schedules, conducts reviews, and recommends promotions and wage increases?  Most employees would say these individuals are supervisors and definitely not co-workers.  But does the layperson's definition of a supervisor apply to a hostile work environment claim?  The Supreme Court is examining this very question and will either apply the narrow definition, the broad definition or, perhaps, a completely new definition of who is a supervisor in hostile work environment claims.


Independent Contractor and Former Employee May Be Bound by Non-Compete Agreement, Florida Court Rules


Section 542.335 is the Florida statute that governs non-compete agreements.  As most practitioners know, the statute is not limited to employment relationships.  Thus, it is not uncommon for businesses and independent contractors to enter into non-compete agreements.  

But what happens when an employee who has signed a non-compete agreement becomes an independent contractor of that business?  Can the worker be bound by the non-compete agreement that she signed when she was an employee?  According to Florida’s Fourth District Court of Appeals recent decision in Anarkali Boutique v. Ortiz (Fla. 4th DCA, December 12, 2012), the answer is "yes."

Anarkali Boutique hired Nahomi Ortiz as an employee in 2008.  Ortiz signed a non-compete agreement in consideration for her "continued at-will employment by [the company]."  The agreement contained a 100-mile restriction that applied for "two (2) years after I am no longer employed by Company."  The agreement also stated that "[a]ny subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement."

In 2009, after building her own clientele, Ortiz began working for the boutique as an independent contractor.  In 2011, Ortiz left Anarkali, started a competing business less than 5 miles away, and took many of Anarkali's customers with her.  Anarkali sued Ortiz for violating her non-compete agreement. 

In the trial court, Ortiz argued that when the company changed her status to an independent contractor, she ceased being an employee under the agreement, and thus the two-year non-compete period began running at that time. Because that two-year period expired before she left to start her business, Ortiz argued that she was not bound by the non-compete agreement.  The trial court agreed and denied Anarkali’s motion for a temporary injunction on this basis alone.

But on appeal, the Fourth DCA reversed the trial court's decision and remanded the case for further consideration by the trial court.  The Fourth DCA noted that the agreement was not entirely clear, as it referred to "employment" but also stated that "[a]ny subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement."  The court resolved this apparent conflict by giving effect to the intent of the parties.  The "obvious purpose" of the agreement, the court concluded, "was to preclude the worker from competing with the company after the company trained the worker and allowed her to build her own clientele."  Thus, the two-year period began running when Ortiz left the boutique, not when she became an independent contractor two years earlier. 

For employers, the takeaway of the Anarkali case is that careful drafting of non-compete agreements is critical.  Although the employer in Anarkali may ultimately prevail, it could have avoided an adverse ruling in the trial court if the non-compete agreement had been drafted to expressly cover an independent contractor relationship.  As noted above, section 542.335 authorizes such agreements.


Employees Have a (Limited) Duty of Loyalty under Florida Law


It has long been established under Florida law that employees have a duty of loyalty to their employer.  Secretly assisting a competitor, or soliciting customers or employees for the benefit of a future employer, generally violates the employee’s duty of loyalty.

But certain actions that an employer may view as disloyal do not breach an employee's duty. "Blowing the whistle" on an employer's illegal activity is protected conduct and cannot be the basis for a breach of duty of loyalty claim.  Similarly, an employee’s mere preparation to open a competing business, such as opening a bank account or obtaining office space or telephone service, does not breach the employee's duty of loyalty.

What about referring work to a competitor and receiving a commission from that competitor?  While that might strike most employers as clearly disloyal, a recent case illustrates the defenses an employee may raise in response to such a claim. 

In Hennegan Co. v. Arriola, 855 F. Supp. 2d 1354 (S.D. Fla. 2012), a printing company, Hennegan, sued its former salesman and head of its Miami office, Joseph Arriola, for breach of the duty of loyalty and other claims, and refused to pay certain commissions to him that he had earned at Hennegan.  The suit revealed that while working for Hennegan, Arriola referred over $1,000,000 of business from two customers to a competitor called Solo, and earned over $300,000 in commissions from such referrals.  

In defense of his actions, Arriola pointed to the fact that one of the customers insisted that its printing work be done in South Florida, where Hennegan did not have a printing facility.  The CEO of the other customer had ordered its director of marketing to stop doing business with Hennegan.  Arriola therefore referred these customers to Solo, which rewarded Arriola with a commission.  

The court, in deciding that Arriola's actions did not breach his duty of loyalty, noted that under Florida law, although Arriola could not have usurped one of Hennegan's business opportunities for himself, he was free (absent a non-compete agreement) to engage in competitive activity if he acted in good faith and refrained from interference with his employer's business.  The Court found that Arriola "acted in good faith when he referred out the business of customers after Hennegan was unable or unwilling to satisfy specific requirements of those customers."  The court also determined that Arriola was entitled to his unpaid commissions from Hennegan.

Florida employers should, of course, be vigilant about their employees' business-related activities to ensure they are not breaching their duty of loyalty.  But as the Hennegan case illustrates, what appears disloyal to an employer may be seen very differently by a court. 


OSHA Announces New Leader Of Whistleblower Protection Program


The U.S. Occupational Safety and Health Administration ("OSHA") has named a former chairman of the U.S. Merit Systems Protection Board ("MSPB"), as the new director of OSHA's Whistleblower Protection Program.  On November 20, officials of OSHA announced that Beth Siavet will lead the agency's whistleblower protection efforts.

OSHA enforces the whistleblower provisions of the Occupational Safety and Health Act of 1970 and 21 other statutes protecting employees who report alleged violations of various workplace regulations.  Rights afforded by these whistleblower acts include, but are not limited to, worker participation in safety and health activities, reporting a work related injury, illness or fatality, or reporting a violation of the statutes.

Beth Siavet was with the MSPB as vice chairman, chairman, and member from 1995 to 2003.  The Merit Systems Protection Board is an independent agency that oversees the personnel activities of federal government employees. Siavet replaces the program's former director, Sandra Dillon, who retired in August.  OSHA has recently sought to expand the reach of its Whistleblower Protection Program and to make it a greater priority to the agency.  Earlier this year, the program was restructured and now reports directly to OSHA's head.

OSHA's announcement that Siavet was named director of the whistleblower program comes as lawmakers have moved to expand protections for employees who blow the whistle on government fraud.  Days before, the U.S. Senate approved changes to legislation aimed at strengthening whistleblower legislation first passed in 1989.   The Whistleblower Protection Enhancement Act of 2012 was unanimously passed by the U.S. House of Representatives a little more than a month ago, and now goes to the President for signature.  The bill takes aim at court decisions that limited protections for whistleblowers to cover situations where the whistleblower was the first to report wrongdoing and in which the whistleblowing was connected to the worker's job duties.  The Act provides additional protections to whistleblowers reporting waste, fraud, and abuse at federal agencies.

Employers are well advised to keep an eye on OSHA's whistleblower developments and to take steps to avoid unnecessary retaliation claims. First and foremost, employers should be vigilant in assessing their workplace for compliance with workplace safety and health standards.  Employers should already have anti-discrimination and anti-harassment policies in place. In addition, employers should have and disseminate to every employee a written internal procedure setting forth how employees can bring complaints to their employer outside the discrimination and harassment realm.  These policies should contain provisions to encourage employees to come forward with complaints about health and safety and a non-retaliation statement.


Holiday Parties In The Social Media Age - You Never Know Who Is Watching!


Mall decorations and peppermint mochas can only mean one thing - the holidays are here again and office festivity plans are well underway. Holiday parties can bring out the very best and the very worst in employees. Unfortunately, the days are gone when what happens at the holiday party stays at the holiday party.  With increased use of social media sites such as Facebook, Twitter, YouTube, and Instagram, what seemed to be a funny and harmless office party prank may now be captured for posterity.  The following practical tips may help avoid the party going viral on the internet:

  • Remind employees that all company policies and procedures, including social media policies and anti-discrimination/anti-harassment policies, continue to apply equally at holiday parties and off–site events. Employees tend to "let loose" at holiday parties, so consider sending a company-wide memo reminding employees of company expectations regarding proper decorum, appropriate attire, and professional conduct.  Designate multiple supervisors to monitor and address inappropriate behavior.
  • Consider hiring a professional photographer or renting a photo booth for entertainment.  Employees may be less likely to take their own pictures/videos when other options are provided.  It is an added bonus that these pictures cannot easily be posted on the Internet.
  • Ensure that the holiday party theme is not specific to any one religion and does not exclude any particular individuals or groups of employees.  For example, hosting the company's annual Christmas or Hanukkah party could make employees who do not celebrate those religious occasions feel uncomfortable, which could lead to disgruntled posts.  The risk is only increased where employee attendance is mandatory.
  • Take proactive steps to limit improper or questionable conduct by selecting a venue that is tasteful and not otherwise offensive to any employee.  For example, a holiday party held at a nearby restaurant or in the office conference room is probably a better idea than a holiday party held at a nightclub.
  • Consider limiting alcohol consumption to one or two drinks per employee by distributing drink tickets and instructing venue staff not to provide drinks to anyone without tickets. Of course, having a "no questions asked, free ride home" car service available to anyone who nevertheless gets too intoxicated to drive is a good idea.

Happy Holidays!


President Obama's Mark on Employment Law - What do Employers Have to Look "Forward" To in the Next Four Years?


Now that the frenzy of the election has died down, Florida has counted its votes, and the major media outlets have moved on from dissecting party rhetoric, the question remains: What does President Obama's reelection mean for the country?  And for the purposes of employers and those in HR, what changes will we see in his second term in labor and employment law?  The simple answer is that labor and employment law is likely to be a very active area for change just as it has been over the past four years: the Department of Labor will continue to flex its stronghold over employers, Democrats will push for new employee-favored legislation and the Republicans will shut it down in the House.  If the parties can come to a compromise on some new legislation and governmental agencies maintain their status quo, the following areas are just a few which will continue to actively move "forward" in the coming years: 

  • Anti-Discrimination Laws for Women: Gender inequality was an issue in Obama's first term and will surely remain a priority in this term.  In January 2009, Obama signed into law the Lilly Ledbetter Fair Pay Act which effectively extends the time period in which employees can file a gender based wage discrimination lawsuit - the 180-day statute of limitations for filing a claim resets with each new paycheck affected by the alleged discriminatory action (as opposed to the statute of limitations beginning on the date the employer makes the initial discriminatory wage decision).  Obama has promised to keep gender inequality on his agenda with the continued advocacy of the Paycheck Fairness Act.  If enacted, this legislation, which amends provisions of the Fair Labor Standards Act will, among other things, (1) require employers to show that any wage discrepancies are based on a 'bona fide factor other than sex, such as education, training or experience,' (2) prohibit retaliation by employers against individuals who raise gender-based wage disparity issues and/or concerns, (3) expose employers to enhanced penalties for any such retaliatory conduct, and (4) provide for a negotiation skills training program for girls and women.  
  • LGBT Rights: Obama has been a candid advocate for the rights of the LGBT community, most publicly through the support of same sex marriage.  However, his administration has pushed for changes in the way of LGBT rights in the employment arena as well.  The Employment Nondiscrimination Act is proposed legislation that adds sexual orientation to the protected classes under Title VII for all employers except religious organizations.  Currently, gay, lesbian, bisexual and transgender employees are not protected under Title VII by federal law or under the law of many states.  This Act has been discussed a lot, most recently the Senate Committee on Housing, Employment, Labor and Pensions held a hearing on the legislation, and it would not be surprising to see a push for the passage of this bill in the coming year.
  • Increased Power for Organized Labor: In the last four years, Obama's appointment of members to the National Labor Relations Board (NLRB) has resulted in the Board's increased influence in the area of organized labor.  Under Section 7 of the National Labor Relations Act (NLRA), employees have the right to self-organize and engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection.  Because the NLRB has adopted a more expansive definition of "concerted activities," many employer policies and procedures have been questioned and the NLRB has issued numerous pro-worker opinions.  For example, in January 2012, the NLRB held that employers may not require their employees, as a condition of employment, to sign an agreement precluding them from filing joint, class or collective claims that address wages, hours, or other working conditions against the employer in any form, arbitral or judicial.  Then in July 2012, the NLRB declared unlawful an employer's policy of requesting employees to refrain from discussing all ongoing internal investigations with co-workers.  The NLRB claimed this action on the part of the employer to be an illegal restraint on non-supervisory employees' right to engage in protected concerted activity.  Finally, the Board more recently addressed social media policies in the context of concerted activity. On September 7, 2012, the NLRB issued its first decision concerning a specific employer's social media policy, determining that Costco Wholesale Corp.'s policy, which prohibited employees from electronically posting statements that "damage the Company . . . or damage any person's reputation" was impermissible under the NLRA as an unlawful restraint on protected concerted activity rights.  With the NLRB's momentum, don't expect these types of opinions, which significantly restrict employer policies, to slow down anytime soon. 
  • Increased Regulation for Government Contractors – The Office of Federal Contractors Compliance Programs (OFCCP) has also been very active during the Obama administration and has pushed and will be promoting a regulatory agenda which seems to be more aggressive than ever before.  One of the OFCCP's regulatory proposals, which has been on the table since 2011, involves a disability utilization goal.  Essentially, the proposed regulation would require federal contractors and subcontractors to set a hiring goal to have 7% of each job group within their workforce to be comprised of individuals with disabilities. The OFCCP has also stated it wants to develop a new compensation data collection tool which would be used to identify pay discrimination. The tool would be used to, among other things, more efficiently investigate pay discrimination and provide insight into industry trends.  Expect for the OFCCP to push for these regulations now that Obama has been given another four years in office. 

This short summary reflects on only a few areas of employment law and is by no means an exhaustive list of the types of changes employers and HR should expect in the next four years.  One thing is for sure, whether or not you believe these expected changes are moving businesses "forward," with some very active government agencies and a president who has championed the expansion of civil rights for women, the LGBT community and the rights of workers, you can be sure to see significant movement  in the laws that affect business and their employees.

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Should Employers Be Concerned About Broward County's Wage Ordinance? Probably Not.


On January 2, 2013, Broward's new wage ordinance goes into effect.  Originally titled "Wage Theft," the ordinance, codified at Chapter 20 ½ of the Broward County Code of Ordinances, is now called "Non-Payment of Earned Wages."  Regardless of its name, business groups vigorously opposed the ordinance, claiming it was unnecessary and duplicative of existing laws.  They were right.  But for those very reasons, I believe the new ordinance will be infrequently used and should not be of great concern to local businesses. 

Existing law already provides a financial incentive to attorneys to take even low-dollar wage cases to court.  The federal Fair Labor Standards Act ("FLSA") entitles employees who prevail in a minimum wage or overtime lawsuit to recover their attorneys' fees.  A separate Florida statute, section 448.08, allows employees who prevail in any action for unpaid wages to recover their attorneys' fees.  Thus, even employees who are exempt from minimum wage and overtime laws but who are denied wages owed to them under an agreement with their employer can recover their attorney's fees if they prevail.  

Because of these financial incentives and a cadre of attorneys who specialize in unpaid wage cases, South Florida leads the nation in wage-related lawsuits.  And each year, the number of new cases seems to grow.   

Will Broward County's wage ordinance significantly accelerate this trend?  Based on my reading of the ordinance, it seems unlikely.  The remedies under the ordinance are no greater than what's available under existing laws.  Under the ordinance, employees can recover their back wages and an equal amount in liquidated damages – precisely what the FLSA provides.  If the employee hires an attorney and prevails, he can also recover his attorney's fees.  But again, that's no different than what existing state and federal law already provides. 

And the ordinance actually gives attorneys a disincentive to use it:  Before filing a complaint, the employee must first notify the employer in writing of the wage deficit and give the employer 15 days to remedy the problem.  If an attorney employs this procedure on behalf of his client, and the employer pays the employee, no case can be filed and the attorney cannot recover his fees.  

At the same time, the ordinance makes it easy for employees to proceed pro se.  For example, the ordinance does not require the payment of a filing fee.  And to initiate a case, the employee need only file a written complaint; the County is responsible for serving the complaint upon the employer.  

In short, the Broward County ordinance seems to offer no additional incentive over existing law for attorneys to file wage-related lawsuits.  If the ordinance results in additional wage cases being filed, it seems likely that such cases will be filed by employees, not by attorneys.  If so, that may actually be good news for employers. When wage-related lawsuits settle, as they almost always do, a significant portion of the settlement typically consists of attorney’s fees.


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