In Employment Arbitrations, Prevailing Party Fee Provision "Chills" But is Not Cool

POSTED BY RICHARD D. TUSCHMAN ON DECEMBER 2, 2013

In recent years the United States Supreme Court has ruled in favor of businesses in several cases involving the enforceability of arbitration agreements.  But as illustrated by a recent decision by Florida's Second District Court of Appeal, Hernandez v. Colonial Grocers, Inc., courts will decline to enforce arbitration agreements that have a "chilling effect" on the filing of employment-related claims.

Jose Hernandez filed an action against Colonial Grocers alleging a violation of the Fair Labor Standards Act and Florida's worker's compensation anti-retaliation statute, section 440.205, Fla. Stat. Colonial moved to compel arbitration in accordance with its employee manual, which provided that "any controversy or claim arising out of or relating to the employment relationship" was subject to arbitration.  The arbitration provision also provided:

Although the parties shall initially bear the cost of arbitration equally, the prevailing party, if any as determined by the arbitrator at the request of the parties which is hereby deemed made, shall be entitled to reimbursement for its share of costs and reasonable attorneys' fees, as well as interest at the statutory rate.

The trial court granted Colonial's motion, and Hernandez appealed.

The Second DCA reversed the trial court's order, holding that the attorney's fee provision had a "chilling effect" that discourages employees from bringing Fair Labor Standards Act claims.  The court noted that under the FLSA, a prevailing plaintiff is entitled to an award of reasonable attorney’s fees, whereas the statute does not allow for prevailing party fees for the defendant. In contrast, under Colonial's arbitration agreement, whichever party prevails "shall be entitled to reimbursement for its share of costs and reasonable attorneys' fees." The result is that if the arbitrator were to declare Colonial the prevailing party, Hernandez would be obligated to pay Colonial's attorney's fees. "This renders the potential cost of arbitration to be far greater to Hernandez than the potential cost of civil litigation," the court wrote, "which under no circumstances would include Colonial's attorney's fees. As such… [the agreement] expose[s] him to a potential liability to which he would not be exposed if the litigation occurred in civil court because the federal statute specifically protects him from such liability."

The Hernandez decision points to one of the principal limitations of arbitration agreements:  They will not pass judicial muster if they defeat the remedial purposes of employment laws.  Employers that fail to recognize this and adopt arbitration agreements that limit an employee’s substantive rights, or that discourage employees from bringing statutory claims by making arbitration more expensive than litigation, will likely find themselves back in court.

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A New Protected Class?: LGBT Workplace Discrimination and the Employment Non-Discrimination Act of 2013

POSTED BY NEFERTARI S. RIGSBY ON NOVEMBER 21, 2013

Congress is currently considering the creation of a new protected class for purposes of workplace discrimination.  The Employment Non-Discrimination Act (ENDA) would create a new federally-protected class of individuals: lesbian, gay, bisexual and transgender applicants and employees.  Generally, ENDA will prohibit employment discrimination on the basis of sexual orientation and gender identity by covered entities.  Most states do not have employment discrimination laws that protect lesbian, gay, bisexual and transgender individuals.  Other states and cities vary with the types of laws and ordinances they have in place.  Some states prohibit employment discrimination based on sexual orientation or gender identity, whereas others only prohibit employment discrimination based on sexual orientation.  Additionally, some laws make a distinction between public and private employment. 

While the bill may undergo changes, there are some key provisions in ENDA of which employers should be aware:

  • Like Title VII of the Civil Rights Act, a covered employer must have at least 15 employees.
  • Sexual orientation includes homosexuality, heterosexuality and bisexuality.
  • Similar to the Americans with Disabilities Act, employers may not discriminate against individuals based on actual or perceived sexual orientation or gender identity. 
  • Individuals who associate with lesbian, gay, bisexual or transgender individuals are protected from discrimination as well. 
  • ENDA permits claims of disparate treatment but not claims of disparate impact. 
  • Employers would not be required to create additional facilities for lesbian, gay, bisexual and transgender individuals in the workplace. 
  • Employers can require an employee to adhere to reasonable dress and grooming standards during working hours. 
  • Employers are prohibited from collecting statistics on lesbian, gay, bisexual and transgender individuals.  Presumably, such information would not be included in EEO-1 Reports.
  • Aggrieved individuals would not be permitted to recover under both Title VII for sex discrimination and ENDA.


ENDA passed the Senate vote on November 7, 2013.  The bill will now proceed to the House of Representatives.  However, House Speaker John Boehner has not scheduled a vote on the bill. Regardless, human resources professionals should keep ENDA on their radar heading into 2014.

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Will You Be Ready When The Whistle Is Blown?

POSTED BY CHRISTOPHER S. DUKE ON NOVEMBER 14, 2013

Claims by employees "blowing the whistle" on their employer are on the rise in today's workplace.  Will you be ready when the whistle is blown on your company?  Better yet, can you prevent whistleblower claims from being raised in the first place?

Various provisions of state and federal law prohibit retaliation against employees who "blow the whistle" on employer misdeeds.  Laws prohibiting retaliation against whistleblowing employees include:

  • Florida's Private Whistleblower Act
  • Florida's Public Whistleblower Act
  • False Claims Act
  • Sarbanes-Oxley Act
  • Dodd-Frank Act
  • 21 whistleblower laws in OSHA’s Whistleblower Protection Program

While the specifics of each of these laws can differ greatly so that each whistleblower claim must be treated individually and on a case by case basis, certain common threads can be found in all whistleblower claims.  First, the employee's claim must be made in opposition to or about an improper practice by the employer.  For most whistleblower statutes, the employee must complain about an actual violation of a law, rule or regulation.  This means that the action complained of must constitute a violation of a law, rule or regulation and not the mere suspicion of a violation or a belief that a violation has occurred.  Under Florida's Private Whistleblower Act, Florida Statutes § 448.101, et seq., only a validly enacted law, rule or regulation can form the basis of a claim.  Thus, employee handbooks or policies, industry standards, even governmental executive orders and opinion letters cannot form the basis of a whistleblower claim because they do not qualify as a validly enacted "law, rule or regulation" necessary to trigger Florida's statute.
 
Another common thread running throughout all whistleblower statutes is the anti-retaliation provision.  Stated simply, once the complaint is made, the complaining employee cannot be subject to any retaliatory personnel action as a result of the claim. This includes discharge, suspension, demotion, decrease in pay or loss of benefits, or any other action that negatively impacts that employee's working conditions.  Unless the decision to take such action against the employee was already made prior to the assertion of the complaint and you have the documentary evidence to prove it, it is wise to forego any negative treatment of the employee until the whistleblower claim has been addressed.

The above topics, as well as many more related to understanding and avoiding whistleblower and retaliation claims, will be discussed at Akerman's upcoming breakfast seminar on November 20th in West Palm Beach, FL.

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OSHA Proposes Major Recordkeeping Change

POSTED BY HEATHER L. MACDOUGALL ON NOVEMBER 12, 2013

The Occupational Safety and Health Administration (OSHA) has proposed a major change to its rules regarding the way that employers report injury and illness data to the agency.

On November 7, 2013, the OSHA Assistant Secretary Dr. David Michaels announced a new proposed rule that would require establishments with more than 250 employees, which are already required to keep injury records, to electronically submit them to OSHA on a quarterly basis, and establishments with 20 or more employees in industries with high injury and illness rates to electronically submit their injury and illness logs each year. Michaels said OSHA will post the data on its website, once personally identifying information is removed.

Michaels said the newly proposed submission requirements will enable employers to compare their safety records against peers and will allow workers to know the safety records of potential employers. Aggregating data across industries also will help researchers identify emerging hazards and patterns, Michaels said. On January 9, 2014, OSHA will hold a public meeting on the proposed rule in Washington, D.C.  In addition, OSHA is accepting public comments for 90 days, until February 6, 2014.

Under current rules, employers are required to post annual summaries of injury and illness reports in a common area where employees can see them. While the OSHA website contains raw numbers about incidents at certain workplaces, it doesn't describe what the injury was or how it occurred. Business groups say they are likely to oppose the plan, claiming that raw injury data can be misconstrued or may disclose sensitive information that may be misused. 

Marc Freedman, executive director for labor policy at the U.S. Chamber of Commerce, said the mere recording of an injury does not tell the full story about the circumstances surrounding it or whether the company has a good safety program.  "Making company-specific data on injuries available for all to see would be a major problem and would likely lead to companies being targeted by outside groups who want to characterize these employers as having bad safety records," Freedman said

Michaels announced the rule on the same day the Bureau of Labor Statistics released its estimate that there were almost 3 million nonfatal U.S. recordable workplace injuries and illnesses by private-industry employers in 2012, resulting in an incidence rate of 3.4 cases per 100 equivalent full-time workers. "Three million injuries are three million too many. We can and we must do better," Michaels said. Michaels called the proposed submission requirements "an effective, inexpensive, and non-prescriptive way" to encourage employers to do this.

With the possibility that OSHA reporting requirements could change soon, it's important for businesses to make sure they remain in compliance with OSHA’s recordkeeping rules.

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OFCCP'S New Rules Expand Affirmative Action Requirements

POSTED BY ARLENE K. KLINE ON NOVEMBER 7, 2013

The Office of Federal Contract Compliance Programs (OFCCP) has issued new rules that  increase affirmative action requirements of direct federal contractors and subcontractors. 

The OFCCP issued its final rules in the Federal Register on Sept. 24th.  The OFCCP announced that the rules, which affect hiring and retention practices for veterans and persons with disabilities, would not go into effect until 180 days after being published, making the effective date of both rules March 24, 2014.  However, for federal contractors with an affirmative action plan already in effect, the affirmative action program requirements do not go into effect until the beginning of the next plan year. 

The rules are an overhaul of the regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act  of 1974 (VEVRAA) and Section 503 of the Rehabilitation Act of 1973 (Section 503), which prohibit discrimination and require contractors to take affirmative action in all personnel practices.  The revised regulations contain hiring targets both for veterans and individuals with disabilities and require that employers undertake voluntary self-disclosure surveys for applicants and employees seeking information about whether they have disabilities.  (The EEOC already has issued a letter stating that it does not regard such surveys as inconsistent with the ADA). 

Besides creating new and increased recordkeeping and tracking requirements, the rules require covered contractors to develop more expansive affirmative action programs to address the new requirements.  Also, contractors will need to reassess and update existing personnel policies and procedures regarding affirmative action, reasonable accommodation and harassment.  Certain information will need to be disseminated to all employees; and training should be conducted for the overall workforce, management and those specifically involved in recruiting, screening, selecting, promoting, disciplining and related supervisory duties. 

Previously, there were two sets of regulations covering VEVRAA.  The new regulations adopt a new across-the-board coverage threshold of $100,000 or more.  In addition, covered contractors or subcontractors with 50 or more employees are required to develop and maintain a written VEVRAA affirmative action program.  The disabilities rule requirements apply to contractors and subcontractors with a covered federal contract or subcontract valued in excess of $10,000.  In addition, covered contractors and subcontractors with contracts valued at $50,000 or more and 50 or more employees must develop and maintain a written Section 503 affirmative action program.

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Employers Prepare for Minimum Wage Increases in 2014

POSTED BY JENNIFER T. WILLIAMS ON NOVEMBER 5, 2013

Florida's current $7.79 hourly minimum wage rate will increase to $7.93 effective January 1, 2014.  Florida's minimum wage law requires the Florida Department of Economic Opportunity to recalculate Florida's minimum wage annually based upon the increase in the federal Consumer Price Index for Urban Earners and Clerical Workers in the Southern Region. This minimum wage increase applies to all employees who are covered by the federal Fair Labor Standards Act.

This hourly increase also impacts wages paid to tipped employees working in Florida. For tipped employees who receive tips as part of their compensation under the FLSA's tip credit rules, employers may count those tips as wages under Florida's minimum wage law. Employers may take a credit of up to $3.02 per hour for all tipped employees.  However, tipped employees must also receive a direct hourly wage. Effective January 1, 2014, this direct hourly wage must be at least $4.91 – calculated as Florida's minimum wage ($7.93) minus the permissible tip credit ($3.02).

Other states are also increasing minimum hourly wages for non-exempt employees in 2014:

  • Arizona: $7.90 effective January 1, 2014.  
  • Connecticut: $8.70 effective January 1, 2014.
  • California: $9.00 effective July 1, 2014.
  • Montana: $7.90 effective January 1, 2014.
  • New York: $8.00 effective December 31, 2013; $8.75 effective December 31, 2014.
  • Ohio: $7.95 effective January 1, 2014.
  • Oregon: $9.10 effective January 1, 2014.
  • Rhode Island: $8.00 effective January 1, 2014.
  • Washington: $9.32 effective January 1, 2014.


States with pending announcements regarding 2014 minimum wage increases include Colorado, Missouri, and Vermont.

*Florida's 2014 minimum wage posters are available for downloading in English and Spanish from the Department of Economic Opportunity website.

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Aery is Scary for Florida Whistleblower Act Defendants

POSTED BY RICHARD D. TUSCHMAN ON NOVEMBER 1, 2013

The Florida Whistleblower Act ("FWA") prohibits employers from retaliating against employees who object to, or refuse to participate in, the employer’s violation of a law, rule, or regulation.  But most courts have held that an employee must show that he opposed an actual violation of a law, rule or regulation; a good faith belief that a violation occurred or is about to occur is insufficient.  

Florida’s Fourth District Court of Appeal apparently disagrees.  In Aery v. Wallace Lincoln Mercury of Lake Park (Fla. 4th DCA, July 31, 2013), the court addressed the FWA claim of John Aery, an automobile parts manager, who believed that the body shop manager was installing used parts in customers’ cars but billing the insurance company for new parts. Aery informed the general manager that this practice was in violation of industry standards and also "against the law." Several months later the general manager fired Aery.  Aery brought suit under the FWA. The trial court dismissed the case on the employer's motion for summary judgment, and Aery appealed.  One of the employer's arguments on appeal was that Aery had failed to state a cause of action because he did not tell his supervisor what laws the body shop manager was breaking.  The Fourth DCA disagreed, holding that "it was not necessary that Aery provide his employer with statutory and case law citations to support his claim of illegal conduct."  And, the court held that a plaintiff asserting a FWA claim need only show that he had a "good faith, objectively reasonable belief" that his the employer’s activities were illegal.  

Aery leaves the burden of proof in a FWA claim in a state of uncertainty.  The "actual violation" standard places a high burden on plaintiffs and is more favorable to FWA defendants.  It is also the standard that the Florida Supreme Court seemingly endorsed in its pattern jury instructions. The "good faith, objectively reasonable belief" standard – the same standard used in Title VII cases – is significantly lower and opens the door to many more FWA claims.  Which standard applies will be determined by the court in which the parties find themselves– at least until the Florida Supreme Court decides the issue.

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It's Official - Offering Full Monetary Relief Without a Judgment Will Not Moot FLSA Case

POSTED BY RICHARD D. TUSCHMAN ON OCTOBER 21, 2013

Last year we reported on the Eleventh Circuit's decision in  Zinni v. ER Solutions, Inc. (11th Cir., August 27, 2012), which seemed to signal that a defendant in a Fair Labor Standards Act case cannot moot the case by offering full monetary relief to the plaintiff without also offering a judgment to the plaintiff.  The issue is significant because a judgment will trigger a plaintiff's entitlement to attorney’s fees.  In Zinni, a defendant could not avoid an award of fees to plaintiff, even when offering the full amount of damages that could be recovered. But, Zinni was not a FLSA case – it was a Fair Debt Collection Practices Act case.
 
Recently, the Eleventh Circuit confirmed the conclusion that Zinni seemed to portend.  In Wolff v. Royal American Management, Inc. (11th Cir., October 1, 2013), the court held that the defendant's tendering of full monetary relief to the plaintiff did not moot her FLSA case and the plaintiff was therefore entitled to her attorney's fees. 

The plaintiff, Phyllis Wolff, claimed she was owed $1,800 in overtime wages and an equal amount in liquidated damages.  The defendant, Royal American Management, Inc. ("RAM"), tendered $3,600 to plaintiff through her attorney and moved to dismiss the complaint.  Wolff's counsel returned the check.  RAM then offered to settle the case for $5,000, but Wolff's counsel never submitted the offer to Wolff because it was not in writing.  When Wolff learned of the offer, she met with RAM on her own, signed a general release, and took the $3,600 check.  The district court approved the settlement but found that the settlement had not mooted the case. The court entered judgment for Wolff and awarded her attorney's fees in the amount of $61,810.44.

On appeal, the Eleventh Circuit affirmed.  The court held that RAM's offer did not constitute full relief that would moot Wolff's claim, because full relief must include an offer of judgment.  The catch, of course, is that a judgment triggers the plaintiff's entitlement to attorney's fees. 

The Supreme Court's recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), does not change the analysis.  Genesis involved a settlement offer that included an offer of judgment.  The Supreme Court held that, assuming such an offer mooted the plaintiff's case, it also mooted a putative collective action where there were no other plaintiffs in the case.  Genesis did not answer the question of whether a defendant can moot a FLSA case by offering full monetary relief, but not a judgment, to the plaintiff. 

In the Eleventh Circuit, Wolff provides the answer to that question and makes it clear that plaintiff's attorneys will continue to have a financial incentive to file even low-dollar FLSA cases in court.  A defendant cannot buy off the plaintiff without also paying her attorney.  And as the facts of Wolff illustrate, a defendant's failure to realize that early in the case can be a very expensive mistake.

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Can Employer Who Has Granted Employee's FMLA Request Dispute Employee's FMLA Eligibility?

POSTED BY RICHARD D. TUSCHMAN ON OCTOBER 15, 2013

An employee sends an email to her manager requesting FMLA leave to care for her father "while he deals with issues surrounding his terminally ill brother."  The supervisor writes back, "Approved," and the employee takes leave.  Neither the FMLA nor the employer's FMLA policy allows leave to care for a terminally ill uncle.  Based on the employee's absence, the employer rescinds a temporary promotion the employee had received.  The employee sues the employer for FMLA retaliation.  Can the employer argue in defense that the employee was ineligible for FMLA leave?  That was the issue presented in a recent case decided by the Eleventh Circuit Court of Appeals, Dawkins v. Fulton County Government, Case No. 12-11951 (11th Cir., September 30, 2013).  

Equitable estoppel is a doctrine that prevents a party in litigation from asserting a claim or fact that is inconsistent with a position that the party has previously taken, if the other party has reasonably relied on that position.  In Dawkins, the employee argued that in light of her supervisor’s approval of her FMLA leave request, her employer should have been prevented from disputing her FMLA eligibility.  That argument raised two questions:  Does the Eleventh Circuit recognize equitable estoppel to extend FMLA coverage?  And assuming it does, did the employee’s equitable estoppel argument have merit?

Unfortunately, the court decided the second question only.  The court held that the employee did not reasonably rely on her supervisor’s approval of her FMLA request.  The court noted that the employee had previously taken FMLA leave and knew that completing FMLA paperwork was required for the employer to determine FMLA eligibility.  So, any reliance on the supervisor’s email approval was not reasonable. Additionally, before receiving the supervisor’s approval, the employee asked for her FMLA paperwork to be sent to her uncle’s address in Florida. This showed that the employee was intent on taking leave regardless of her FMLA eligibility and that she did not actually rely on her supervisor’s approval.

The court declined to decide whether equitable estoppel can ever be used to extend FMLA coverage. The court stated: "The relief Dawkins requests would require this court to create a new federal common law equitable estoppel applicable to the FMLA.  The times when we should create new federal common law are few and restricted."  But in a dissenting opinion, Judge Wilson noted that every other circuit to have considered the issue has decided that equitable estoppel can apply in FMLA cases. So it remains to be seen how the Eleventh Circuit will resolve this issue.

For employers, the Dawkins case should serve as a reminder about the importance of carefully considering FMLA leave requests.  While employers should not deny legitimate FMLA requests made by eligible employees, employers should be hesitant to grant FMLA leave requests made by ineligible employees. Under the right set of facts, an ineligible employee might be able to persuade a court that the employer's actions prevent the employer from disputing his FMLA eligibility – even if his leave was to care for his sick uncle.

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With This Ring, I Thee Confer Benefits... The Meaning of "I Do"

POSTED BY DEBRA M. LEDER ON SEPTEMBER 30, 2013

Based upon an IRS determination which took effect last week, same-sex couples who enter into marriages in jurisdictions that recognize such marriages are now treated as married for federal tax purposes, regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage.  The IRS will now allow pre-tax dollars to be used to pay premiums for same-sex spouse benefits, such as health insurance coverage. 

With regard to employer-provided benefits, the IRS ruling does not confer an obligation for employers to provide spousal coverage.  However, if an employer has a benefit plan which entitles spouses to certain benefits, and the term "spouse" is not defined as an opposite-sex marriage, the same-sex spouse may be covered under those plans, even if same-sex marriage is not recognized in the state where the couple resides.  The IRS ruling follows upon the determination by the United States Supreme Court in U.S. v. Windsor, 133 S. Ct. 2884 (June 26, 2013) that key parts of the "Defense of Marriage Act," unconstitutionally denied federal recognition to same-sex spouses.  Other benefits, such as job-protected leave under the Family and Medical Leave Act ("FMLA") have not yet caught up. 

Under the FMLA, the definition of "spouse" depends upon state law.  In August, 2013, the U.S. Department of Labor reiterated that the term "spouse" means "a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including 'common law' marriage and same-sex marriage."  So basically, an employee may be able to provide health insurance to his or her same-sex spouse, but not take leave if that spouse develops a serious health condition, depending upon whether their marriage is recognized in the jurisdiction where they live.

Unless and until DOL aligns with the IRS, an employer's definition of "spouse" with regard to employee benefits may be open for interpretation.  Currently there are thirteen states which recognize same-sex marriages, whether by legislation, court decision or popular vote (California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington, plus the District of Columbia).  If you have employees in those jurisdictions, same-sex spouses would be entitled to leave benefits under the FMLA.  For employers who have employees with same-sex spouses residing in jurisdictions where same-sex marriage may not be recognized, take a look at your policies.  It is possible that any references to "spouses" or "marriages" within your employee benefit plans, including health insurance and retirement plans, may be construed to include same-sex spouses.  Depending upon the size of your workforce, this impact may not be significant.  However, now is a good time to review your policies and determine whether it would be appropriate to amplify the definition of spouse, such as an "opposite-sex marriage," to ameliorate the impact of the IRS ruling where such broad coverage may not be intended, particularly in jurisdictions where same-sex marriages are not currently legally recognized.

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Continued Employment in Dead-End Job May Entitle Employee to Incentive Benefits

POSTED BY RICHARD D. TUSCHMAN ON SEPTEMBER 24, 2013

In Florida, employee handbooks, procedure manuals, and other statements of an employer's policy are generally non-binding and do not give rise to enforceable contract rights.  But suppose an employer induces an employee to continue working by offering a long term incentive plan? That was the issue addressed in a recent decision by Florida’s Fourth District Court of Appeal, Turton v. Singer Asset Finance Co., LLC (Fla. 4th DCA, September 4, 2013).

Singer Asset Finance Company was in the business of purchasing, servicing and securitizing assets, including state lottery awards and structured settlement payments.In 2000 or 2001, Singer decided to cease all business except to become a "run down" entity, functioning solely for the collection of its structured settlement portfolio.  To incentivize employees to stay with the company during the "run down", Singer offered the "2001 Singer Long Term Compensation Plan."  One of the express purposes of the Plan was to "[c]reate enough incentives so that employees will not resign their positions."  The Plan guaranteed employees at least twenty-five shares per year and contained a formula for how employees would receive shares in the Plan each year.  The Plan also contained formulas for determining the value of shares, how much each shareholder would receive for the shares, and how payments would be made to shareholders. 

Margaret Turton worked for Singer from 1997 through December 2009.  Upon her resignation, she demanded payment of the value of her vested shares in the Plan.  Singer refused payment, and Turton sued for breach of contract.  Turton argued that she relied on the offer of long term  compensation – that she would not have continued working for Singer in her "dead end job" beyond 2001 if not for the offer of compensation under the Plan.  Singer argued that the Plan was neither a contract nor an offer and that any compensation from the Plan was discretionary.  The trial court agreed with Singer and granted the company’s motion for summary judgment, noting that that there was no explicit language in the Plan stating that it was a binding contract.

On appeal, the Fourth DCA reversed.  The court noted that the Plan was not only designed to compensate employees for hard work, but also to compensate employees for not quitting a dying business.  Thus, there were questions that a jury would have to resolve: Whether the transmission of the Plan to Turton constituted a continuing offer to avoid Turton's resignation, and whether Turton's continued employment was a continuing acceptance of the offer.

It seems likely that a jury of Turton's peers will answer these questions in her favor.

For employers, the Turton case should serve as a reminder of the importance of careful drafting.  If you want an offer of compensation or benefits to an employee to be discretionary and non-binding, state that clearly in the document.  Absent such a disclaimer, the employee’s acceptance of your offer is likely to create a binding contract. The defense that "we didn't mean what we promised" is not very appealing, especially when employees rely on that promise. 

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Minimum Wage and Overtime Pay Extended to Certain Direct Home Care Workers

POSTED BY VENUS A. CARUSO ON SEPTEMBER 19, 2013

On September 17, 2013, the U.S. Department of Labor's Wage and Hour Division announced a final rule extending the Fair Labor Standards Act's minimum wage and overtime protections to cover certain direct care workers such as certified nursing assistants, home health aides, personal care aides, caregivers and other companions who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities. The new rule will take effect January 1, 2015. 

Since 1974, the Fair Labor Standards Act ("FLSA") has covered workers who perform a "domestic service" – i.e., services of a household nature performed by a worker in or about a private home, whether permanent or temporary. This term includes services performed by companions, babysitters, cooks, waiters, maids, housekeepers, nannies, nurses, janitors, caretakers, handymen, gardeners, home health aides, personal care aides, and family chauffeurs, among others.  However, the FLSA also provides for a Companionship Services Exemption, exempting certain domestic service workers from minimum wage and overtime protection including, but not limited to, casual babysitters and domestic service workers employed to provide "companionship services" for an elderly person or a person with an illness, injury, or disability if they meet certain regulatory requirements described below.  

The amended regulations narrow the Companionship Services Exemption in two ways. First, they narrow the definition of "companionship services". Second, they provide that the exemption may only be claimed by the individual, family, or household using the services.

Under the revised regulations, the term "companionship services" means the provision of "fellowship" and "protection" for an elderly person or a person with an illness, injury, or disability who requires assistance in caring for himself or herself. "Companionship services" also include the provision of care, such as assisting a person with activities of daily living, provided that that such care requires no more than 20 percent of the employee's time worked for the person during the workweek. "Companionship services" do not include the performance of medically related services or household work not performed primarily for the elderly person or person with an illness, injury or disability who requires assistance, or household services.  Also, under the revised regulations, the Companionship Services Exemption is only available to the individual, family, or household solely or jointly employing the worker, and only if the companionship services duties test is met.  Third party employers of direct care workers, such as home care staffing agencies, are not permitted to claim this exemption, even when the employee performs companionship services and is jointly employed by the third party employer and the individual, family, or household using the services.  As such, third party employers must pay their workers the Federal minimum wage for all hours worked and overtime pay at time and one-half of the regular rate of pay for all hours worked over 40 in a workweek.

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Urging an Employee to Retire is Not Necessarily Evidence of Age Discrimination

POSTED BY RICHARD D. TUSCHMAN ON SEPTEMBER 11, 2013

Mandatory retirement is generally unlawful under the Age Discrimination in Employment Act.  So when an employer urges an employee to retire, isn't this evidence of age discrimination that an employer should avoid?  

Not necessarily, as illustrated by a recent decision by the Eleventh Circuit Court of Appeals, Woolsey v. Town of Hillsboro Beach (11th Cir., September 6, 2013). 

James Woolsey is a police officer employed by the Town of Hillsboro Beach.  In 2008, the town's Chief of Police promoted Woolsey, who was 49 years-old at the time, to Captain, or second-in-command. But by 2010 Woolsey's relationship with the Chief soured because Woolsey had implemented certain practices the Chief did not agree with.  Woolsey claimed the Chief twice demanded that he retire and was silent when Woolsey asked why.  The Chief also provided Woolsey with materials for the Florida Retirement System's Deferred Retirement Option Program (DROP).  Woolsey claimed that the Chief told him that if he did not retire, he "was going to take [him] down in an embarrassing ball of flames."

That year, the Chief demoted Woolsey from Captain to Patrol Officer.  The Chief cited the following reasons for his decision: lack of loyalty, lack of supervisory skills, failure to perform at the level expected of Captain, failure to support the Police Department's accreditation process, and disagreements about how the Department should have been run.  

Woolsey sued the town, claiming that the Chief was motivated by age discrimination. The district court granted the town's motion for summary judgment, and Woolsey filed an appeal. 

The Eleventh Circuit affirmed the district court's decision.  The court noted that in support of the Chief's stated reasons for Woolsey's demotion, the town submitted multiple letters of counseling/reprimand and performance evaluations issued to Woolsey explaining his specific deficiencies and what needed to be done for him to improve, including a warning of possible demotion or termination if he did not.  While Woolsey argued that these were all subjective reasons, the court stated that a subjective reason is legally sufficient as long as the employer "articulates a clear and reasonably specific factual basis upon which it based its subjective opinion." In fact, Woolsey acknowledged that he had disagreements with the Chief about how the Department should be run. Also of significance was the fact that the Chief had promoted Woolsey just a couple of years earlier when Woolsey was 49 years old.  In short, the Eleventh Circuit held that Woolsey's claim of age discrimination was so weak that the district court was correct in granting summary judgment in the town's favor. 

Interestingly, the court's opinion attributed no significance to the Chief's repeated demands that Woolsey retire.  In the context of this case, that makes sense.  An employer may be aware that an employee is eligible for retirement benefits but be motivated to terminate or demote the employee for legitimate, non-discriminatory reasons.  In that scenario, urging an employee to accept retirement benefits as an alternative to a lawful discharge does not necessarily evidence a discriminatory intent.

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Keeping the Jury at Bay: Workers' Compensation Retaliation Claim is Subject to Arbitration

POSTED BY RICHARD D. TUSCHMAN ON AUGUST 20, 2013

A workers' compensation retaliation claim must be arbitrated under the parties' arbitration agreement, according to a recent decision by Florida's Second District Court of Appeal, Audio Visual Innovations, Inc. v. Spiessbach (Fla. 2d DCA, August 16, 2013)
 
Michael Spiessbach injured his back while working for Audio Visual Communications, Inc. (AVI).  He claimed that after filing a claim for workers' compensation benefits, AVI treated him differently and eventually terminated his employment because of his claim.  Spiessbach then filed suit under Florida's workers' compensation retaliation law, section 440.205, Florida Statutes.
 
AVI moved to compel arbitration, but the trial court denied the motion.  On appeal, the Second District Court of Appeal considered several issues.  First, did the arbitration agreement substantially diminish the statutory remedies under section 440.205?  The court held that it did not.  The employee was not required to pay the arbitrator's fees, and the arbitrator was authorized to grant any relief that a court could grant.
 
Second, was the workers' compensation retaliation claim a claim for "workers' compensation benefits" that was excluded under the parties' arbitration agreement?  The court held that it was not, noting that a petition for workers' compensation benefits is filed with the Office of the Judges Compensation Claims, whereas a claim for workers' compensation retaliation is filed in Circuit Court. 
 
Third, did the employer waive its right to arbitration by filing two motions for extension of time to answer the complaint, participating in mediation, and waiting five months before demanding arbitration?  The court held that the employer did not waive its right to arbitration because it did not file a responsive pleading or otherwise take a position on the merits that would be inconsistent with its right to arbitration.
 
The court therefore reversed the trial court's order and directed the trial court to grant AVI's motion to compel arbitration. 
 
For employers, the Spiessbach case is a good illustration of the pros and cons of arbitration.  The main benefit to the employer is that the case will be decided by an arbitrator rather than a jury.  For employers who fear hostile, "runaway" juries, that is a good thing.  On the other hand, arbitration agreements are often challenged by employees.  The cost of defending the arbitration agreement in court, coupled with the arbitrator's fees, may prove to be more expensive than litigation.  In addition, if the employer has a good case for summary judgment, court may be a better option, as arbitrators are hesitant to make an award for an employer without a hearing.  Accordingly, whether to have an arbitration agreement depends on many factors that should be carefully considered.    
 

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The Continuing Saga of Unpaid Workers & Misclassification Issues

POSTED BY JENNIFER T. WILLIAMS ON AUGUST 13, 2013

Worker misclassification continues to be an issue at the forefront of today's workplace.  Along with the use of unpaid interns, we are now seeing litigation brought on behalf of unpaid volunteers seeking compensation.  In the last week alone, three court filings highlight various issues related to unpaid workers:
  • On August 6, 2013, an unpaid summer intern working at Columbia Music Corp. filed a class action lawsuit in New York state court to recover unpaid minimum wages under New York state labor laws.  The named plaintiff (Britt'ni Fields) worked in Columbia's Promotions Department during the summer of 2008. According to the complaint, Fields' duties included general office task such as making photocopies and handling mass mailings.  The complaint alleges that Fields and other interns should have been compensated for this time because Columbia would otherwise have needed to hire new employees or pay additional wages to existing employees to perform this type of work. 
  • On August 7, 2013, an unpaid volunteer working at Major League Baseball's "FanFest" filed a hybrid class and collective action lawsuit in federal court for the Southern District of New York seeking to recover unpaid minimum wages under both the federal Fair Labor Standards Act and New York state labor laws. Plaintiff John Chen claims that he and other volunteers should have been compensated for the time they spent working as greeters, manning the information booth, and handling event hospitality.  The lawsuit alleges that volunteers were required to attend a mandatory orientation session, pass a background check, and wear a "uniform" consisting of sneakers and khaki pants or shorts.  Instead of wages, Chen and the other volunteers received Major League Baseball souvenirs. 
  • Also on August 7, 2013, two former unpaid interns filed a petition with the United States Supreme Court seeking to resolve a conflict among federal appeals courts as to the appropriate legal test for determining whether an unpaid intern is entitled to wages under the FLSA.  The petitioners, Risa Kaplan and Linda O'Neill, both completed externships as part of earning a degree in medical billing and coding at MedVance Institute.  Both Kaplan and O'Neill claimed that they were entitled to unpaid minimum wages for their work checking the status of medical claims and reviewing accounts during the course of their externships.    

These cases, coupled with the recent ruling against Fox Searchlight Pictures that unpaid interns working on the production of the film Black Swan were misclassified, may signal increased litigation related to unpaid interns and volunteers. Employers should review existing internship and volunteer programs to ensure that programs comply with the specific guidance issued in April 2010 by the U.S. Department of Labor.  Our July 2, 2013 Practice Update addresses the DOL's guidance in detail and provides practical suggestions for evaluating workplace internship and volunteer programs.

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