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There are a Million Reasons (Almost) for Careful Attention To Employee Time and Wages

17 Mar

As a restaurant in Copiague, N.Y. learned the hard way, failure to track and pay employee hours accurately can lead to a big matzah ball of legal liability.  The Wage and Hour Division of the United States Labor Department has announced that the restaurant was ordered to pay $390,000 in back wages to approximately 40 employees who had not properly been paid overtime pay and had not received the equivalent of the required minimum wage, despite working 70-80 hours per week in some cases.  Based upon “liquidated damages” provisions under applicable law, the restaurant also was ordered to pay an additional amount equal to the  back pay owed to the employees.  As a result, the restaurant was required to pay the employees a total of $780,000.  The restaurant also apparently was adjudged not to have properly tracked wages and tips, and to have paid employees with un-tracked cash payments, leading to an additional civil fine of $20,000.  All told, the restaurant is picking up an $800,000 tab for its lax record keeping and for underpaying its overworked employees.

The action against the employer was based upon the Fair Labor Standards Act, a federal law which requires employers to pay qualifying employees at least the federal minimum wage, plus time and a half for time spent at work beyond 40 hours in a given week.  Although there is no indication the violations were inadvertent in this instance, an employer is not excused from paying an employee overtime even if the employer has not directed the employee to work overtime, but the employer generally has to be aware the employee is doing so before it is responsible to pay.  There also are provisions aimed at protecting employees who report a violation of the FLSA.

There also may be state laws that apply to a given situation where there are unpaid compensation or a failure to account for employee time.  For example, our home state of Minnesota has passed legislation that  provides strong remedies to employees, and even commission-based agents, who have not been paid as required.  There are strict timing requirements that apply to these payments as well.

Employers or employees with questions about whether a business is in compliance with the law should seek the assistance of counsel in determining whether the FLSA applies and whether changes are necessary.  Also, an attorney can pursue or defend cases for recovery of unpaid wages under the FLSA as well as applicable state laws.  If you have a question, contact us at Thomsen Nybeck.

Matt Drewes contributed this post.  Matt is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s nine-member Community Association Representation Group and the firm’s Creditors’ Remedies Group. and practices in the areas of business and real estate litigation and transactions, employment law, construction litigation, community association law, debtor/creditor law and insurance.  He has been included in Minneapolis/St. Paul Magazine’s list of Rising Stars for several years, and has been quoted on issues involving construction litigation, community associations and real property issues in the Minneapolis Star Tribune, Minnesota Lawyer, Yahoo!Finance.com, Bankrate.com, and elsewhere.  He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.

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Are Text Messages by Government Employees Private?

17 Dec

U.S. Supreme Court has taken a case to decide.

On December 14, 2009, the United States Supreme Court granted certiorari (meaning they decided to take the case) in a case from the Ninth Circuit Court of Appeals that revolves around the extent of a government employee’s privacy in the content of text messages sent over a government-issued pager.

A SWAT team officer in Ontario, California had the content of text messages searched by the City’s Police Department and it turned up a number of sexually explicit messages between the officer and others.  The pagers were issued by the City and the City was the account holder and paid the bills for the accounts.  The search was performed by the City in relation to investigating whether the “character limit” for each account’s monthly texting needed to be expanded or whether recurring overages were the result of personal use.  The officer and the recipients of the message sued, in part, the City, its police department and the chief of police for violation of the Fourth Amendment.  The District Court granted summary judgment to the defendants dismissing the plaintiffs’ claims.[1]  The Plaintiffs appealed.

The Ninth Circuit Court of Appeals issued a decision in June of 2008 overturning the District Court’s decision and allowing the claims of the Plaintiffs to proceed.  The portion of the Ninth Circuit’s decision that related to the privacy of the text messages found that the SWAT officer had an expectation of privacy in the content of the messages and the search of that content without the officer’s consent was unreasonable.  The full opinion can be found here.  The primary elements of this portion of the Ninth Circuit’s holding were:

  1. Searches of private property of government employees by the government employer are subject to the Fourth Amendment;
  2. Users of text message services have a reasonable expectation of privacy in the content of their text messages in the context of that case (which might have been different had other policies been in place); and
  3. The search of the content of the text messages was unreasonable as there were less invasive ways to effectuate the purpose of the search.

The City, its police department, and the police chief petitioned the United States Supreme Court to take its case.  The issues that they asked the Court to review were:

  1. Whether the officer had a reasonable expectation of privacy considering the messages were on a city pager and there was an official “no-privacy” policy, even though a non-policymaking lieutenant had an informal policy of allowing some personal use of pagers.
  2. Whether the Ninth Circuit erred in analyzing whether the department could have used “less intrusive” methods to achieve the purpose of the search.
  3. Whether individuals who send a message to an officer’s city pager have an expectation that the content of the message will be free from review by the officer’s government employer.

The case will likely be decided by the Supreme Court sometime in the next year.

This case has numerous potential implications for government employees, as well as insight into lingering questions on the breadth of the Fourth Amendment.  The case does not have much, if any, effect as to the right of employees of non-government employers.  Non-government employees have far fewer rights as to the searches by their employers, though that is not to say there aren’t any.  Contact an employment lawyer with our firm if you have further questions in that regard.

This blog entry is written by Chris Renz, a shareholder at Thomsen & Nybeck, P.A. Chris practices in the litigation area of the firm with primary focus on wind energy-related lease litigation, real estate litigation, employment litigation, townhome and condominium law, and criminal law, particularly as the prosecutor for the Metropolitan Airports Commission.


[1] It is interesting to note that many of the plaintiffs were involved in a 2006 federal class-action suit concerning covert videotaping of a locker room to investigate theft of a flashlight.  See link: http://www.ics.uci.edu/~redmiles/ics131-FQ04/week05bPrivacy/LATimes20041029OfficersSue.pdf

Age Discrimination Standard at Heart of Case before the United States Supreme Court

27 Apr

 

 

At the end of March, the United States Supreme Court heard arguments from the attorneys in the case of Gross v. F.B.L. Financial Services.  In the case, the plaintiff had sued his employer claiming age discrimination when he was demoted from one position to another, the latter of which had a lower salary.  The plaintiff in the case was 54 years old.

 

The primary issue in the case is what is does a plaintiff need to establish in an age discrimination case.  There is a line of cases, otherwise know as precedent, which suggests that it is only necessary for a plaintiff to prove that age was a “motivating factor” in the employment decision, while another line of cases indicates that the plaintiff is required to show “direct evidence” of discrimination.  In the case before the Supreme Court, the plaintiff had presented evidence at trial that age was a motivating factor, which resulted in a jury award to him of approximately $47,000.00.  However, the defendant appealed that verdict claiming that direct evidence of discrimination was required and had not been shown.  The Court of Appeals for the Eighth Circuit sided with the Defendant (see decision here).

 

The Supreme Court granted the plaintiff’s request for review of the Eighth Circuit’s decision.  In addition to whether the overarching standard is “motivating factor” or “direct evidence,” there were a number of other issues to be sorted out by the high Court, including, in particular, what is meant by “direct evidence”.  Practitioners in the employment law arena look forward to the decision by the Supreme Court to help define some of these concepts that are involved in age discrimination law suits.  A decision is expected within the Supreme Court’s current term, which runs until October.

 

Author:
This blog entry is written by Chris Renz, a shareholder at Thomsen & Nybeck, P.A. Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, townhome and condominium law, and criminal law, particularly as the prosecutor for the Metropolitan Airports Commission. 

 

 

 

 

Five Actions to Take When an Employee Departs

14 Apr

It is never easy when an employee leaves regardless who decided upon the departure. There are things to consider and issues to address in order to have a smooth transition and abide by state and federal laws. Below are the five things to take under consideration.

 

1. Ensure Prompt Payment – It is always best practice to pay a departing employee, as soon as possible after their departure, for any salary, commission, holiday or vacation pay or other benefits they may have accrued. In addition, if an employee makes a written demand for payment, an employer has only 24 hours to pay the employee before penalties and other consequences may result (including the right to attorneys’ fees if a suit is brought).

 

2. Provide COBRA Information – COBRA is a federal law that gives employees the right to continue coverage in a group health plan following their termination or departure. COBRA only applies to employers with 20 or more employees, including self-insured employers. Employers and plan administrators are required by federal and state law to provide written notice of the right to continue coverage, along with the cost of the coverage and how to apply for the coverage within 44 days under federal law and 10 days under state law.

 

3. Property Recovery – Ideally, an employee should take all personal property with them upon departure. If there are other personal items of the employee remaining, they should be returned immediately and the employee should sign a written receipt of the items returned. The employer also has the right to retain their property including assets and information the employee had on the business.

 

4. Reminder of Obligations – The best time to remind an employee of obligations the employee has to the employer is at the time of termination. Obligations include such things as non-disclosure or non-compete agreements that were signed by the employee during or over the course of the employment. Presenting them with a copy and having them sign a receipt can protect you against future claims that they were “unaware” of such agreements.

 

5. Severance in Exchange for Finality – When an employee leaves, consult with an attorney to determine whether offering the employee a severance package in exchange for a release of all claims would be beneficial. This is especially important if the termination was contentious.

 

Chris Renz and Bill Sjoholm, shareholders, contributed to the contents of this article. Chris concentrates his practice in the areas of general civil litigation, real estate litigation, employment litigation, construction litigation, and criminal law. Bill concentrates his practice in the areas of employment law, commercial law, plaintiffs’ personal injury, and general civil litigation. Chris and Bill can be contacted at crenz@tn-law.com or wsjoholm@tn-law.com, respectively.

Reviewing or Creating a Non-Compete Agreement – Five Considerations

23 Feb

Employers typically want to restrict former employees from immediately going to work for a competing business. In order to do that, a covenant not to compete (also known as a non-compete agreement) can be used.  In determining whether the non-compete agreement is enforceable, consider the following:

Whether Something Was Given in Exchange
In order for a competition restriction to be enforceable, “consideration” had to be given in exchange for that agreement. If a person has not received anything substantial in exchange for the promise to not compete, there is no consideration and the agreement is unenforceable.  While consideration will be analyzed as to each circumstance, payments as little as $500.00 have been deemed sufficient consideration to enforce a covenant not to compete.

When the Covenant Was Signed
There is sufficient consideration where an employee is required to sign a covenant not to compete in order to, and prior to, commencing employment.  If the employee has already begun work when the covenant not to compete is signed, even if only days into the job, there needs to be additional consideration (bonus, raise, promotion) given for the agreement to be enforceable. There is no consideration if an employee is already employed and nothing further is given in exchange for the agreement; mere continued employment is not enough.

Reasonable Size of Restriction
The span of the restriction can be very subjective.  The basic rule is that the restriction cannot be greater than what is necessary to protect the former employer’s legitimate interest.  Courts consider such things as: the relationship between the restricted territory and employer’s current territory; the new duties/job of the former employee and their similarity to the prior position; the amount of customer contact by the former employee; and the resources that had been furnished by the employer.

Reasonable Time of Restriction
The length of a non-compete agreement is also subjective and has the same basic rule of being no greater than necessary to protect the former employer’s legitimate interest.  Factors considered include length and time of restriction compared to length and time of the contract with the former employer.  Each case is looked at independently, but as a reference, restrictions of up to three years have been enforced.

Remedies for Breach
Where “the rubber hits the road” for non-compete agreements is what the consequences are if the agreement is broken.  A well-drafted non-compete will allow the employer the ability to seek an order from the court stopping the former employee from continuing to breach the agreement.  Whether or not damages and attorneys’ fees are recoverable are often determined by the contract as well.

The law in Minnesota does not allow covenants not to compete to be blunt instruments. As a result, there are a number of variables that skilled legal counsel can help assess when putting such an agreement together or determining how to proceed in relation to an agreement into which parties have already entered.  In order to determine how to proceed in constructing such an agreement or determining the enforceability of such an agreement, contact the professionals at Thomsen & Nybeck, P.A.

Author:
This blog entry is written by Chris Renz, a shareholder at Thomsen & Nybeck, P.A. Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, townhome and condominium law, and criminal law, particularly as the prosecutor for the Metropolitan Airports Commission.  For more information on employment law, please visit: http://www.tn-law.com/CM/Business-Law/Employment-Law.asp.

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