Be Prepared

Be Prepared

LAW by Dave Szymanski | Tampa Bay Editor

Companies are vulnerable to a range of federal and state personnel laws. Attorneys who represent companies say consistent policies and an understanding of the law can help avoid labor lawsuits.

In 2007, the federal court's middle district of Florida, which runs from Fort Myers to Jacksonville and includes the Gulf Coast, was the third-busiest in the nation for employee vs. employer lawsuits, outpacing New York and Chicago.

"In the last year, it has just exploded," says Bill deMeza, employment law attorney with Holland & Knight LLP in Tampa. "My partners in Chicago, Boston and New York don't see this happening."

"We are clearly leading the nation in Florida," says Denise Wheeler, office managing shareholder and employment law attorney for Fowler White Boggs Banker in Fort Myers.

Why? Some law Florida firms saw an opportunity to branch out and start representing employees and do a lot of advertising to build business. Another reason is that they had just cause: Some Florida companies were not following federal rules that include overtime pay and family medical leave.

"Plaintiffs attorneys have discovered that claim," Wheeler says. "They are very active in advertising for those claims. Also, when someone has a personal injury, they ask if they received overtime. They are targeting industries, such as construction."

For example, even if a person is salaried, in some cases, such as manual labor, they need to be paid overtime if they work it.

In another example, a person can take 12 weeks of unpaid family medical leave in one year for a serious medical condition or the condition of a family member. And they need to give little or no notice before leaving.

And that's just the beginning for evolving laws such as the Family Medical Leave Act, the Fair Labor Standards Act, the Americans with Disabilities Act and workers' compensation laws.

So what can a business owner or CEO do to avoid ending up in court and still be able to staff his business adequately?

According to attorneys that represent Gulf Coast companies, it is a lot cheaper and more cost effective to take proactive steps and take defensive measures to prevent lawsuits rather than defend them after they're filed or hope they won't be filed.

"Entrepreneurial CEOs, our clients, often need help with the maze of employment law," says Chris Barker, managing partner of the Tampa law firm of Barker, Rodems & Cook, P.A. "Both of them (FMLA and FLSA) are evolving bodies of law. They are very difficult. Some say they'll have to wait and see. By that time, it can cost a lot of money."

The slower economy may also be contributing to lawsuits because if employees find themselves out of a job, it may be more difficult to find another. They may be bitter and will analyze the firing. Sometimes lawsuits and class actions follow.

"The problem is you cannot guarantee that an employee will never sue you," Barker says. "We advise clients to deal ethically and 100% in compliance with the law."

Family Medical Leave Act

The Family Medical Leave Act is a federal law that applies to an employee who has worked at least a year at a company, or worked 1,250 hours. That employee can take 12 weeks of unpaid leave within the calendar year, at once or in pieces, to deal with a serious health condition, for themselves or a family member.

The law protects smaller mom-and-pop operations because it only applies to companies with 50 or more employees. But companies need to be careful if they are leasing employees or if employees work in different offices. If the total adds up to 50 or more, the FMLA is in effect.

One of the conflicts in interpreting the law is what qualifies as a "serious" medical condition.

"'I don't feel well' doesn't qualify," Barker says. "Pregnancy. Cancer. Someone taking time off for a severely ill dad or mom. It applies. A lot of employers require certifications (from a doctor). At the end of the day, it can get hairy."

Recently an amendment passed which gives additional medical leave rights to people in the military and family members. The U.S. Department Labor proposed revised regulations that clarify aspects of the FMLA. It is seeking public comment. President Bush wants to issue those regulations before the end of his term.

The Family Medical Leave Act began in 1993. It was intended to protect people from losing their jobs. It hasn't been abused in widespread fashion, but it has been abused, labor attorneys say.

Companies can help themselves on medical leave by having a good policy and training supervisors about it, deMeza says. Part of the training needs to cover intermittent leave. Employees don't need to take their leave all at once.

"Most employers don't understand intermittent leave," deMeza says. "Some employees do abuse the FMLA."

One client company suspected abuse by an employee because it found out her son was playing in a football game. But she produced a doctor's note to prove she had a medical reason for not being at work.

"They didn't have enough facts," deMeza says.

Fair Labor Standards Act

The Fair Labor Standards Act is a federal law that applies to companies with revenues of at least $500,000 a year.

It covers a number of areas, but one of the larger issues for lawsuits involves pay, such as overtime, minimum wage and working off hours, such as during lunch. Half of the civil cases filed in the federal court's middle district of Florida are FLSA cases.

Some employees are exempt from overtime, while others are not. Some employers don't know the distinction, deMeza says.

Everyone is presumed to be an hourly employee ("non-exempt") entitled to the minimum wage and to overtime. However, certain executive, administrative and professional employees are "exempt" and need not be paid overtime if they perform certain duties and are paid a salary of at least $455/week without deductions for the quantity or quality of their work, deMeza says.

Off-the-clock work is a common claim that often is hard for companies to win: The FLSA gives employees the benefit of the doubt in disputes about hours worked and it usually is very hard for builders to prove the worker did not work the hours claimed, especially since FLSA lawsuits sometimes can be filed three years after the hours claimed, deMeza notes.

Non-exempt employees have to be paid overtime if they work more than 40 hours a week. Employers can't let those employees "bank" the hours or use them as comp time, attorneys say. They also can't have workers sign a paper, waiving their rights to overtime pay.

The FLSA, which requires the payment of minimum wage (now $6.79/hour in Florida) and overtime to many workers, is so complicated and fact-specific that there are dozens of ways in which careful companies can still get trapped by workers, their lawyers and the government, deMeza says.

It is also relatively easy to form a class, for a class-action suit, such as John Smith and the people vs. Joe's Auto Dealership, deMeza says. So then the suit is trying to recover money on behalf of a number of employees.

That has attracted lawyers to the FLSA area. Many can charge an hourly attorney's fee.

"If you have and can find a problem, you can get paid for all of your time," Barker says. The law is extremely complex. If you break the law, you should pay. But a lot of the larger plaintiffs firms have started advertising."

Once again, one way to try to prevent lawsuits is to write a clear compensation policy that deals with the law and follow it.

"But that is easier said than done," Barker says. "You can spend the rest of the day reading the regulations, but it's like the tax code, not very clear."

Step one is knowing the law, Baker says. Step two is following it.

Keep track of hours

Companies need to know that any time an hourly employee is working, they need to be paid. If secretaries answer phones and work through lunch hour, that is paid time.

There are a lot of meal-break claims, Wheeler says. Another category is travel time. Typically the commute from home to the office is not compensable. But if hourly employees log on to computer before leaving for work, it might be, she says.

Large employers automatically deduct lunch breaks from the paycheck, but many times, it's not exactly an hour. They may come back to work in 20 minutes. These are brought as collective actions. And they are costly.

"If a company loses, it pays the employee double," Wheeler says. "It pays attorneys fees (the employee's attorney). They have to pay their own attorney. It can add up pretty quickly."

People working from home, using Blackberries and laptops, could be compensated for that work.

"Employers need to get some general working knowledge the law," deMeza says. "They need to pay employees for all the hours they work. If they are entitled to overtime, pay them. That's usually time and half for everything over 40. But there are exceptions. Certain categories you can pay half time. It tends to confuse people."

Even some salaried employees need to be paid for overtime. In the 1990s, some Wall Street brokerage houses had to pay salaried secretarial and support staff back overtime pay because many were working 60 hours a week.

"In law school, they told us you can sue anyone for anything anytime," Barker says. "One professor said, 'Truth is subject to a relevancy objection.' There's a difference between legal and right. With labor law, with really big companies, with multiple layers, it can get really confusing."

However, lawyers aren't the only people who can help unravel labor law.

"A lot of HR professionals know every bit of an issue," Barker says. "The important thing is to go to people who know what they're talking about. It comes down to getting good, competent advice."

ADA and workers' comp

Another tip for employers is looking at job classifications, Wheeler says. If a company calls someone a manager, but they are doing manual labor, they may fall into a different overtime category. That's why it's important to make sure they are properly classified.

"The No. 1 misconception out there with small businesses is that a lot of employees, if they are paid on salary, do not have to be paid overtime," Wheeler says. "The employee accepts this."

"Make sure your policies are consistent with your practices," Wheeler says. "Because the plaintiff's bar is so active, have an attorney review your job classifications, compensation policies and practices. It's a lot less expensive to audit this than to defend one of these things."

Employers also need to be aware of workers' compensation laws, if the employee is injured on the job, and the Americans with Disabilities Act, which secures access to a business for customers and employees. There are some parts of the laws open for interpretation.

"It depends on the facts," Wheeler says. "Who is the employer? You need to look at the resources available to the employer. If you don't look beyond the FMLA, to what are your obligations under the ADA, you could have a problem."

Companies need to also be careful when they fire an injured employee.

"If an employee needs a two-week leave of absence and it was an injury at work, and you fire him, you may say the FMLA does apply," Wheeler says. "But then you may have a retaliation claim under worker's comp laws."

LABOR TIPS

FOR EMPLOYERS

• Establish a clear personnel policy. Follow it.

• Do an inventory of all positions and how they are classified. Make sure the employee's actual duties fit the classification.

• Know that an employee can take 12 weeks off under the Family Medical Leave Act in one calendar year, in whole or in parts, if a relative is ill or has a serious condition.

• If you deduct time for meal breaks, make sure employees aren't working.

• Make sure everyone agrees on the accuracy of time cards.

• Consult with people who understand employment law so you can prevent lawsuits and craft appropriate workplace policies.

REVIEW SUMMARY

Industry. Employment law

Key. Establish a clear consistent personnel policy that tracks the law and follows it.