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Gender Based Hiring – Beware of the Assumption Trap

Posted in Labor & Employment

Back in December 2013, I posted regarding a new lawsuit brought by the Equal Employment Opportunity Commission (“EEOC”) which involved a grocery store that would not hire a woman for an open courtesy van driver position.  The complaint alleged that the store manager told the applicant that he would not hire a woman for the position out of concern that the job would not be safe for a female driver.  The applicant otherwise met the qualifications for the position, but a few days later the grocery store hired a male candidate for the position.

This case has now been settled.  The applicant, Deborah Newell, will receive $10,500 as part of the settlement.  The employer will also adopt and implement a formal companywide anti-discrimination policy.  The employer will provide annual training to all of its managers, supervisors and employees regarding Title VII of the Civil Rights Act.  The employer is also required to provide the EEOC with reports, every six (6) months, which shall include the identities of all employees who have complained that they were discriminated due to their sex.

Remember, the EEOC has focused on eliminating barriers to hiring as one of its six (6) national enforcement priorities.  Gender based assumptions in hiring and promotions can quickly lead to claims for sex discrimination.  As an employer, do not assume that a woman will not want to work in a traditional male field, i.e. driver, construction, etc.  Rather focus on the actual duties of the position and apply them fairly and equally across your candidate pool.  So, while an employer hiring for a construction position may screen out applicants who are unable  to lift and carry items of a certain weight (assuming that is a real requirement of the position) an employer should not assume that women cannot fulfill that employment requirement.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

Payroll Cards – Convenience or Crooked?

Posted in Banking, Labor & Employment

More and more, employers are ditching the traditional paper check and providing wages to their employees via a payroll card which works much like a debit card or gift card.  But, some of those payroll cards come with fees and that has spawned litigation around the country.

Credit Card (Ficticious)

Here in Florida, Florida Statute § 532.01 was amended in 2009 to include payroll cards as a permissible form of wage payment.  Employers that choose to use payroll debit must ensure that the instrument is negotiable and payable in cash, on demand, without discount, at an established place of business in the state, the name and address of which must appear on the instrument or in the payroll debit card issuing materials. But, that doesn’t mean that fees associated with payroll cards are not permitted.  Rather, just like a check cashing fee, if an employee chooses to use his payroll card at a location where he will incur fees that is his choice.

There are benefits to payroll cards for the employee.  Payroll cards can be a less expensive option for low wage workers who do not have access to a free or low cost checking account.  Similarly, payroll cards can be cheaper than check cashing stores and other similar services.

Of course, employers like payroll cards because a payroll card deposit costs $0.35 compared to $2.00 to issue a payroll check.  Multiply those savings for hundreds of employees and it adds up.

Best Practices

In order for an employer to implement a successful payroll card program, make sure to be aware of the following best practices tips:

  • Employees should be able to access their full wages, without fee, at least once per pay period. Failure to provide such access will open up the employer to Fair Labor Standard Act or other minimum wage litigation (assuming that the fees bring the wages below the permissible threshold).
  • Federal law prohibits mandating payroll cards, rather employers must offer at least one other alternative.
  • Additionally, employers should be aware that payroll cards are subject to federal regulation under the Electronic Funds Transfer Act (“EFTA”) and Regulation E, which implements the EFTA.  Accordingly, the regulations require that the employee receive certain disclosures concerning the fees associated with the payroll card.  Also, there are limitations on the employee’s liability for unauthorized transfers using the payroll card (think about your own debit card).  Regulation E also provides error resolution procedures relating to the payroll card.  While the third party payroll card provider will likely be responsible for compliance with Regulation E, the employer likely will be the target of litigation if there is some failure or employees are dissatisfied with the payroll card program.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

Vacation Time – Optional or Medicine?

Posted in Labor & Employment

It’s summer time, which means family vacations and travel for many.  But, when was the last time you were able to take 11 weeks of vacation?

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In a recent Florida case, Hurley v. Kent of Naples, Inc., No. 13-10298 (11th Cir. 2014), that was exactly the issue. Patrick Hurley, began working for Kent of Naples, Inc. in 2001 as CEO.  In 2008, Hurley sent the CEO of the parent company, Gil Neuman, an email with a vacation scheduled that listed 11 weeks of vacation time over two years. Responding as many employers would to a demand for 11 weeks of vacation, Mr. Neuman denied the request.  There were a few back and forth emails in which Mr. Hurley explained that the requested vacation time was not optional and that he had been advised to take said time off by medial professions.  Shortly thereafter, Mr. Neuman terminated Mr. Hurley for insubordination and poor performance

A week after the termination, Mr. Hurley’s doctor filled out a Family Medical Leave Act (“FMLA”) form noting that Mr. Hurley suffered from depression and needed treatment.  Thereafter, Mr. Hurley filed a FMLA interference and retaliation lawsuit.

While the defendant admitted that Mr. Hurley had a chronic serious health condition there was no evidence that there requested vacation time was for a period of incapacity.  At trial, the jury found that Mr. Hurley was an eligible employee under the FMLA, that he suffered from a serious health condition and that he gave proper notice under the FMLA.  But, the jury answered “no” to whether Mr. Hurley’s leave request caused his termination, but then awarded damages.  In sum, an inconsistent verdict by the jury.

On appeal, Kent of Naples Inc. reasoned that Hurley’s requested vacation leave did not qualify for FMLA protection. Mr. Hurley, on the other hand, argued that he needed only to “potentially qualify” for FMLA leave in order to file an interference claim against his employer.

The Eleventh Circuit siding with Kent of Naples, found that:

Giving an employer notice of unqualified leave does not trigger the FMLA’s protection; otherwise, the FMLA would apply to every leave request.

Furthermore, the Eleventh Circuit also ruled that the requested leave was not for a period of incapacity (as defined by the FMLA) since Mr. Hurley did not contend that his leave was for a period of treatment or that he would be incapacitated (since he could not predict his period of incapacity) during the proposed vacation days.

Despite the fact that the employer eventually won this case, protracted litigation and an appeal are both expensive.  As such, employers need to train supervisors in the FMLA certification process and be careful and diligent in documenting the process when an employer provide notice of a need for leave that may qualify for FMLA.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

Drafting Non-Compete Agreements Under Florida Law

Posted in Labor & Employment

Florida’s non-compete statute, Fla. Stat. 542.335, provides numerous protections to employers or business purchasers who are looking to safeguard a company’s goodwill, trademarks and the like. Still, it is important to not overreach when drafting a non-compete. By that, should a party have to enforce a non-compete agreement, it will likely do so by seeking an injunction in state or federal court. A good non-compete agreement should balance an employee’s right to earn an income against a business’s right to protect its customer relationships, proprietary information and so on. This post will address some points to consider when drafting a non-compete agreement under Florida law.

Under Fla. Stat. 542.335(1)(a), Florida non-compete agreements are unenforceable unless they are in writing and signed by the person against whom enforcement is sought. By drafting a non-compete agreement, a party satisfies the writing requirement. Equally important, make sure the non-compete agreement is signed by the person you may ultimately seek enforcement against. This can be an employee, a franchisee or a person buying a business.

A non-compete agreement must identify at least one legitimate business which the enforcing party seeks to protect. In an action to enforce the non-compete agreement, if the court finds there is no legitimate business interest, than there is nothing for the court to protect and the enforcing party will not prevail. Florida’s non-compete statute lists five categories of legitimate business interests. A non-compete agreement should spell out that it seeks to protect at least one of these interests. Legitimate business interests include (i) trade secrets; (ii) confidential information; (iii) customer relationships; (iv) customer goodwill; and (v) specialized training.

The lists of legitimate business interests is non-exclusive, meaning other legitimate business interests in addition to the five listed above can be included in the non-compete agreement. Also, the non-compete agreement can, and probably should, list more than one legitimate business interest to protect.

When enforcing a non-compete agreement, the party seeking enforcement must show that the non-compete agreement is reasonably necessary to protect the legitimate business interests. When drafting the agreement, it is important not to overreach. For example, if you are seeking to protect customer relationships for a sales representative that deals with customers only in Florida, it may not be helpful to list the geographic region for enforcement to include the continental United States.

Section 542.335 provides several rebuttable presumptions of how long the enforcement period should last for a non-compete agreement. Be sure to read the statute and consider whether the enforcement period included in your non-compete agreement should follow the presumptions provided for in the statute. For example, for non-compete agreements between the seller and buyer of a business, a court must presume that a duration of 3 years or less is reasonable and that a duration for enforcement of 7 years or more is unreasonable. This does not mean that a non-compete agreement for 10 years is entirely unenforceable. Instead, the enforcing party must overcome the presumption that a 10 year duration is unreasonable.

Finally, even if a court were to find that a provision in the non-compete agreement is too long in duration, too broad in scope, or otherwise unenforceable, the court may still enforce a less restrictive form of the non-compete agreement. This practice is commonly referred to as “blue penciling,” meaning the court can modify, or pencil-in, terms to the non-compete agreement in order to protect the legitimate business interests. Section 542.335(c) specifically provides, “[i]f a contractually specified restraint is overbroad, overlong, or otherwise not necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief necessary to protect such interest or interests.” This gives the enforcing party, and the courts, tremendous flexibility when enforcing non-compete agreements to protect the business interests of a company in a reasonable manner.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement

 

Florida Non-Compete Agreements: The Cessation of Business Defense

Posted in Labor & Employment

In Florida, a party opposing enforcement of a non-compete agreement may raise as a defense that the employer, or other enforcing party, no longer continues in the same business. Florida Statute § 542.335(1)(g)(2) provides that a court:

may consider as a defense the fact that the person seeking enforcement no longer continues in business in the area or line of business that is the subject of the action to enforce the restrictive covenant only if such discontinuance of business is not the result of a violation of the restriction.

Florida’s Second District Court of Appeal recently addressed the cessation of business defense in Richland Towers, Inc. v. Denton, et al., No. 2D12-5493 (Fla. 2d DCA Mar. 12, 2014). In Richland, two key employees left their employer to start a competing business. The employees had previously signed non-compete agreements which precluded the employees from engaging in a competing business during their employment and for a period of time after their departure.

The employer in Richland brought suit against the employees, alleging breach of their employment agreements and seeking an injunction. The employees raised several defenses, one being that their former employer, Richland Towers, Inc., was no longer in business, rendering the non-compete agreements unenforceable.

The trial court rejected the employers’ cessation of business defense and the appellate court agreed. The Richland court recognized the defense where an employer no longer continues in the same business if the discontinuation was not caused by the employee breaching the non-compete agreement. For example, suppose an employee is a sales rep and his district covers the entire State of Florida. If the employee leaves the employer to go work for a competitor, in breach of the employee’s non-compete agreement, the employee cannot argue that the non-compete agreement is unenforceable because the employer no longer operates in Florida. It was the employee’s breach (leaving his district in Florida to work for a competitor) which caused the employer’s cessation of business.

The cessation of business defense did not apply in Richland as the employees’ former employer designated a third party beneficiary, Richland Towers, LLC, who stood in the shoes of Richland Towers, Inc.. Although the employer, Richland Towers, Inc., ceased doing business in 2008, the non-compete agreements against the employees were valid through 2011. Equally important, the employment agreements identified the new entity, Richland Towers, LLC, as a beneficiary under the agreements. Even though the original employer was no longer in business, the non-compete agreements remained valid and enforceable against the employees.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement

 

Florida Construction Liens: Payment Bonds and Notice of Nonpayment

Posted in Construction & Real Estate, General Litigation

Previously in this series, the Notice to Contractor condition precedent was discussed in the context of actions in connection with payment bonds. In addition to the Notice to Contractor, Section 713.23(1)(d) of Florida’s Construction Lien Law requires a lienor, as a condition precedent to recovery under a payment bond, to serve a written “Notice of Nonpayment” to the contractor and the surety not later than 90 days after the final furnishing of labor, services, or materials by the lienor. A written notice satisfies this condition precedent with respect to the payment described in the notice of nonpayment, including unpaid finance charges due under the lienor’s contract, and with respect to any other payments which become due to the lienor after the date of the notice of nonpayment. The time period for serving a written Notice of Nonpayment shall be measured from the last day of furnishing labor, services, or materials by the lienor and shall not be measured by other standards, such as the issuance of a certificate of occupancy or the issuance of a certificate of substantial completion.

The failure of a lienor to receive retainage sums not in excess of 10 percent is not considered a nonpayment requiring the service of the notice of nonpayment. If the payment bond is not recorded before commencement of construction, the time period for the lienor to serve a notice of nonpayment may at the option of the lienor be calculated from the date specified in this section or the date the lienor is served a copy of the bond. The notice may be in substantially the following form:

 NOTICE OF NONPAYMENT

(name of contractor and address) 

(name of surety and address) 

The undersigned notifies you that he or she has furnished   (describe labor, services, or materials)   for the improvement of the real property identified as   (property description)  . The amount now due and unpaid is $____ .

If a lienor fails to deliver a notice of nonpayment to the contractor and surety in accordance with the provisions of Fla. Stat. § 713.23(1)(d), no suit may be brought on the bond. See Standard Heating Service, Inc. v. Guymann Const., Inc., 459 So. 2d 1103 (Fla. 2d DCA 1984). As such, unless a lienor timely provides both a Notice to Contractor and Notice of Nonpayment, no action can be maintained against a contractor or surety. Fla. Stat. § 713.23(1)(e). Assuming compliance with the notice requirements, Fla. Stat. 713.23(1)(e) limits the time period for bringing an action on a bond to one year after the provision of labor, material, or supplies by the lienor.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Florida Construction Liens: Arbitration Proceedings and Limitations on Claims of Lien

Posted in Construction & Real Estate, General Litigation

On May 21, 2014, Florida’s Second District Court of Appeals issued an opinion in Snell v. Mott’s Contracting Services, Inc. affecting construction claims of lien and arbitration proceedings. The court examined the question of whether the award of attorneys’ fees was proper in an arbitration proceeding pursuant to Florida’s Construction Lien Law.

The court held that Section Fla. Stat. § 713.21(1) requires that an “action to enforce a construction lien must be brought ‘in a court of competent jurisdiction’ within one year of recording the claim of lien or it automatically extinguishes.” Moreover, the Court held that an arbitration proceeding is not a “court.”  As such, the lien at issue in this case “became unenforceable pursuant to section 713.22 prior to the issuance of the [arbitration] award” due to the contractor’s failure to file an enforcement action in court within a year.

Given the holding in Snell, it is likely advisable for lien holders to file an action in a court of competent jurisdiction within a year, even if the action is stayed during an arbitration proceeding. Otherwise, lienholders may have difficulty recovering fees or even enforcing a lien to the extent that enforcement in the arbitration proceeding is not complete within year.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Florida Construction Liens: Lienor’s Notice to Contractor of Intent to be Protected by Bond.

Posted in Construction & Real Estate, General Litigation

Before, beginning, or within 45 days after beginning to furnish labor, materials, or supplies, a lienor who is not in privity with the contractor, except a laborer, shall serve the contractor with notice in writing that the lienor will look to the contractor’s bond for protection on the work. Fla. Stat. § 713.23(1)(c). If a notice of commencement with the attached bond is not recorded before commencement of construction, the lienor not in privity with the contractor may, in the alternative, elect to serve the notice to the contractor up to 45 days after the date the lienor is served with a copy of the bond. A notice to owner pursuant to Fla. Stat. § 713.06 that has been timely served on the contractor is sufficient.

For specially fabricated materials, the 45-day period begins at the time of fabrication. Actual delivery of the materials to the job site is not required because the fabricated material would have no other useful purpose other than for the particular project for which they are fabricated. See Oolite Industries, Inc. v. Millman Const. Co., Inc., 501 So. 2d 655 (Fla. 3d DCA 1987).

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Florida Construction Liens: Payment Bonds

Posted in Construction & Real Estate, General Litigation

Owners of real property in Florida can exempt their property from all future liens at the outset of construction by requiring their general contractor to post a payment bond pursuant to Fla. Stat. § 713.23 or 713.245 before construction begins. In general a payment bond is a contract among the surety, the owner, and the contractor. Generally speaking, if a contractor fails to pay a subcontractor, materialman, or laborer, the surety must assume this obligation thereby protecting the owner’s property from a lien.

In order to properly exempt their property from the lien law, the owner must attach and record a copy of the bond with the Notice of Commencement prior to the beginning of construction. As a result of the bond, an unpaid lienor is protected by the bond rather than an interest in the owner’s property. See Resnick Developers South, Inc. v. Clerici, Inc., 340 So. 2d 1194 (Fla. 4th DCA 1976).

A bond furnished by the contractor must be in at least the amount of the original contract price and the bond must be conditioned on the contractor promptly making payments for labor, services, and material to all lienors under the contractor’s direct contract. Fla. Stat § 713.23(1)(a). Any provision in the bond to the contrary will be disregarded.

Where a payment bond contains a condition limiting the liability of a surety to lienors, that provision of the bond will be disregarded by Florida courts. For example, Florida courts have held that a provision of bond would be invalid and disregarded where it provided that the surety would not be liable to lienors unless the owner has made payments to the contractor. See Cohen v. Lunsford, 362 So. 2d 383 (Fla. 1st DCA 1978).

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

 

When Are Trade Secrets Protected Under Florida Non-Compete Agreements?

Posted in Labor & Employment

Florida Statute § 542.335 lists five legitimate business interests which are protected through non-compete agreements. First on the list is trade secrets which includes information such as formulas, patterns, compilations, programs, methods or processes which derive their economic value from not being readily known to others. Further, the secrecy of a trade secret must be reasonably maintained under the circumstances. See Fla. Stat. § 688.002(4), defining trade secrets. Florida courts often define a trade secret as information that has value by not be readily available to others and which there has been reasonable efforts made to maintain the trade secret’s secrecy. See American Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1410 (11th Cir. 1998).

Customer lists may constitute trade secrets which are protected as a legitimate business interest under Fla. Stat. 542.335. One of the issues the court must decide is whether the information alleged to be a trade secret was the result of great expense and effort by the party that owns or compiled the information. See East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001). Courts are less inclined to find materials constitute trade secrets if they were obtained from commercially available information which is easily available to the public. However, information that was “distilled” down from public information may rise to the level of trade secret. For example, a customer list consisting of names pulled from a public directory may not constitute a trade secret. Yet, a list of customers based on a public directory that contains the customer’s buying history may be protected under Fla. Stat. 542.335. See Sethscot Collection, Inc. v. Drbul, 669 So.2d 1076, 1078 (Fla. 3d DCA 1996).

Even if a party can show that the alleged trade secrets consisted of valuable information, it is not enough unless reasonable steps were taken to prevent the public distribution of the information. Proprietary information may not be protected as a trade secret where it was intentionally made available in public forums on the internet or through trade groups. Information that is commonly known in a particular industry usually does not rise to the level of trade secret. Keel v. Quality Medical Systems, Inc., 515 So.2d 337 (Fla. 3d DCA 1987).

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement