Federal Judge calls FLSA suits “nuisance!!”

A United States District Judge in Florida has publicly opined that FLSA suits are “basically nuisance type claims that get bought off” and little more than attorneys’ “retirement bills” that require congressional reform Employment Law 360 reported.  Judge Kenneth L. Ryskamp of the Southern District of Florida made these statements and is now facing a motion for recusal. 

While no Connecticut Federal Judge is known to have made these statements, it is nevertheless alarming to hear that any federal judge would make such remarks. 

Congress passed the Fair Labor Standards Act in 1938 as part of the New Deal.  It has been modified many times, including as recently as 2004.  It is an  important law that helps employees obtain fair compensation for the hours they work.   Employees who bring claims under these laws are not looking for emotional distress awards, they are only asking to be paid for the hours they worked.

Many times, employees do not understand their rights, including that they have been misclassified under the FLSA.  Accordingly, the law includes a mechanism to allow employees and their attorneys to invite other similarly situated employees into the litigation.  If this provision did not exist, other employees who were also the victims of wage violations, would not have a reasonable chance to advance their claims.

Judge Ryskamp’s comments are deplorable.  They fall in line with the same mentality that sought to blame UAW workers for the demise of the auto industry.  Workers in America deserve to be paid the wages they have earned.  The fact that wages in America have been historically low has been a contributing factor to the economic crisis we are in.  What merchant wouldn’t wish that his customers had more money to spend buying his products?

The FLSA’s collective action provisions do not need congressional reform.  To the contrary, what is needed are more lawyers like attorney Shavitz and his firm to enforce  this important law.  Judge Ryskamp should be removed from the case and never permitted to preside over another FLSA case.

Can AIG avoid paying out retention bonuses?

The blogosphere is filled today with articles about AIG and the controversial retention bonuses.  One fellow blogger has included AIG’s white paper on this topic in which it explains why it believes that it cannot avoid these payments.  Generally, retention bonus contracts require an employee to be paid if he/she stays with the company through a certain date.  Of course, it is always essential to see the actual terms of these contracts in order to determine if the money is due.

One term, however, that is contained in every contract, regardless of its express terms, is that the employee materially perform his/her duties in order to be entitled to take advantage of its terms.  We learn this in first year law school:  material breach by one party excuses performance by the other.  

In Connecticut, this principal has been applied by our Appellate Court in the employment setting.  In Shah v. Cover-It, Inc., 86 Conn.App. 71 (2004), that court held that an employee materially breached his employment contract by not working hard enough and was therefore not entitled to contractual severance pay.

I admit that I have no personal knowledge of how hard the AIG employees in question worked, but it seems to me that there may be a claim that by their poor performance, they have bankrupted the company.  If their trading in risky mortgage backed securities was knowingly reckless and exposed AIG to this risk, I would think that AIG could claim that they materially breached their contracts and are therefore not due their retention pay.  

AIG claims in its white paper that it cannot legally deny these employees their pay and that they have been so advised by outside counsel.  While I don’t know who these lawyers are, I can assure you all that they are probably the same type of corporate defense attorneys who routinely deny legitimate claims for earned compensation in my cases and in the suits brought by my brothers and sisters of the Connecticut plaintiff’s employment bar.  

I say that AIG should deny the retention pay and let the employees sue.  They will have to prove that they materially performed and we will all get to go to the public trial on this issue and hear them explain how their risky trading was not a material breach.  I can even suggest a few aggressive employment defense attorneys to defend AIG!

Are bonuses wages? – Part III

On November 24, 2008, I posted a report on the case of Ziotas v. Reardon Law Firm which held that a bonus due an employee was considered a wage and enforceable under our wage enforcement laws (C.G.S. Section 31-72), which include the remedies of double damages and attorneys fees.  I reported that it was shaping up to be a banner year for employees.

On December 19, 2008, a fellow blogger from the dark side of employment law reported about the Connecticut Supreme Court case of Weems v. Citigroup, Inc., in which it held that a discretionary bonus was not a wage under that statute.  Attorney Schwartz indicated that employers could “breath a sigh of relief” because of this ruling.

Not so fast, Attorney Schwartz!  Sometimes we have to wait and see how the Superior Court judges are applying these holdings.  On January 15, 2009, Judge Robert Martin of New London had a chance to deal with these two seemingly contradictory rulings, and he chose to apply Ziotas and to read Weems narrowly.  

In the new case of Edwards v. Edwards Wines, LLC, an employee brought a claim for, among other things, unpaid bonus compensation.  She claimed that she was due a bonus because of an agreement that she would be paid a bonus for increasing the winery’s productivity and profitability.  Judge Martin squarely addressed the tension between Ziotas and Weems and chose Ziotas.   He pointed out that in Weems, the Supreme Court held that “bonuses that are awarded solely on a discretionary basis, and are not liked solely to teh ascertainable efforts of the particular employee, are not wages under Section 31-71a(3).”  He refused to strike Edwards claim because she alleged that her bonus was dependent on her efforts to increase productivity and profitability.

This is a good first indication for employees that the Superior Courts will interpret Weems narrowly and apply Ziotas.  This writer agrees and in fact, would have gone further.  How can any money that an employer pays an employee not be a wage?  Will employers invoking Weems pay discretionary bonuses without withholdings?  Will they issue 1099 forms?  Does such a payment turn the employee into an independent contractor?

Weems was wrongly decided.  All bonuses are wages and employers should not be allowed to avoid the enforcement provisions of our laws by saying otherwise.  Our legislature should address this issue by rewriting the definition of wages to overturn Weems.

CVS sued in Connecticut for overtime violations

An Assistant Manager in Connecticut has sued CVS Caremark Corporation for unpaid overtime in violation of the federal Fair Labor Standards Act.  In her complaint, she claims that she was illegally classified as exempt and denied overtime pay despite the fact that her primary duty was not management.  She has included in her suit a claim on behalf of other Assistant Managers around the country, since they, like her, have been classified as exempt pursuant to the same illegal policy.  If her request is granted, CVS Assistant Managers around the country will receive notice of this lawsuit and be invited to join.

This lawsuit follows on the heels of similar claims against Family Dollar Stores and Staples.  Nationwide retailers frequently classify assistant managers and managers as exempt without giving them enough management authority for them to fairly and legally be considered managers under the law. 

The most recent ruling on this issue comes from the Eleventh Circuit Court of Appeals.  In its ruling upholding a $35,000,000 verdict against Family Dollar, that court wrote:

“The overwhelming evidence showed that Plaintiff store managers exercise little discretion and spend 80 to 90% of their time performing manual labor tasks, such as stocking shelves, running the cash registers, unloading trucks, and cleaning the parking lots, floors, and bathrooms. Even as to the assigned management tasks, such as paperwork, bank deposits, and petty cash, the store manual strictly prescribes them. And district managers closely scrutinize store managers to ensure compliance with the manual and corporate directives.” 

For these reasons, the jury’s verdict was affirmed.  Many other retailers follow a similar business plan which usually entails such severe micromanagement that the “manager” doesn’t truly manage as his or her primary duty. 

Plaintiffs are represented by the Hayber Law Firm and by Siegel, Brill, Greupner, Duffy & Foster, P.A. 

Last Chance Agreements can’t release future claims!

I have seen it many times.  Employers of union workers frequently ask the employee to sign a last chance agreement in order to keep their job.  These documents include promises by the employee that he/she will obey all work rules going forward and if they don’t, they’ll be fired.  They also usually include a provision that says that the employee will waive all rights to sue, including for what might happen after they sign.  I’ve always been bothered by those terms since it is the general rule that releases can only release past (i.e., not future) conduct. 

Well the Sixth Circuit (we are in the 2nd Circuit, but this case can be influential for Connecticut employees) has come to the rescue.  As reported by Ellen Simon’s Employee Rights Post, the Sixth Circuit Court of Appeals has struck down that provision of a Last Chance Agreement.  She explains this case very well.  The good news for Connecticut employees is that if they have signed such an agreement and subsequently are fired, they still have the right to sue.  A further takeaway could be that an employer that fires you for not signing such an Agreement could be violating your common law right not to be fired for reasons that violate Public Policy.  Stay tuned!