Monday, March 29, 2010

Department of Labor Issues New Administrator’s Interpretation

Rather than release individualistic opinion letters interpreting the application of the Fair Labor Standards Act, the DOL will now issue broad Interpretations of the law. The DOL believes this will be a much more efficient and productive use of its resources. The DOL’s goal is to provide meaningful and comprehensive guidance and compliance assistance to the broadest number of employers by issuing interpretations of the law and regulations, applicable across-the-board to all those affected by the provision in issue. The DOL will still utilize requests for opinion letters to gauge which areas of law require additional clarity.

Tuesday, March 23, 2010

Employer cannot terminate employee to avoid pay

Firing an employee to avoid paying him/her a commission, bonus, or other form of compensation is another example of wage theft. An employer cannot fire an employee to deprive him/her of the benefits accrued prior to being terminated. See Phillips v. US Bank, N.A., 2009AP246, 2010 Wisc. App. LEXIS 87, ¶7 (Wis. Ct. App. Feb. 2, 2010) (“an at-will employee may [not] be deprived of benefits that accrued before he or she was let go if the firing was to prevent payment of those benefits”). Basic principle/agent law establishes that an agent “is entitled to the promised amount if the principal, in order to avoid payment of it, revokes the offer and” the agent has performed the work necessary to receive the compensation. Restatement (Second) of Agency § 454 (1958); Philips, at ¶ 7.

The Court of Appeals, in reaching its decision in Phillips, relied on Leen v. Butter Co., 177 Wis. 2d 150, 153 (Ct. App. 1993), a case explaining the procuring cause doctrine. Noting that an employer does not have to act in good faith in terminating an at-will employee, the Court held that an employer must comply in good faith with its “contractual obligations” to properly pay its employees. Phillips, ¶8.

Procuring Cause Doctrine

An employee of an employer is entitled to commissions he/she procures from a ready, willing and able purchaser. The default rule is that such commissions must be paid irrespective of whether the employee is employed at the time the commission is to be paid. See Leen v. Butter Co., 177 Wis. 2d 150, 153 (Ct. App. 1993). Unless an agreement between the employee and employer “provides otherwise, final consummation of the sale is not required.” Fryer v. Conant, 159 Wis. 2d 739, 744 (Ct. App. 1990) (the sale for which the employee was entitled to commissions did not take place until after the time limit in the employment agreement had ran).

Therefore, when an employee does all the work necessary to receive a bonus, commission, or some other similar payment, it must be paid to the employee regardless of whether that employee is still employed. However, should there be a contract between the employee and the employer that requires an employee to be employed when the compensation is to be paid out, the default rule is modified.

Thursday, March 11, 2010

Attorneys fees in small value wage claims

In the grand scheme of the legal system, a claim involving a few hundred or even a few thousand dollars is not one of monumental impact. However, for an individual who lives paycheck to paycheck denial of even a small amount of wages can cause major hardships. Thankfully, Wisconsin Statues and case law have provided that if an employee is a prevailing party in a wage claim, the trial court may award attorney fees. See Wis. Stat. § 109.03(6); Jacobson v. American Tool Cos., 222 Wis. 2d 384, 402, 588 N.W.2d 67 (Ct. App. 1998).

The Wisconsin Court of Appeals explained that “the purpose of Wis. Stat. ch. 109 is to ensure employees receive their wages to prevent harm to themselves and their families. If [the plaintiff] were not awarded attorney fees, he would be forced to pay the fees out of his pocket and, thus, would not receive the full wages to which he was entitled.” Zakowski v. CWA Transport, Inc., 2004 WI App 186; 276 Wis. 2d 572; 687 N.W.2d 549 (Ct. App.).

This decision and the statutes do not give litigants carte blanche to seek excessive attorney fees but rather limits attorney fees to a reasonable hourly rate multiplied by a reasonable number of hours expended and allows for adjustments for factors enumerated in SCR 20:1.5 and other “relevant” factors. See Lynch v. Crossroads Counseling Center, Inc., 2004 WI App 114, 275 Wis. 2d 171, 684 N.W.2d 141 (Ct. App.). What is clear, however, is that the amount of recovery itself is not a valid reason to reduce attorney fees below a reasonable amount.

Wednesday, March 10, 2010

Immigration status irrelevant when pursuing unpaid wages.

One of the groups most vulnerable to wage theft is the low-wage worker - particularly those workers who are undocumented. Many companies will use the immigration status of their employees against them by threatening that if they bring a claim for any wage violations, their immigration status will be put out in the open. Similarly, once a wage claim is filed, Defendants’ counsel will attempt to obtain information about immigration status through discovery with the hope that prospective plaintiffs will be discouraged from opting-in to a collective action lawsuit brought under §216 of the FLSA. Such threats strike a very real fear in employees which often results in employees allowing their employers to take advantage of them.

It has become clear from the developing case law that the immigration status of plaintiffs is not relevant to a liability determination under the FLSA.

The courts have held that the protections of the FLSA are available to citizens and undocumented workers alike as they are seeking proper compensation for work that has already been performed. The court further found that there was an in terrorem effect of having Plaintiffs produce information regarding their immigration statuses. See Flores v. Albertsons, Inc., 2002 U.S. Dist. LEXIS 6171 (C.D. Cal. 2002). This differs from Hoffman Plastic Compounds, Inc. v. National Labor Relations Board, where the Court held that an award of backpay to illegal immigrants for work “not performed” was against the policies of the Immigration Reform and Control Act and thus immigration status was relevant for the purposes of liability. 122 S. Ct. 1275 (2002).

The federal district court for the Eastern District of Wisconsin has similarly held that an employees immigration status is not relevant to a determination of liability and thus is not a proper subject of discovery. Hernandez v. City Wide Insulation of Madison, Inc., 2006 U.S. Dist. LEXIS 86756 (E.D. Wis. 2006). The Court did leave open the possibility that immigration status may be relevant to a determination of credibility, but noted that immigration status of the plaintiffs, “is not dispositive of their credibility such that it outweighs the harm that disclosure might bring to plaintiffs.” Id.