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by M. McClure on Jul 19, 2011 at 3:40 PM
Filed in Wage and Hour | FLSA

independent contractorsThe Department of Labor has released the breakdown of its $103.3 billion 2011 budget, which includes a new multi-agency "Misclassification Initiative" that will strengthen and coordinate federal and state efforts to enforce labor violations that result from the misclassification of employees as "independent contractors."  The breakdown shows that the Wage and Hour division plans on hiring 90 full time employees during the 2011 fiscal year.  The Initiative will “strengthen and coordinate federal and state efforts to enforce labor violations that result from the misclassification of employees as independent contractors and to deter such violations in the future.”  The Initiative will also focus on the industries where such violations are the most common, such as, construction, home health care and business services.  

These issues are not just important at the federal level: Arkansas' Department of Workforce services also sent a notice to Arkansas employers outlining Arkansas' law regarding classification of independent contractors, and you can find that information here.  Additionally, Arkansas Business recently published two articles discussing the growing number of wage and hour claims that are being filed, particularly focusing on the issue of employee misclassification as independent contractors, which you can find here and here.  

Employers should be concerned about these trends, if for no other reason than that wage and hour claims often present themselves as class action litigation, which is expensive to litigate.  It's my belief that wage and hour claims will continue to increase because of the complexity of the FLSA and the challenge that employers face in compliance. Employers should use the label "independent contractor" cautiously and not rely on this framework without legal review.  

 

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by Jewel Bennett on Sep 22, 2009 at 12:24 PM
Filed in Wage and Hour

Employment law attorney in Arkansas adds color to the Arkansas court ruling.Determining whether an employee's duties fall within the administrative exception of the Fair Labor Standards Act can be more of an art than a science. A new Arkansas case gives employers a motive to be more conservative in their decision-making, perhaps suggesting that employers be more DaVinci than Dali.

In Wolfe v. Clear Title, LLC, Wolfe, a salaried employee sued her employer, Clear Title, LLC, for violation of the FLSA and sought punitive damages for retaliation that followed her request for overtime pay. Her job duties as Escrow Manager included preparing documents, ordering items needed for closing, working with lenders for payoffs, working with title insurance companies, and dealing with clients. Although her job title included the word "manager," Wolfe did not supervise other employees. Clear Title sought to paint her job description as falling under the administrative exception of FLSA. Wolfe argued that she did not meet this exception because her position did not require her to use discretion and independent judgment.  Instead, Wolfe's duties required her to follow pre-set procedures. Because there were issues of fact, mainly conflicting affidavits, the district court denied Clear Title's motion for summary judgment.

Shifting its focus to the issue of whether punitive damages are available under the FLSA, the court noted that the circuit courts are split. To make matters more difficult, the district courts within the Eighth Circuit are split as well. Some courts find that punitive damages are available for employees who claim retaliation, while the other courts do not. Now, the Eastern District of Arkansas finds that punitive damages are available for an FLSA retaliation claim. So, in case you needed another reason to make a more conservative choice regarding FLSA in Arkansas, the Eastern District has just painted a clear picture for you.

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by M. McClure on Jul 14, 2009 at 3:42 PM
Filed in Wage and Hour
Many jobs fall into a gray area where it is difficult for employers, and even courts, to determine whether an employee should be paid overtime.  The Fair Labor Standards Act (FLSA) requires that all employees be paid time and half for hours worked over 40 in a week, unless the employee falls into one of the statute's exemptions.  The exemption that gives employers the most trouble is the Administrative Exemption, although some of the others are tricky too. The Administrative Exemption allows employers to pay an employee a salary and no overtime if the employee: 1) is paid more than $455 per week, 2) performs non-manual work directly related to the management or general business operations and, here's the hard part, 3) exercises discretion and independent judgment.

The District Court for the Eastern District of Arkansas recently denied summary judgment to an employer who relied on the Administrative Exemption to not pay overtime to an employee who held the title "Payroll Manager." Reedy v. Rock-Tenn Co. In making its determination of whether the employee fell into the Administrative Exemption, the court ignored the employee's title and looked instead at what the employee did on a daily basis. The court found that the employer had not provided sufficient evidence to demonstrate that the employee did anything more than clerical work and applying "common sense" to the issues that came to her.  

Bottom line: Misclassification of employees as salaried or "exempt" can be serious for an employer. These claims often present themselves as class actions.  Employees can claim unpaid overtime for up to two years, and for three years, if the violation is found to be willful. When faced with a FLSA classification issue, employers should look at the specific work the employee is performing and monitor the nature of the work to ensure that the day-to-day tasks do not drift into work protected by the FLSA.  And, don't try to cut corners on HR employees - they know the rules of the game.

 

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