In this week’s Alabama Law Weekly Update, we report on a case from the Alabama Court of Civil Appeals discussing the enforceability of non-solicitation agreements under Alabama law and a case from the Eleventh Circuit discussing an employee’s FLSA claim for overtime wages.

G.L.S. & Associates, Inc., and G.L. Smith & Associates, Inc. v. Keith Rogers, No. 2130322 (Ala. Civ. App. 2014) (discussing the enforceability of non-solicitation agreements under Alabama law).

Keith Rogers was employed as a registered representative of G.L.S. & Associates, Inc. and G. L. Smith & Associates, Inc. (collectively “GLSA”) until he resigned from his employment in January of 2013. Rogers was employed as a securities broker. Rogers’ employment agreement with GLSA contained a non-solicitation provision. Under the non-solicitation provision, Rogers was prohibited from soliciting clients of GLSA for a period of two years following the conclusion of his employment with GLSA. In June 2013, GLSA sued Rogers alleging that he violated the non-solicitation provision of his employment agreement by attempting to solicit clients of GLSA. Rogers filed a motion to dismiss the lawsuit.

In his motion to dismiss, Rogers argued that the non-solicitation provision of his employment agreement was unenforceable as a matter of law. Rogers claimed that a securities broker is a “profession” which could not be restricted from practicing under Alabama law. In general, Alabama law permits non-solicitation agreements between an employer and an employee. However, non-solicitation agreements are unenforceable when they attempt to prevent a person from practicing a “profession.” In determining whether a particular occupation is a “profession,” Alabama courts examine several factors: professional training, skill and experience required to perform certain services, the delicate nature of the services offered, and the ability and need to make instantaneous decisions.

During the hearing on Rogers’ motion to dismiss, neither side presented any evidence in support of their position. As a result, the Alabama Court of Civil Appeals concluded that there was insufficient evidence to show that Rogers was entitled to a dismissal of the complaint. The Court determined that the inquiry of whether a particular occupation is a “profession” requires evidence of the factors mentioned above. Because there was no evidence presented at the trial level, the Alabama Court of Civil Appeals concluded that a dismissal was premature and remanded the case to the trial court for further proceedings.

Alfredo Ocampo Pino, and all others similarly situated under 29 U.S.C. § 216(B), v. Painted to Perfection Corp., Noel Nazario, 2014 WL 1876927 (11th Cir.  May 12, 2014) (examination of an employee’s a claim for overtime wages under the FLSA).

Painted to Perfection is a Florida-based yacht refinishing and painting business owned by Noel Nazario (“Nazario”). Alfredo Pino (“Pino”) was employed at Painted to Perfection. Pino was paid hourly until 2012 when he became salaried. While he was an hourly employee, Pino averaged 63 hours per week and earned $15 per hour. Pino was not provided overtime compensation. In 2012, Pino filed a complaint against Painted to Perfection and Nazario seeking overtime wages under the Fair Labor Standards Act (“FLSA”). Pino claimed that Painted to Perfection was an “enterprise” grossing $500,000 or more per year, and that both his work and the business itself affected interstate commerce. Painted to Perfection moved for summary judgment, arguing that the business did not gross more than $500,000 a year in any of the relevant years, and thus was not an “enterprise” under the FLSA. Further, Painted to Perfection argued that its work did not affect interstate commerce because Pino painted boats for local customers.

Nazario testified that his business did not gross the minimum amount to qualify as an “enterprise” under the FLSA. Nazario claimed that he owned a local business that painted boats for local customers. Pino, on the other hand, argued that many of the boats he worked on were “destined for interstate commerce,” and had foreign or out-of-state registries. The trial court granted summary judgment for Nazario and Painted to Perfection. Pino appealed.

The FLSA requires employers to pay covered employees at an overtime rate if they work more than 40 hours in a workweek. Employees are entitled to the protections of the FLSA if they can show that their employer is an “enterprise” engaged in commerce or that the employee is entitled to individual coverage. In this case, the Eleventh Circuit examined whether or not Pino could establish that he was entitled to individual coverage. To be eligible for individual coverage, Pino must show that he was “engaged in commerce.” For the purposes of the FLSA, “engaged in commerce” means direct participation in the actual movement of persons or things in interstate commerce. For example, the Eleventh Circuit noted that employees who operate or maintain transportation facilities directly participate in the movement of persons or things in interstate commerce and are entitled to coverage under the FLSA. Those employees who “merely affect[] that commerce” are not entitled to coverage under the “engaged in commerce” provision of the FLSA.

Pino argued that he was “engaged in commerce” because he worked on boats with foreign registries, he spoke with Captains of boats with foreign registries, and Nazario traveled out-of-state to work on boats. The Eleventh Circuit concluded that none of these actions were sufficient to show that Pino “directly participated in the actual movement of persons or things in interstate commerce.” The Eleventh Circuit held that Pino was not engaged in commerce in such a way as to be eligible for individual coverage under the FLSA.