Arbitration Agreement with Prevailing Party Attorney’s Fees and Costs Provisions Unenforceable
An arbitration agreement in an employee manual allowing the prevailing party to get reimbursed for its share of litigation costs and for its reasonable attorney’s fees was unenforceable under the federal Fair Labor Standards Act (“FLSA”), the Florida Court of Appeals has held. Hernandez v. Colonial Grocers, 124 So. 3d 408 (Fla. 2d DCA 2013). Jose Hernandez sued his former employer, Colonial Grocers, in state court alleging the employer violated the FLSA and the Florida Workers’ Compensation Act (Section 440.205, Florida Statutes). The trial court granted the employer’s motion to compel arbitration under a provision of the employee manual. Hernandez challenged the trial court’s ruling on appeal, arguing the agreement was unenforceable because: • it required him to share the initial costs of arbitration; • it included a prevailing party attorney’s fee provision that contradicted the attorney’s fee provision under the FLSA; and • the cost of arbitration was prohibitively expensive. The appellate court reversed. Holding the arbitration agreement was unenforceable because it conflicted with the FLSA’s attorney fee provision, the Court explained, “The federal act states that a prevailing plaintiff is entitled to an award of reasonable attorney’s fees, but it does not allow for prevailing party fees for the defendant.” In this case, were the arbitrator to award in favor of the employer, the arbitrator would be required to award the employer its costs and attorney’s fees pursuant to the terms of the arbitration agreement. The Court found that this agreement had a “chilling effect” on prospective complainants that defeats the FLSA’s remedial purpose. It held, “The attorney’s fees provision of the Fair Labor Standards Act is intended to encourage employees to seek redress when they believe they have been wronged by an employer. The arbitration agreement, however, does just the opposite— it discourages the employee from pursuing a claim.” Thus, the Court found the agreement unenforceable and reversed the trial court’s order granting the motion to compel arbitration. Employers utilizing arbitration agreements should ensure that their terms do not conflict with rights guaranteed employees under employment laws that might lead to litigation and impair enforcement. For assistance with arbitration agreements, contact the Jackson Lewis attorney with whom you usually work or Lillian Chaves Moon, at [email protected] or (407) 246-8452. INSIDE THIS ISSUE: U.S. Supreme Court: Donning, Doffing of Protective Gear is ‘Changing Clothes’ under FLSA Florida Considers Prohibition on Employers Requesting Access to Social Media Accounts Former Employee’s Failure to List FLSA Claim in Child Support Affidavit Sinks Claim against Employer Minimum Wage Continues to Rise Jackson Lewis News 2 4 3 A Bulletin on employment, lABor, BenefitS And immigrAtion lAw for ClientS And friendS of JACkSon lewiS p.C. Spring 2014 All We Do Is WorkSM Arbitration Agreement with Prevailing Party Attorney’s Fees and Costs Provisions Unenforceable "The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience." Rule 4-7.3, Rules Regulating the Florida Bar. ADVERTISEMENTT he U.S. Supreme Court has held that time spent donning and doffing protective gear can constitute “changing clothes” under the Fair Labor Standards Act, and therefore not compensable where the employer and the union have so agreed in a collective bargaining agreement. Sandifer v. U.S. Steel Corp., 134 S.Ct. 870 (2013). In 2007, steel workers brought a putative collective action against their employer, seeking overtime pay for time spent donning and doffing personal protective equipment that the company required them to wear because of hazards at its steel plants. The protective gear included a flame-retardant jacket, pants, a hood, a hardhat, a “snood” (a hood that also covers the neck and upper shoulder area, which, as Justice Antonin Scalia described, “on the ski slopes, one might call it a ‘balaclava’”), “wristlets,” work gloves, leggings, metatarsal boots, safety glasses, earplugs and a respirator. Pursuant to a provision of its collective bargaining agreement with the employees’ union, the employer did not compensate employees for time spent putting on or taking off the protective equipment. The provision’s validity depended on § 203(o) of the FLSA, which allows parties to collectively bargain over whether “time spent in changing clothes . . . at the beginning or end of each workday” must be compensated. The U.S. Supreme Court first examined the meaning of the word “clothes.” Citing the rule of statutory construction that words should be interpreted according to their “ordinary, contemporary, common meaning,” the Court observed that dictionaries from the era of § 203(o)’s enactment defined “clothes” as items that are both designed and used to cover the body and are commonly regarded as articles of dress. Noting that nothing in § 203(o)’s text or context suggested anything other than this ordinary meaning, the Court rejected the employees’ argument that the term “clothes” somehow omitted protective clothing. The Court then considered the meaning of the term “changing.” It found that, while the normal meaning of “changing clothes” connotes “substitution,” at the time of § 203(o)’s enactment, the phrase also carried the meaning “to alter.” Therefore, “time spent in changing clothes” includes time spent in altering dress, the Court said. Whether one exchanges street clothes for work clothes or simply chooses to layer one garment over another may be a matter of purely personal choice, and § 203(o) should not be read as imposing only a substitution requirement — thereby allowing workers to opt into or out of its coverage at random or at will — when another reading is textually permissible, the Court concluded. Applying these principles, the Court held that the donning and doffing of the first nine types of required gear (i.e., flame-retardant jacket, pants, hood, hardhat, “snood,” “wristlets,” work gloves, leggings and metatarsal boots) fit within the definition of “changing clothes.” However, it found the safety glasses, earplugs, and respirator do not constitute “clothes” because they are not commonly regarded as articles of dress. Although the time spent putting on or taking off safety glasses, earplugs and a respirator was minimal, the Court rejected the argument that it was “de minimis” — too trivial to warrant consideration. It found that there “is no more reason to disregard the minute or so necessary to put on glasses, earplugs, and respirators, than there is to regard the minute or so necessary to put on a snood.” Instead, the Court concluded that the question for courts is whether the period at issue can, on the whole, be fairly characterized as “time spent in changing clothes.” For example, if an employee devotes the vast majority of the time in question to putting on and taking off equipment or other non-clothes items (perhaps a diver’s suit and tank), the entire period would not qualify as “time spent in changing clothes” under § 203(o), even if some clothes items were donned and doffed as well. However, if the vast majority of the time is spent in donning and doffing “clothes,” as the Court defined that term, the entire period qualifies, and the time spent putting on and taking off other items need not be subtracted. For additional information regarding donning and doffing or other issues under the FLSA, please contact the Jackson Lewis attorney with whom you usually work or Jay P. Lechner, at [email protected] or (813) 512-3210. 2 www.jacksonlewis.com EDITOR-IN-CHIEF: Lillian Chaves Moon, Esq. 407-246-8452 [email protected] Lillian Chaves Moon is a Shareholder in the Orlando, Florida office of Jackson Lewis P.C. Ms. Moon earned a Bachelor of Arts degree in 1995 and her Juris Doctor degree in 2000 from Brigham Young University in Provo, Utah. The majority of her practice is devoted to employment litigation, defending employers in federal and state courts, as well as before the EEOC and other administrative agencies. She also provides clients with day-to-day advice and counseling regarding employer policies and various workplace law issues as they arise. In addition, prior to practicing in Florida, Ms. Moon served as an appellate attorney for the United States Department of Labor in Washington, D.C., representing the Secretary of Labor in federal appellate courts in cases brought pursuant to the Occupational Safety and Health Act. Ms. Moon is a member of the Florida Bar, and the U.S. Supreme Court Bar. This update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis P.C. and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis P.C. This update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome. Jackson Lewis P.C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work. © 2014 Jackson Lewis P.C. U.S. Supreme Court: Donning, Doffing of Protective Gear is ‘Changing Clothes’ under FLSA3 www.jacksonlewis.com A former employee is judicially barred (“estopped”) from moving forward with her Fair Labor Standards Act claim against the employer when she had taken an inconsistent position in a previous action, the U.S. District Court for the Southern District of Florida has ruled in Stabielli v. Eagle Roofing Products of Florida, 2013 U.S. Dist. LEXIS 149859 (S.D. Fla. 2013). The court granted summary judgment in favor of the defendant-employer. Tracy Stabielli was a former design center coordinator for Eagle Roofing Products of Florida. She sued the employer alleging she had been misclassified as an exempt employee and that the employer had failed to pay her overtime wages in violation of the FLSA. On the same day that Stabielli retained counsel to file her FLSA lawsuit against the employer, she filed an affidavit in her ongoing state court child custody and support case. In that case, her ex-husband was seeking a reduction in child support payments to Stabielli and an attorney’s fee award against her. Stabielli’s financial assets were at issue in her support case and she filed in that case, under oath, the Florida state law’s required financial affidavit. Stabielli was required to disclose all possible assets and liabilities, including possible lawsuits. However, she did not disclose her FLSA lawsuit against the employer, nor did she amend her financial affidavit after filing suit against the employer. Seeking summary judgment, Eagle Roofing argued Stabielli should be judicially estopped from bringing suit against it because she had failed to disclose her FLSA lawsuit on the financial affidavit in her child support proceeding. “Judicial estoppel is a common law doctrine that estops a party who has taken a sworn position in a previous action from asserting an inconsistent position in a subsequent action,” the Court explained. Judicial estoppel is applied against a party when: (1) the party took an inconsistent position in a previous action under oath; and (2) the inconsistencies are calculated to make a mockery of the judicial system. The purpose of judicial estoppel is to preserve the integrity of the judicial process. Therefore, the party asserting judicial estoppel is not required to show that it has been injured or prejudiced by the inconsistency asserted. The Court found that Stabielli’s “failure to disclose her known FLSA claim and lawsuit on her sworn Financial Affidavit in her Child Support proceedings is the legal equivalent of a sworn representation that her FLSA claim and lawsuit did not exist.” Accordingly, the pursuit of her claim against the employer was inconsistent with her prior sworn statement that the claim against it did not exist. Thus, the Court found Stabielli’s inconsistent positions made a “mockery of the judicial system,” that she knew the claim existed at the time she took the inconsistent position in her financial affidavit and she had a financial incentive to conceal the FLSA claim and lawsuit. Therefore, it ruled she was judicially estopped from pursuing her FLSA claim against the employer. Please contact the Jackson Lewis attorney with whom you regularly work if you have any questions about the issues discussed in this decision. T he Florida Senate is considering joining other states that ban employers from requesting or requiring access to current or prospective employees’ social media accounts. “An Act Relating to Social Media Privacy,” Senate Bill 198, would prohibit employers from: • requiring or requesting access to employee or applicant social media accounts; and • taking any retaliatory personnel action or refusal to hire based on an employee’s or applicant’s failure or refusal to provide access to the account. The proposed law would allow an employee or prospective employee to file a civil suit for injunctive relief and damages, including for the recovery of attorney’s fees and costs should the employee or applicant prevail against the employer. States that have enacted similar laws include Arkansas, California, Colorado, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, Oregon, Utah, Vermont and Washington. Employers in Florida and across the country will need to revisit their internal hiring, human resources, and monitoring practices should the bill pass. In particular, lower level managers and supervisors, who may not be aware of these developments, should be trained. Companies also need to reconsider what role they want employees to play in the businesses’ marketing strategies in social media. For assistance, please contact Lillian Chaves Moon, at [email protected] or (407) 246-8452. Florida Considers Prohibition on Employers Requesting Access to Social Media Accounts Former Employee’s Failure to List FLSA Claim in Child Support Affidavit Sinks Claim against EmployerT he Florida minimum wage increased to $7.93 per hour, with a minimum of $4.91 per hour for tipped employees, as of January 1, 2014. Employers are prohibited from retaliating against any employee who exercises a state constitutional right to receive the minimum wage. Shortly thereafter, in his State of the Union address, President Barack Obama announced his intention to press for raising the federal minimum wage from $7.25 per hour to $10.10 per hour. A bill to that effect is pending before Congress. Meanwhile, this new minimum wage has already been imposed by the President’s Executive Order on federal contractors and subcontractors, effective January 1, 2015, in all new and renegotiated federal contracts (tipped employees will have to be paid $4.90 per hour). The hourly rate will continue to rise with the rate of inflation each year. For more information about this or other workplace developments, please contact the Jackson Lewis attorney with whom you regularly work. 4 www.jacksonlewis.com Jacksonville Office Continues to Expand Vanessa S. Hodgerson has joined our Jacksonville office as an Associate. She was a federal district court law clerk and has worked as a human resources professional. Ms. Hodgerson devotes her practice to an array of employment litigation, focusing on claims related to discrimination, the Family and Medical Leave Act, wage and hour, harassment, and restrictive covenants. Ms. Hodgerson is admitted to practice in the state of Florida, the U.S. Court of Appeals for the Eleventh Circuit and the U.S. District Courts for the Northern, Middle and Southern Districts of Florida. She was named as a Florida Rising Star by Florida Super Lawyers Magazine in 2013. Ms. Hodgerson received her undergraduate degree from Florida State University, and her law degree from Florida Coastal School of Law, where she graduated summa cum laude. Ms. Hodgerson may be contacted at [email protected] Jacksonville, Tampa Offices Honored We are pleased to announce Jackson Lewis has been recognized as the Tampa Bay Litigation Department of the Year for labor and employment by the Daily Business Review (DBR) based on submissions from the firm’s Jacksonville and Tampa offices. Jackson Lewis’ Jacksonville office opened in May 2008. In January 2013, the firm announced the opening of its Tampa office, enhancing Jackson Lewis’ ability to provide advice and counseling to clients within Florida and the southeastern United States. JACKSON LEWIS NEWS Jackson Lewis P.C. represents management exclusively in employment, labor, benefits and immigration law and related litigation. The firm has more than 770 attorneys practicing in 55 locations throughout the U.S. and Puerto Rico. Jackson Lewis represents employers before state and federal courts and administrative agencies on a wide range of issues, including discrimination, wrongful discharge, wage/hour, affirmative action, immigration, and pension and benefits matters. Jackson Lewis negotiates collective bargaining agreements, participates in arbitration proceedings and represents union-free and unionized employers before NLRB and other federal and state agencies. 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