Archives for the month of: December, 2013

OvertimeOverhead.  It’s a challenge facing employers and employees.  For many businesses, labor cost is the single greatest overhead expense.  Unfortunately, many employers try cutting corners that they should not, in particular in the area of overtime wages.  The Fair Labor Standards Act (or FLSA) is a federal labor law that requires employers to pay overtime compensation (at time-and-a-half) to employees who are not exempt under the Act for all hours worked over a prescribed threshold period (typically, 40 hours per week).  Most employees are non-exempt, meaning that they are entitled to overtime pay.  The most common exceptions to this rule involve some administrative, executive and professional employees, computer professionals, outside sales employees, and certain retail employees.  Liability exists under the FLSA even for unintentional violations.

But what if a business only employs a few people?  Is the business exempt from paying overtime?  The answer is no. Unlike many other federal laws, the FSLA does not depend upon the number of persons employed.  Instead, the FLSA covers businesses engaged in commerce or in the production of goods for commerce (i.e., handling, selling, or otherwise working, on goods or materials that have been moved in or produced for commerce).  The FLSA’s coverage is very broad, and the courts typically interpret it that way.

But what about salaried managers and individuals that have really important sounding, executive job titles?  Are they exempt?  If the manager’s/executive’s salary is less than $100,000.00, then the inquiry typically focuses on the nature of the job and how the employee performs it.  For example, if the employee cannot hire or fire other employees, or does not regularly direct the work of at least 2 employees, overtime must usually be paid.

But what about salaried employees?  Does overtime get factored into their pay?  The answer is typically yes, in most instances overtime is still required.

Is it acceptable for an employer to get around overtime by allowing the employee to volunteer their time?  No.  The FLSA does not recognize “voluntary unpaid overtime” or “donated time” as legitimate exceptions to avoid paying overtime.

What about a signed, written agreement with the employee waiving any claim they might have to overtime?  Is that acceptable?  Under the FLSA, such agreements are null, void and completely unenforceable.

Is comp time an acceptable alternative to paying overtime?  For a governmental employer, probably so.  In the private sector, comp time is generally not permissible.  It should be noted that a private employer may adjust an employee’s schedule within the same week to ensure that their total hours worked do not exceed 40 hours.  However, overtime hours may not be averaged out over a longer period of time except in exceedingly narrow cases of certain employees of residential care facilities.   Otherwise, any overtime worked within a workweek must be paid for that workweek.

Is overtime required to be paid to an independent contractor?  If a worker is truly an independent contractor, then overtime may be avoided.  The problem is that too often employers get cute, slap an independent contractor label on the worker, but then treat them as if they are employees.  If workers are truly employees, regardless of the title they hold, and if they work more than 40 hours in a workweek, the employer must pay the worker overtime pay if they do not qualify for an overtime exemption.  There is no way to contract around that.  There is no piece of paper and no amount of explanation that will overcome the finding of an employment relationship if the Department of Labor or the IRS, or a state employment security agency, determines that an employer/employee relationship exists.  For this reason, employers must be very familiar with the various tests for determining whether a worker is an employee or an independent contractor.  The controlling factor is whether the employer controls the details of how the person’s services are performed.

At the end of the day, uncertainly under the FLSA can cause serious problems.  Court’s may award an affected employee damages, including unpaid base wages, overtime pay (at time-and-a-half), liquidated damages of an amount equal to all of the employee’s unpaid wages and overtime pay, attorney’s fees, and court costs.  So for both employers and employees, care should be taken to make sure that the FLSA is followed and overtime is paid where required.

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ImageHow do I find out what prior claims my insurance company might rely upon in determining whether to issue me a policy or determine my insurance rates? Insurance companies go through an underwriting process, which includes reviewing past claims amongst other matters.  To find out about prior claims, many carriers subscribe to a service known as A-PLUS (sometimes called ISO), which is a property and liability database designed for insurance underwriters. A-PLUS serves as a clearinghouse for claims data from many different insurance companies.  The data shows the claims histories of individuals and properties.  Participating insurers can search the database to find information for underwriting, to verify claims information provided by insurance applicants, and to help prevent fraud on applications for insurance.   A-PLUS property reports provide up to five years of information on all types of loss, including: fire damage; flood damage; earthquake damage; burglary; credit card theft; workers compensation; and medical payments.  To insure that the information being relied upon is accurate, you are entitled to full disclosure of any data regarding your own claims that may be in the A-PLUS database.  ISO releases the information within 10 days of receiving a signed “Request for Disclosure” form.  To obtain a copy of the form, or for more information, call 1-800-709-8842, or write to:  A-PLUS Consumer Inquiry Center, ISO, 545 Washington Boulevard, 22nd Floor, Jersey City, NJ 07310-1686.  The standard price for a loss-history report is $19.50.  However, you can get a copy of your report free of charge if an insurer took an adverse action against you – for example, if an insurer denied coverage within the past 60 days – based on a report submitted to A-PLUS by a participating insurer.  If you disagree with or dispute the accuracy of information in the A-PLUS database, A-PLUS will contact the insurer that submitted the claim and request an investigation.  Pending the outcome of the investigation, it will add a statement of dispute to your claims record if you request it.  If the insurer does not investigate the disputed claim within 30 days of notification, A-PLUS will delete the claim from the database.  If, after investigation, the insurer stands by the claim and does not agree to remove it, you may submit a statement of dispute on that claims record.  Your statement of dispute then becomes available as part of the A-PLUS report in any future inquiries by any insurer.  For more information, go to www.iso.com.

Homeowners insurance

Many clients are reluctant to report claims on their homeowner’s insurance policies.  Their single greatest fear is that it will increase their future premiums. Whether or not your rates increase depends on multiple factors, including who your insurer is, how long you have been with them, what type of claim you are filing, and how many claims in the past that you have filed.  Generally speaking, homeowner’s insurance claims based on weather-related events (e.g., tornado, hail, wind, etc.) typically do not result in an increase in your premium.  Be advised, however, some carriers will increase your deductible when the Policy is renewed.  Going from a 1% to a 2% deductible may not seem like a lot, but it could mean the difference between whether or not you are having to pay for most, if not all, of a new roof in the event of a new claim. If the homeowner’s claim, however, is based on a plumbing leak or a slip and fall, your carrier may wind up increasing your rates when the policy is renewed and/or reduce your coverages.  For example, if a water heater leaked, and you filed a claim, the carrier might increase your rates upon renewal as well as reduced the amount of coverage for such claims (e.g., decreasing your policy limits for such claims from $150,000.00 to $50,000.00).  Amazingly, the insurance company might do this even if the amount of your claim did not even reach your deductible and the carrier had to pay nothing.  If you do have a claim, it is imperative that when your policy is renewed that you carefully read the Declarations Page and your Policy to see if your deductibles were raised, any coverage were decreased, and/or your premiums were increased.  You would be surprised how many times many homeowners do not look, throw their renewal Policy into a drawer, and then find out after a large loss that their homeowner’s deductible has been increased, coverage limits for the claim reduced, and/or their premiums had increased significantly.  At the end of the day, before you experience any loss, you probably should contact your agent and ask them what situations could result in your premiums being increased and by how much.  You should also ask them what duties you have under the Policy as to reporting claims, the effect of not doing so, and what provisions in the Policy that set your duties and responsibilities in the event of a claim.  I would recommend documenting who you spoke with, the date that you spoke with them, and what the person told you.

Brian T. Cartwright is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization.

 

Image Many clients are  reluctant to report claims on their auto insurance policies.  Their single greatest fear is that it will increase their future premiums.  Whether or not your rates will increase depends on multiple factors, including who your insurer is, how long you have been with them, what type of claim you are filing, and how many claims in the past that you have filed.  If a claim is filed under your auto policy, and you have been with the company less than a decade, and you have had one or more past claims, there is a good chance that your premiums could go up.  Because of this, many people try to avoid involving their auto carrier.  Be careful, however.  There is often one or more provisions in your automobile policy that requires you to report any loss and not prejudice the insurance company’s duty to defend you.  If you fail to follow these provisions, and your failure results in the carrier being prejudiced, the insurance company may wind up denying coverage if you, the other party, or the other party’s insurance company winds up later filing a claim for whatever reason.  For example, suppose you are involved in what you think is a minor fender bender.  You don’t report the matter to your insurance company, you tell the other party that the car accident was your fault, and, in trying to be a good person, you verbally agree to pay for the property damage as well as the person’s damages resulting from the wreck.  Now suppose that what the other party originally believed was whip lash actually was a herniated disk and, when you refuse to pay the thousands of dollars of medical expenses to treat the person’s injuries, you or the other party files a claim with your insurance company.  There is a good chance that the insurance company could deny the claim, reasoning that you accepted liability, prevented the carrier from asserting any potential defense, and they are now stuck with paying the bill.  At the end of the day, before you experience any loss, you probably should contact your agent and ask them what situations could result in your premiums being increased and by how much.  You should also ask them what duties you have under the Policy as to reporting claims, the effect of not doing so, and what provisions in the Policy that set your duties and responsibilities in the event of a claim.  I would recommend documenting who you spoke with, the date and time that you spoke with them, and what the person told you.

 Brian T. Cartwright is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization and can be reached at bcartwright@dentonlaw.com and at http://www.dentonlaw.com.

Image More and More of us are doing our shopping online for the holidays.  Much of the time, before the sale is completed, we are asked to check a box that says something like “agree to terms and conditions.”  Occasionally, if you are like most people, you’ll scroll down the tiny box skimming the tiny print that is there.  Then, you click on the box and move on to complete the purchase.  Well, you didn’t really read those terms and conditions, are you bound by them anyway?

The short answer is “probably yes.”  These point and click contracts, where the individual consumer has no opportunity to negotiate the terms, are sometimes referred to as adhesion contracts.  An adhesion contract is a standardized contract form that offers goods or services to consumers on essentially a “take it or leave it” basis without giving consumer realistic opportunities to negotiate terms.  If the consumer wants the product, the consumer cannot purchase it unless, as in the case of most internet sales, they check the box that they agree to the terms and conditions that the seller is offering.

Some people have heard (or have the knee jerk reaction) that adhesion contracts are not enforceable.  This is generally not true.  As the Texas Supreme Court has repeatedly said, an agreement is not negated because one party had a better bargaining position.  Adhesion contracts will be enforced unless the contract results in unfair surprise or oppression.  To constitute unfair surprise and oppression the circumstances have to be extreme.  Texas courts have found relatively few adhesion contracts that they believed resulted in unfair surprise or oppression.

In a similar vein, many retailers now use shorter contracts when you make in-store purchases that incorporate the terms and conditions that are spelled out on a company’s website.  Sometimes the terms are even emailed to you when or shortly after you pay for the product.  These types of agreements are also finding favor in the courts.  Under Texas law, unsigned documents may be incorporated into the parties’ contract by referring in the signed document to an unsigned document.  The language used to refer to the incorporated documents is not important as long as the signed document “plainly refers” and not just mentions the incorporated document.  For example, if a written contract signed in the store plainly refers  you to the terms and conditions on the store’s website, those terms and conditions have likely become part of your agreement with the store whether you have read them or not.

The moral of the story is this.  Be careful where you point and click.  For major purchases, you should actually read, not simply scroll through, the terms and conditions.  If you see a reference in an in-store agreement to additional terms and conditions on the website, ask to see the website terms before signing the agreement.  Now more than ever, we have options on where and from whom we purchase goods and services.  If you think the terms  and conditions of a point and click contract are outrageous, take you business elsewhere.  Your local merchants will be glad to see your smiling face this holiday season.

Sam B. Burke is Board Certified by the Texas Board of Legal Specialization in Civil Trial Law and may be reached at sburke@dentonlaw.com or at www.dentonlaw.com.