Legal Trickery – Eric A. Parzianello

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Archive for the ‘Wage and Hour Law’ Category

Audit Your Contractors – They May Cause You To Be Liable for Their Employees

Posted by Eric Parzianello on June 2, 2015

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Once a company is found to be a joint employer with its contractor, it is jointly liable for any wage violations committed by the contractor. In a May 28, 2015, Florida federal court decision, a company was held liable as a “joint employer” for improper payments its contractor required from its employees.  The essential question at issue in the case was whether the workers are dependent on the company as an economic reality.

In Garcia-Celestino vs. Citrus Consolidated, the plaintiffs alleged that a citrus grower’s contractor demanded that they pay back a portion of their wages in exchange for not reporting them as illegal immigrants and having them deported to Mexico. The workers said the contractor forced about 200 workers to pay over $100,000 during three harvest seasons.

The United States District Court of the Middle District of Florida balanced several factors in making a determination as to whether the grower was a joint employer.  If a company makes decisions such as: (1) for whom and how many employees to hire; (2) how to design the employees’ management structure; (3) when the work day begins; (4) when the laborers shall start and stop their work throughout the day; and (5) whether a laborer should be disciplined or retained, it is likely a joint employer.

Joint employer status can also be found if the company supervises workers regardless of whether orders are communicated directly to the worker or indirectly through the contractor.  The authority to hire, fire, or modify the employment conditions of the workers and the extent of the company’s involvement in the payroll procedures and wage payments is also considered.

The court found that the workers provided an integral service for the grower, indirectly but extensively supervised the workers and was also directly involved in payroll practices thereby affecting Plaintiffs’ pay.  The grower therefore will be liable in an amount to be determined for the adverse effect on the workers’ wages and possible Fair Labor Standards Act (“FLSA”) violations.  A full copy of the decision can be found at my firm’s website:   Garcia-Celestino vs. Citrus Consolidated.

Lesson for companies working with contractors:  audit their employment practices or ensure that you don’t cross decisional control lines and risk being considered a joint employer.

Eric Parzianello
eparzianello@hspplc.com
313-672-7300

Posted in Business Litigation, General Employment Law, Wage and Hour Law | Leave a Comment »

Five Things an Employer Can Do Before a Wage and Hour Claim is Made

Posted by Eric Parzianello on February 4, 2014

Employers both large and small continue to be affected by Wage and Hour claims.  In one recently reported case, a Domino’s Pizza franchisee agreed to pay $1.28 million to 61 pizza delivery workers based on claims of unpaid work.  In a case in which we’re involved, a collective action was filed in federal court on behalf of workers employed by a company but allegedly misclassified as independent contractors.  In another case, the Department of Labor’s Wage and Hour Division received a complaint from a worker and sent the letter no employer wants to receive:

Dear Owner/Manager:
The Wage and Hour Division (WHD) of the U.S. Department of Labor is responsible for administering and enforcing a number of federal labor laws, including The Fair Labor Standards Act (FLSA). This letter is to inform you of the agency’s plans to visit your establishment on February 6, 2014, at 10:00 a.m. to determine your compliance with the FLSA. 

The Department of Labor’s WHD website makes it very easy for any employee to make a claim. The WHD touts that “there are no charges to file a complaint or for the WHD to conduct an investigation” and that it will enforce wage laws “without regard to an employee’s immigration status.”  Damages in a wage and hour case may include attorney fees as well as double the amount of unpaid or under-paid wages.  Not surprisingly, National Economic Research Associates reports that on average, companies paid approximately $4.5 million to resolve cases involving wage and hour violations in 2013.

What can an employer do before a claim is made or an audit is demanded by the Wage and Hour Division?

  1. Conduct periodic internal audits with labor counsel to ensure compliance with applicable laws
  2. Ensure that employees who are classified as salaried workers and thus exempt from overtime pay are properly classified
  3. Review written job descriptions to ensure that duties of exempt employees reflect their actual job duties
  4. Determine that any workers classified as independent contractors are properly classified and are not actually employees
  5. Ensure that time record keeping procedures accurately reflect the work done

These procedures can help minimize the risk of an audit or a claim by an employee for unpaid wages or overtime.

Posted in General Employment Law, Wage and Hour Law | Tagged: , , | Leave a Comment »