Overtime Exemptions and Salary

     A salaried position is not ipso facto exempt from the time-and-a-half overtime pay rule imposed by section 207 of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et. seq. at 207).

     The list of exemptions from the overtime rule appears in section 213. At the top of the list are those employed "in a bona fide executive, administrative or professional capacity." (29 U.S.C. 213(a)(1)).

     Although such positions often are salaried, the decisive considerations are whether the job entails hiring, firing, and supervising others (executive); or exercising judgment and discretion as to "matters of significance" (administrative); or advanced knowledge of science or learning gained through a prolonged course of specialized instruction (professional). (29 C.F.R. 541.100, 541.200, 541.300).

Fee Shifting: Charging the Adversary for One's Own Legal Fees

 by David McCarthy

The most frequently asked question of all is whether one's legal expenses (and attorney's fees in particular) can be charged to an opponent. In general, the answer is no, each party bears its own litigation fees and costs. This is called the American Rule. 

There are exceptions when fee-shifting is called for by a relevant contract (e.g., an apartment lease) or a statute (e.g., the Illinois Wage Payment and Collection Act). (Typically, the client will pay its own attorney and then, if the client is also the "prevailing party," invoke the contract or the statute in support of an application for an order obligating the opponent for the fees.)

   When preparing or vetting contracts for clients, we put a lot of energy and attention on fee-shifting clauses. And we get push back from the other side all the time. A lot of advantage and disadvantage rides on the existence and content of a fee-shifting clause in a contract.

   As for statutes that permit or require fee shifting, they are as a rule available only to plaintiffs as applied even though many of them are neutral on their face (employing the term "prevailing party"). Make no mistake: They are game changers that alter the balance of power in favor of plaintiffs. We know it, and we have leveraged them to the great advantage of our clients.

   The rough equivalent for defendants is a motion for sanctions for frivolous pleadings on the part of a plaintiff. They are rarer than cases with fee-shifting potential because the conduct necessary to support an award of sanctions must be beyond the pale. (We have made three motions for sanctions, defended one, and have not lost yet.)

 

Hostile Work Environment

by David McCarthy                     

Another interesting misconception about hostile environment and retaliation came to our attention recently.  

An individual we will name John Doe had been employed for a relatively short time, about six months, but long enough to know that he and the owner of the business did not get along. What brought it to a head was a disagreement over a "prioritizing" of tasks.  

Mr. Doe was filling an order for a customer who was due to arrive later in the day. The owner asked him to put that work down and turn his attention to a different task -- a task that was perfectly legal. Mr. Doe did not do what the owner asked him to do. He opposed the owner and asserted that the task he was working on should receive priority.  

The owner threatened to strike Mr. Doe if his opposition continued, and Mr. Doe was suspended from work. He then contemplated the filing of criminal charges, and supposed that doing so would position him to be a viable retaliation plaintiff if he got fired. 

In our judgment, the State had a pretty good case against the owner on a misdemeanor charge, but that was not going to make Mr. Doe a viable retaliation plaintiff. Every antagonistic relationship between employees and superiors, and there are a lot of them, does not provide the ingredients for a "hostile environment" case.  

To get to that place, the "hostility" has to relate to a form of discrimination that is prohibited in the workplace, e.g., lewd jokes, racist remarks, mocking older workers. 

Something more than a mere clash of personalities is required, though a clash of personalities can certainly be distracting and stressful and unpleasant. Mr. Doe did not fall into any of the classes who are protected by workplace discrimination laws, and the friction between him and the owner, though plenty hostile, did not rise to the level of a "hostile environment" case.  

And in our judgment, the filing of a complaint with the police did not qualify as a predicate act that would set Mr. Doe up to be a viable retaliation plaintiff were he to lose his job over the dispute with the owner because it did not constitute the opposing of an unlawful employment practice. (Ironically, if Mr. Doe were to lose his job and apply for unemployment benefits, an objection by the employer on the grounds of insubordination would have a fair chance of being sustained.)

Family Medical Leave Act and Job Security

by David McCarthy

It is easy to suppose that an employee on leave under the Family and Medical Leave Act ("FMLA") enjoys a special "halo" of job security and protection that co-workers who are on the job do not. After all, businesses subject to FMLA must allow eligible workers up to 12 weeks of unpaid leave each year plus reinstatement to their old position. That invites an inference that an employee on leave has privileges and protections that an employee at work does not.

But it is not so. The work-at-will rule continues to apply to the employment relationship and does not yield to leave-taking.

Suppose the employee on leave had worked the night shift, and the employer puts an end to the night shift. Does that mean that only those who were actually working the night shift are out of a job while the one who was on leave is not?

Answer: no.

If the position would have been eliminated while the employee was on active duty, so to speak, the fact that the employee is on leave does not preclude elimination of the position or obligate the employer to hold the position open for the employee.

FMLA is codified at 29 U.S.C. 2601 et. seq. It generally applies to businesses with 50 employees or more. An eligible employee is one who has worked for the employer for at least 12 months (though that need not be 12 months in a row) and who has worked at least 1,250 hours in the 12 months immediately prior to the start of leave. That employee is entitled to reinstatement to his/her old position or to a position that is similar in terms of pay, benefits, etc.)

FAQs - Probate and Estate Administration

What if you die after a divorce without changing your will?

Answer: A section of the Probate Act steps in and nullifies those parts of the will which make gifts to the former spouse. (755 ILCS 5/4-7(b)).

Illinois statutes also nullify powers of attorney and those terms of revocable trusts which pertain to a former spouse. (755 ILCS 45/2-6(b) and 760 ILCS 35/0.01 et seq.). However, that is not the case with respect to the beneficial interest in a policy of life insurance.

The law does not step in and revoke a designation of a former spouse as a beneficiary. The surest way to change the beneficiary is to complete and submit a formal change of beneficiary. A second-best way would be to include a waiver in the marital settlement agreement. The trick to that, of course, is to make sure the waiver is highly specific lest it will be deemed too vague to be enforceable. A third way is to take some positive step which manifests an intention to change the beneficiary, an uncertain proposition if that "positive step" is something short of formally changing the beneficiary.


What if a child is born after a will has been made, or even after the parent has died?


Answer: In general, that child will be entitled to the same share of the estate that the child would have received had the parent died intestate (that is, without a will). There are exceptions when a will exists and speaks to this point. An after-born child will be entitled to what the will calls for, or disinherited, depending on whether the will makes gifts to after-borns or disinherits them. The statutes will control when the will is silent on the point or there is no will. (755 ILCS 5/2-3 and 755 ILCS 5/4-10).

Information Technology: Cybercrime

A loved one with an entrepreneurial spirit figures to soon be procuring product for his new venture from vendors in China. His situation is far from unique.

This has raised a host of issues relevant to cybercrime (and, for that matter, the subject of online contracting):

•How does one establish that the vendor is who he claims to be?
•Will the transactional documents will remain as drawn, and unaltered?
•Will the goods will be delivered?
A lot of good advice about such concerns, among others, is available at the website of the Internet Crime Complaint Center ("IC3"), a partnership between the Federal Bureau of Investigation and the National White Collar Crime Center that was established in 2000 "to address the ever-increasing incidence of online fraud." (2012 Internet Crime Report, Internet Crime Complaint Center p. 5).


Is cybercrime a big deal?

Here is the data from the most recent year available (2012):

Total complaints received: 289,874

Complaints reporting loss: 114,908

Total loss: $525,441,110.00

Median dollar loss for those reporting a loss: $600.00

Average dollar loss overall: $1,813.00

Average dollar loss for those reporting loss: $4,573.00

Where does Illinois fit in?


It ranks seventh in number of complaints by state (8,297 complaints) and fifth in losses ($14,316,107.72). (California, Florida, and Texas rank 1-2-3 in both those categories.)

Every once in a while, the FBI catches a bad guy. But the principal contribution of IC3 is that it imparts information and education to consumers. In terms of information, it regularly publishes online scam alerts that are available at the above identified web site address.

The Wage Act

The sales representative had this dilemma: He had an offer of new employment that would soon expire. But to collect commissions on sales made in the current year he had to remain with his current employer until April 1st of the next year.

The question was whether he had any tools available, other than his own powers of persuasion, to obtain the commission immediately.

Answer: Probably.

The Illinois Wage Payment and Collection Act ("Wage Act" or "Act"), 820 ILCS 115/1 et seq., classifies earned commission as final compensation for purposes of paying "separated" employees. The commission in this case was, in fact, earned. The sales had been closed. The goods had been received and paid for.

Section 5 of the Act states that the employer "shall pay" the final compensation of a separated employee at the time of separation if possible but in no case later than the next pay day. And there is no except-for language in case the agreement of the parties calls for payment on some other basis. Moreover, an agreement in Illinois incorporates and includes the law of Illinois in effect at the time when the agreement was made unless the agreement clearly excludes such incorporation. The agreement under examination here did not contain that exclusion. Hence, there was a conflict between the agreement that required presence on the payroll until April 1st of the year to come and the Act, and the agreement had to yield to the Act.

That would seem to put the employee in a solid position to accept the new offer of employment and demand his commissions. So why is the answer to the question posed above just "probably"? Because the Act applies only to "Illinois employers." It was far from clear whether there was an "Illinois employer" in this case.

The company was organized under the laws of a state other than Illinois. It had its principal place of business in a state other than Illinois. Its presence in Illinois was largely confined to the presence of its sales representative, an Illinois resident who conducted business from a location in Illinois. Most of the decisional law that bears upon this question is something less than "controlling legal authority." For it comes from the federal trial courts in Chicago and it analyzes the "Illinois employer" question on a case-by-case basis.

We recently made an inroad of sorts on this point before the Illinois Appellate Court. It began with a six-figure money judgment against an out-of-state business executive who was found personally liable for the severance pay of a former employee on the grounds that he had knowingly permitted the true employer to violate the Act by withholding the pay. (Under section 13 of the Act company officers who knowingly permit an employer to violate the Wage Act are deemed to be the employer and are personally liable for the pay.)

There was no question that the true employer in the case was an "Illinois employer": It was a limited liability company organized under Illinois law and it had its only business office in Illinois. The executive contended that he could not be personally liable unless he, too, was as an "Illinois employer," and he could not be an "Illinois employer" because he lived and worked outside Illinois and had virtually no physical contact with Illinois.

The Illinois Appellate Court rejected that contention and affirmed the judgment on the grounds, among others, that his duties as an officer of an Illinois company were sufficient to confer personal jurisdiction over him under our "long-arm" statute and bring him to trial on the question whether he knowingly permitted the true employer to violate the Wage Act.

The upshot is: In order for the Wage Act to apply at all, the true employer (or the employer-in-fact) must be an "Illinois employer," but only the employer-in-fact need be an "Illinois employer."