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Wage and Hour Pitfalls of Telework

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Written by Haley Paul
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Thanks to COVID-19, many employers are still permitting some or all of their employees to work remotely. While telework presents a whole host of complications for employers, one of the primary concerns—or what should be a primary concern—among employers is properly tracking and calculating work time.

Under the Fair Labor Standards Act (the “FLSA” or “Act”) and its regulations, an employer is required to pay its employees for all hours worked, even work that was not requested but was allowed, including work performed at home.

Under typical circumstances, the Department of Labor (the “DOL”) generally considers the time between an employee’s “first and last principal task” in a work day to be compensable (with some exceptions). But given the fact that many workers are simultaneously having to care for children during school and childcare closures and/or caring for sick family members or are dealing with new and unique complexities of working from home, the DOL has made it clear that employees need only be compensated for time actually spent working. This permits employers and employees to agree to flexible schedules that more closely align with current needs.

New questions have arisen due to these new work-from-home arrangements. Namely, how do employers accurately track their employees’ working hours? How do employers ensure that employees are not inflating their hours, given the lack of oversight? What if employees under-report their hours, which could open employers up to significant liability under the FLSA?

The FLSA regulations make it clear that if the employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. An employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence.

So how do employers find a balance between creating policies that ensure employees do not over-report work hours and/or work unauthorized overtime while also ensuring that employees do not under-report their hours such that they invite liability for unpaid worktime? The DOL has indicated that the key is to provide a reasonable reporting procedure and carefully monitor employees’ hours. It may be time to invest in a better time-keeping software or app. Some of the newer programs have features such as random screen sampling and ability to track progress on specific projects.

If an employee fails to report unscheduled hours worked through such a procedure, the DOL has indicated that the employer is not required to undergo impractical efforts to investigate further and uncover unreported hours of work and provide compensation for those hours.

On the other hand, if the employer believes an employee is inflating hours or the employee is taking too long on a particular job assignment, it is time for a verbal or written warning, a performance improvement plan or perhaps even some informal coaching, depending on the circumstances (including, whether this is the first instance or an ongoing problem and whether the employer believes the issue to be an intentional misstatement or an issue of inefficiency).

If you are permitting employees to telework and you have concerns about potential under or over-reporting of workhours, it is important to discuss your concerns with an experienced labor and employment attorney. Wage and hour violations can be grossly expensive and time consuming. It is always better to catch and correct the problem early, rather than through a DOL investigation or lawsuit.


These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed. Employers should consult their tax advisors concerning the application of tax laws to their particular situation.

Employers are also encouraged to seek legal counsel prior to taking actions to avoid violations of federal or state employment laws including, but not limited to, Title VII of the Civil Rights Act of 1964.


 

Topic: Employment Law
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When an Email is More Than an Email: Clicking "Send" Forms the Contract

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Written by Adam R. Fracht
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It’s a common belief in business—a formal, signed contract is required to actually form a contract.  Until pen is put to paper on a nice, neat document, complete with signature lines dutifully placed at the bottom of the last page, there is simply no “deal.”  Right?

Unfortunately, no.  The reality is that many businesses miscalculate how easy it is to form a contract, often unintentionally. Perhaps nowhere is this more evident than in emails, the dominant form of business communications today.

Consider the following scenario: one of your customers is past due on a $100,000 debt.  The customer emails you proposing a payment of $50,000 to settle the debt.  You email the customer back that you have authority to settle the debt for $75,000 and ask the customer to let you know if the customer “can make this happen.”  The customer then responds via email that he is “OK” with your offer and says he agrees to the $75,000 to settle.  He then asks you to “please send paperwork so I can review.”

A day later, you reconsider and conclude that $75,000 is too low.  You inform the customer that there is no deal.  Your customer quickly responds that “we do have a deal and I expect you to honor it!”  You reply that “no one signed a contract and even you, Mr. Customer, expected to review the ‘paperwork’ for the deal, and that was never even drafted!”

Surprisingly, your customer may have a good argument that an agreement was formed simply from the email exchange.  Texas courts have found on similar facts that (i) such an “offer” email was clear, definite, and covered the essentials of the proposed transaction; and (ii) such an “acceptance” email was unequivocal and unconditional, and accepted the significant terms of the “offer.”  Even the Texas Supreme Court has concluded that emails exchanged between two different parties—when read together—can be construed as forming one single contract.  The emails do not even need to expressly refer to one another.

But what about the fact that no one actually “signed” anything?  Well, you actually did “sign” that email, as did your customer, you just did not know it.  Under the Texas Uniform Electronic Transactions Act, courts have found that both the “from” field in an email and a person’s email’s signature block constitute a legally effective “signature.”  Like it or not, your “John Hancock” is there, digitally and legally.

What about the missing terms of the so-called “deal”, such as when the $75,000 is to be paid, how it is to be paid and the form and scope of the settlement agreement?  How can there be a contract if these details were never specified?  Interestingly, Texas courts have routinely found that such items are not essential terms of such a contract, and thus the contract stands despite them being absent.

Perhaps most surprisingly, not much weight may be given to the customer’s response of “please send paperwork so I can review,” which certainly implies that even the customer thinks additional terms need to be ironed out in a subsequent formal written contract.  Rather, courts have viewed such language—which does not expressly condition the customer’s acceptance on any particular details such as further documentation—as failing to negate the customer’s acceptance of the offered terms, as expressed in his email.  In other words, the deal is stuck even without such further “paperwork,” even if the customer requested such “paperwork”.

At this point, you may be nervous about ever sending another email, wondering if the use of carrier pigeons or smoke signals might be a safer option.  Fortunately, there are some ways to mitigate against the risk of a “contract-by-email,” and one of the easiest is a slight twist on the “paperwork” request by our hypothetical customer—making clear in our email “offer” that no contract arises between the parties until a formal written contract is personally executed by the parties, and that the email communications are nothing more than preliminary discussions.

While this may not sound that different than simply “sending the paperwork,” it is different in one major way—you are now clarifying that your consent to the “deal” is conditioned upon such a formal written contract, rather than that the formal written contract simply memorializing the “deal.”  In other words, until the formal written contract is drafted and signed, there is no “deal.”

Of course, every situation is different, and it is impossible to guarantee no contract-by-email is formed in every circumstance—clever lawyers will always work the facts to their client’s benefit—but realizing the binding-power of an email conversation, and how to guard against it, never hurts.

If you have questions regarding the above, or have found yourself in a “contract-by-email” predicament, please contact Stibbs & Co.


These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.


 

Topic: Contract Law
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Residential Evictions Halted

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Written by Haley Paul
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September 4, 2020

Relief for Residential Tenants Could Mean Hardship for Landlords

Following an Executive Order by President Trump, the Centers for Disease Control and Prevention (CDC) announced a temporary eviction moratorium intended to prevent the further spread of COVID-19, effective through December 31, 2020. The Agency Order, Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19, is available here: September 4, 2020 Agency Order.

The Agency Order prohibits landlords, owners of a residential property, or other persons with a legal right to pursue eviction or possessory action from evicting any covered person from any residential property. According to administration officials, this includes evictions that were already in process. A “covered person” means any tenant, lessee, or resident of a residential property who provides to their landlord, the owner of the residential property, or other person with a legal right to pursue eviction or a possessory action, a declaration under penalty of perjury indicating that:

1) The individual has used best efforts to obtain all available government assistance for rent or housing;

2) The individual either

(i) expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return), or

(ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or

(iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;

3) the individual is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses;

4) the individual is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other non discretionary expenses; AND

5) eviction would likely render the individual homeless— or force the individual to move into and live in close quarters in a new congregate or shared living setting— because the individual has no other available housing options.(The CDC has published a declaration form that tenants may use that contains all the prerequisite language.)

The Agency Order is effective immediately in every jurisdiction, except that it does not apply to any State, local, territorial, or tribal area with a moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements listed in the Agency Order. Nor does it apply to American Samoa.

Notably, the order “does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract. Nothing in [the] Order precludes the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.” The Agency Order places no restrictions or caps on interest and penalties, so the terms of the lease (as governed by pre-existing law) will apply.

Finally, tenants may still be evicted for reasons other than not paying rent or other housing payment (including late fees, penalties, or interest). So, if the lease has other restrictions or if the lease terminates and is not renewed, the restrictions on evictions will not apply.

It is important for both tenants and landlords to do their homework right now. There are state and local relief programs available, but they require prompt action as funds are not unlimited. The city of Houston and Harris County began accepting applications from landlords in mid-August for their program and opened the application program for tenants on August 24—both of which are currently still open for application. Visit https://www.bakerripleyrenthelp.org/ for more information.

If you have questions regarding the particular terms of your residential lease or how this Agency Order will affect your rights, contact an attorney.


These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.


 

Topic: Real Estate