New Legislation Proposes Employees' Choice of Comp Time in Lieu of Overtime

By: Robert D. Martin, Esq.

New legislation proposed in the United States House of Representatives seeks to offer hourly employees more choices in maintaining work-life balance. The Working Family’s Flexibility Act of 2017, H.R.1180, sponsored by the Representative Martha Roey (R-AL) amends the Fair Labor Standards Act and authorizes employers to offer employees the option to either receive time-and-a-half pay for every hour worked over forty, or to accumulate those time-and-a-half paid time off hours worked over forty to be used as paid time off (“comp time”) at some other point during the year. Like all other overtime provisions in the FLSA, this option would only apply to hourly workers who do not fall under one of the Act’s recognized exemptions.

The bill does prohibit an employee from accruing more than 160 hours of this comp time, or four weeks. In the event that the employee does not use comp time by the end of the calendar year, the employer is required to pay the original overtime that would have been due to the employees.

In the event that an employer decides to discontinue the comp time program, the employer must give employees 30 days’ notice. Likewise, the employee can withdraw from an agreement to receive comp time at any time.

The crucial point here is that the decision to take comp time in lieu of overtime pay is left solely to the employee. Employers may not force the employee to make such a determination and may not terminate an employee for deciding to take overtime pay instead of comp time.

Several private and government employers already use a comp time or flex time program for their FLSA exempt employees.

The comp time is not accrued on an hour for hour basis; rather, it is accrued on a time and a half basis. For instance, if an employee works fifty hours in a week under the act, he would be either entitled to forty hours of regular pay, and ten hours of time and a half pay, or regular hourly pay for fifty hours, and fifteen hours of comp time.

Critics of the measure say that the bill offers a false choice, in that employees would not actually have the ability to make the determination of whether to accept comp time or overtime, and that the employer reserves the right to deny use of the comp time if it would interfere with business. However, the bill explicitly prohibits employees from requiring comp time rather than overtime as a condition of employment. Furthermore, under current law, employees already have the right to approve or deny time off, with the exception of FMCA.

In this writer’s estimation, this bill balances the needs of employers and employees to bring the working environment into the 21st century without taking a hit to productivity or work-life balance. Additionally, the bill has a sunset provision which will cause the Act to expire after 5 years if it is not renewed by Congress. That way, if the act does not have the impact as planned, it can be retired without an act of Congress.

The legislation was passed the House and is awaiting a vote in the Senate.

If you are an employer and would like to know more about how the Working Families Flexibility Act of 2017 will or could affect your business, call Robert Martin at Meridian Law at 615-647-0645.

Meridian Law Attorney Gives Presentation on Wedding Law

Meridian Law attorney and somewhat-recently-married-man, Robert D. Martin, recently presented a seminar on tort and contract issues that often arise in wedding planning. The presentation was a part of the Tennessee Bar Association’s Wedding CLE held on March 29, 2017.

Robert spoke to a room full of attorneys about how to deal with conflict that may arise when a parent or guardian is paying the bill for services provided for the benefit of the bride and groom. His presentation also addressed the legal requirements to officiate weddings in Tennessee, liability issues that may arise from serving alcohol to wedding guests at home weddings, and how to deal with vendors who do not perform their contractual obligations satisfactorily, or wedding parties who refuse to pay for services after the matter. Robert gave severalexamples of specific provisions to include in vendor contracts to prevent issues down the road.

If you are a vendor in the wedding industry and need advice on how to structure your contracts or have issues dealing with your clients, contact Meridian Law at 615-229-7499.

There Is No Private Right of Action for Violation of the Tip Statute

By: Robert D. Martin, Esq.

Hardy v. Tournament Players Club at Southwind, Inc. d/b/a “TPC Southwind,” No. W2014-02286-SC-R11-CV (Tenn. March 8, 2017). 

The Tennessee Supreme Court recently held that a server may not sue her employer for violation of the Tennessee Tip Statute. The Court’s opinion overturned the decision of the Court of Appeals, who in 2015 declared that the tip statute contained an “implied right of action.”

Kim Hardy was a server and bartender at the Tournament Players Club (“TPC”) at Southwind golf course in Memphis. TPC customarily added a mandatory service charge to every bill at its bars and restaurants, in addition to allowing customers to pay optional tips. The Mandatory Service Charges were placed in a pool and were paid out to employees on their regular paychecks. The traditional tips were also not paid to employees until their regular paychecks. Ms. Hardy alleged in her Complaint that the service charges were distributed to non-service employees, which would have violated the tip statute. The tip statute requires that restaurants which automatically add a gratuity onto a customers’ bills distribute the tips only among employees who have rendered the service. The statute makes a violation of the law a misdemeanor, but does not specifically state than an employee may sue their employer for a violation. 

The trial court dismissed the case for failure to state a claim, after it determined that the Tip statute did not allow a private right of action, meaning that an employee could not sue its employer if the employer violated the statute. The Court of Appeals reversed, relying on a 1998 Court of Appeals decision that found an implied private right of action under the tip statute.

The Supreme Court disagreed, overturning the Court of Appeals. The Court held that the Tennessee General Assembly, in passing the tip statute, gave no indication that it intended for a private citizen to file a lawsuit for a violation of the statute. The statute is criminal in nature since it provides that a violation of the statute is a misdemeanor. This means that if the employer broke the law, it was up to the government to hold the employer accountable, not the employee.

The tip statute is different than other wage and hour laws. For instance, the Fair Labor Standards Act, the federal wage law, not only provides for a private right of action for violations of the statute, but also provides that an employee may file a “collective action,” remarkably similar to a class action, on behalf of fellow employees who were also not paid in accordance with the law.

If you are an employer in the food service industry, and you have questions regarding how to compensate or handle tips for your employees, contact Meridian Law for a consultation.

Tennessee Adopts Duty of Technology Competence

By: Miles Martindale

 

On July 11, 2016, the Tennessee Bar Association (“TBA”) filed a petition asking the Tennessee Supreme Court to amend Rule 8 of the Rules of the Tennessee Supreme Court. The TBA proposed to amend selected portions of Rule 8 in light of similar revisions to the American Bar Association’s Model Rules of Professional Conduct that were adopted by the ABA’s House of Delegates in August 2012. On March 6, 2017, the Tennessee Supreme Court issued an order that adopted certain amendments to Rule 8, whichwere effective immediately. Among the amendments, the Order approves adoption of the language of Comment 8 of ABA Model Rule 1.1 pertaining to technology competence, which makes Tennessee the 27th state to adopt such a rule. Tennessee’s Rule 1.1, Comment 8 (formerly Comment 6), now provides: 

“To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education, and comply with all continuing legal education requirements to which the lawyer is subject.” 

The Duty of Technology Competence update does not change the duty to maintain competence under Rule 1.1, it merely clarifies that maintaining technological competence is part of that duty. Thus, lawyers can no longer remain  ignorant of technology and still claim to ethically serve their clients’ needs. Technological competency does not require all lawyers to become experts in field of legal technology, and no state has published a list of technology programs that lawyers must learn or skills that lawyers must possess. However, this duty does require lawyers to stay abreast of legal technology developments and requires a baseline understanding of, and reasonable proficiency in, modern legal technology.

Technology is becoming increasingly important in the business and practice of law. This amendment is an acknowledgement that technological competence is a necessary requirement in today’s legal environment. A lawyer’s fundamental duty has always been to provide competent representation to her clients. As times have change, so has the view of what it means to provide competent representation. Competency no longer simply refers to a lawyer’s substantive knowledge of the law combined with experience and the ability to adequately represent a client. Lawyers who refuse to keep up with modern technology now risk violating ethical obligations and becoming obsolete. Meridian Law is committed to staying on the cutting-edge of legal technology and incorporating technology into our practice to provide efficient and cost-effective legal services to our clients.
 

Meridian Law WINS Summary Judgment in Uninsured Motorist Case

By: Robert D. Martin

 

In November, 2016, Judge Hamilton Gayden of the Davidson County Circuit Court granted Summary Judgment in favor of an uninsured motorist insurance provider when the insured driver delayed notifying the provider for over two years after the accident at issue occurred.

Meridian Law, representing the insurance provider, argued that the driver’s delay prejudiced the provider’s ability to fairly and effectively try the case by removing its ability to interview witnesses while they still had a fresh recollection, examine the scene, and conduct its own independent investigation of the crash. Furthermore, the driver was involved in multiple subsequent vehicle accidents before notifying the insurance provider, making it difficult, if not impossible, to determine which injuries were the result of which accidents.

The Court agreed and granted Summary Judgment for the insurance provider, effectively ending its involvement in the litigation. This is a great victory for our clients!

If you are an insurance adjuster and you are looking for attorneys to handle your claims, contact Meridian Law for a free consultation. 

Dog Groomers Are Employees, Not Independent Contractors, Holds Court of Appeals

By: Robert D. Martin, Esq.

 

The Tennessee Court of Appeals held that a Knoxville dog grooming service owed five years-worth of unpaid unemployment taxes for groomers that it treated as independent contractors, when those groomers were actually employees.

Many employers believe that if they issue workers 1099s instead of W-2s, then those workers are independent contractors. This misconception can end up being very costly for employers, as it was in Concord Enterprises of Knoxville v. Department of Labor and Workforce Development. In that case, Concord was “in the business of grooming dogs.” Their groomers each determined their own prices for services on a case-by-case basis and could work at any location they wanted, although all of their services ended up actually being performed at Concord’s place of business. The groomers were paid a 50% commission by Concord each week. Customers called Concord to set appointments, but the customers could request a particular groomer.

Tennessee’s unemployment statute provides that all workers are employees unless three distinct factors are met: (A) the worker has been and will continue to be free from control and direction of the company in connection with the performance of their service; (B) the service is performed either outside the company’s usual course of business or outside of all the company’s places of business; and (C) the worker is customarily engaged in an independently established trade, profession or business. Tenn. Code Ann. § 50-7-207(e) (paraphrased). All three factors of this so-called “ABC Test” must be met in order for workers to be classified as independent contractors for purposes of unemployment taxes and eligibility.

The Court determined that Concord failed to satisfy the B prong of the test, since Concord was admittedly “in the business of grooming dogs” which was precisely the work being done by the groomers at issue. Additionally, all of the Groomers’ work occurred at Concord’s place of business. As a result of this misclassification, Concord was forced to pay back-unemployment taxes for the years 2006-2011.

This case serves as a warning that the cost of misclassifying workers can be steep. If you own or operate a business and are worried that you might be classifying your workers incorrectly, contact Meridian Law for help. 

Meridian Law Successfully Defends Breach of Contract Claim in Benton County, TN

January 17, 2017

Stacey & Lisa Powell v. Matthew Powell, 16-CV-314

In this matter, the Plaintiffs filed a lawsuit against the Defendant in the General Sessions Court for Benton County. The cause of action was breach of contract for an alleged unpaid debt of a specified amount.

Meridian Law successfully defended the action. The trial court dismissed the case on Defendant’s motion after a trial on the merits. At trial, the Plaintiff failed to introduce any evidence of a contract memorializing any actual debt owed. Meridian Law successfully argued that on an action for an unpaid debt, the parties must have a writing, signed by the person against whom the contract is to be enforced pursuant to the statute of frauds. T.C.A. 29-2-101.

Tennessee, like many other states, has a law on the books called the Statute of Frauds. This is an important law to know and understand, especially if you are considering loaning someone money. Tennessee’s Statute of Frauds states that certain types of contracts must be in writing in order to be enforced. Absent a writing, the contract cannot be enforced. The most common mistake we see, is that creditors loan money without a written contract. As in the case above, if there is no written contract, a creditor cannot enforce the agreement and is precluded by law from filing a lawsuit to collect the debt.

If you are considering loaning someone money, or entering into any other type of monetary transaction, you should reduce your agreement to a writing and have it signed by all parties. If you have been sued, or need to file suit to collect a debt, Meridian Law may be able to assist. Meridian Law can also assist in the drafting and review of contracts.

If you think Meridian Law can help you, give us a call today at 615-229-7499 or email info@meridian.law.

Tennessee Court of Appeals Vacates a Williamson County Chancery Court’s Order of Default Judgment

Regions Bank v. Chas A. Sandford, No. M2015-02215-COA-R3-CV

November 21, 2016

Service of process is essential to the tenant of due process. Service of process, in simple terms, means the delivery of legal papers. Once a lawsuit has been filed against a defendant, the plaintiff must serve the defendant with all of the legal papers. Only then can the lawsuit move forward. If the defendant is not properly served with process, the lawsuit cannot continue. If the defendant is properly served with process, then the lawsuit may continue pursuant to the applicable rules of procedure.

The Tennessee Rules of Civil Procedure (“Tenn. R. Civ. P.”), govern all aspects of civil procedure in the Chancery Courts of Tennessee. Tenn. R. Civ. P. 4.04 states, generally, that an individual defendant must be served with process personally, or by leaving process at the defendant’s usual dwelling house with a person of suitable age and discretion. Another option for service is that the plaintiff may mail process to the defendant by certified mail requesting restricted delivery. (See Tenn. R. Civ. P. 4.04(1)-(11) for a full list of acceptable forms of service). After the defendant has been served with process by an available method, the plaintiff must file proof of service with the court. Tn. R. Civ. P. 5.03.

If a defendant is properly served with process and fails to file a responsive pleading within the appropriate amount of time, then the plaintiff may ask the court to enter a default judgment against the defendant. Tn. R. Civ. P. 55.01.

In Regions Bank v. Chas A. Sandford, No. M2015-02215-COA-R3-CV (Tn. Ct. App. November 16, 2016), the Tennessee Court of Appeals at Nashville, vacated a default judgment ordered by the Williamson County Chancery Court. In that decision, the plaintiff’s process server attempted to serve the defendant eleven times without success. Following the eleven attempts at service, plaintiff again attempted to serve the defendant by certified mail. The United States Postal Service returned the receipt marked, “Return to Sender,” “Unclaimed,” and “Unable to Forward.” The plaintiff then filed an affidavit indicating that service had been properly completed – even though service was not completed pursuant to the Tenn. R. Civ. P.

Regions Bank then filed a motion for default judgment against the defendant. Defendant finally responded by filing a “special appearance” contesting service of process. On September 25, 2015, the Williamson County Chancery Court granted plaintiff’s motion and entered a default judgment for $153,274.13 against the defendant. The defendant appealed.   

The Court of Appeals held that service cannot be completed by mail unless the record contains a return receipt showing personal acceptance by the defendant. A return receipt marked “unclaimed” does not show personal acceptance by a defendant and therefore cannot serve as a basis for an entry of a default judgment.

Regions Bank argued on appeal that the defendant was on notice of the lawsuit because he filed a “special appearance”. The Court of Appeals found that argument to be without merit because the law is clear: “actual notice of the lawsuit is not a substitute for service of process when the Rules of Civil Procedure so require.” Thus, the Court of Appeals held that the trial court abused its discretion by entering a default judgment based on service of process by mail with a return receipt marked “unclaimed.” In so finding, the Court of Appeals vacated the Williamson County Chancery Court’s order of default judgment against the defendant.

Service of process is vital in Tennessee to ensure that a defendant’s due process rights are protected. If a defendant is not properly served, no judgment may result. However, if the court does enter a judgment against a defendant that has not been properly served, that judgment could be vacated.

If you are a defendant and have had a judgment entered against you by default, you may have options to have the judgment vacated. It is important that you seek the advice of legal counsel. The attorneys at Meridian Law, PLLC, may be able to assist. Call Meridian today at (615) 229-7499.