Labor and Employment Law Weekly Update

13 July 2009 Publication
Authors: Paul R. Monsees

Legal News: Employment Law Update

Expect More FLSA Litigation

Who's hiring? The Department of Labor. After a surge in job postings, the DOL has confirmed that it has begun the process of adding new investigators and staff to its field offices.

Historically, a down economy coupled with high unemployment has led to an increase in wage violations. With that in mind, Labor Secretary Hilda Solis has announced her intent to revitalize the Wage and Hour Division.

In addition to heightened DOL scrutiny, companies should also anticipate an increase in private Fair Labor Standards Act (FLSA) compliance litigation. The Plaintiffs’ Bar has already settled multimillion-dollar FLSA cases against Farmers Insurance, Starbucks, IBM, Merrill Lynch, Cingular, CIGNA, T-Mobile and Microsoft.

The most common FLSA violation is failure to pay overtime. Usually this is because workers entitled to overtime have been misclassified as “exempt” from overtime. Professionals, executives and outside sales employees are classified as exempt under the FLSA, but an employee’s job title alone does not determine the status. Instead, the law considers a number of factors. Information/computer tech support workers, insurance adjusters, loss-prevention managers, hotel-retail managers and pharmaceutical sales representatives have each been found to have been misclassified as exempt and entitled to overtime.

Litigation over the distinction between “independent contractors” and “employees” is also increasing. Like exempt vs. non-exempt status, independent contractor status depends on a number of factors. The transportation and delivery industry, including Federal Express, has been hit hard by the lawsuits claiming independent contractors are in fact employees.

Tips for preparing for (and avoiding) FLSA overtime litigation:

  • Conduct a self-audit of positions, classifications and timekeeping documentation policies. Good documentation and record-keeping is key. Attorney-client protection is a good idea for an audit, so involve counsel.
  • Make sure overtime is being calculated properly.
  • Communicate with employees about how overtime is calculated. Confusion can lead to frustration (and litigation). Do not allow employees to work “off the clock.”
  • If you suspect any employees have been misclassified, work with your attorney to determine the best approach to reclassification or possible payment of back pay.

Employee Retains Reasonable Expectation of Email Privacy Despite Computer Use Policy

Most employers today try to limit their employees’ expectation of privacy in email communications by promulgating computer-use policies. Such policies generally state that employer-supplied computers and servers are for business use, that the employer has the right to access and review any information on those computers, and that, while the employee may use the computer for occasional personal use, such use should not be considered private or confidential. These policies allow employers to monitor employee computer use without violating employees’ right to privacy.

Or that is what they are supposed to do. A new case suggests that employees retain a reasonable expectation of privacy in personal emails despite such computer-use policies, and that there are limits on what an employer can do with the information on its computers.

In Stengart v. Loving Care Agency, Inc., a New Jersey appellate court raked the employer’s computer-use policy over the fire. The policy stated that while some personal use was allowed, “e-mail and voice mail messages, internet use and communication” were considered part of the company’s business records and could not be considered private or personal to employees. The employer argued that because of this policy, employees had no expectation of privacy in emails sent from work computers. When the employer discovered on its computer emails sent by the employee through her personal internet email account to her attorney, the employer argued that it owned the emails and was free to use them since the employee had waived any confidentiality by sending them from her work computer after being informed of the computer-use policy. The court, however, held that an employer has “no legitimate business interest” in the content of an employee’s personal emails, just as it has no legitimate interest in electronically eavesdropping on an employee’s conversations during her lunch break. The employer’s only legitimate interest, reasoned the court, was in the fact that the employee was engaging in business other than the company’s, and its right to discipline employees for such lapses “does not extend to the confiscation of the employee’s personal communications.” The court thus concluded that the employee retained a reasonable expectation of privacy in the content of her personal emails.

The Stengart decision applies to New Jersey employers, but other courts have recognized a reasonable expectation of privacy in electronic communications against the owner of the equipment where the communications are stored. Employee privacy rights are ripe for expansion as the political winds shift, and employers would be well-served by implementing strong policies that assert the right to review electronic communications and thus destroy any expectation of privacy employees may have, while avoiding any claim to ownership of the electronic communications stored on their equipment. 

Legal News is part of our ongoing commitment to providing legal insight to our clients and colleagues. If you have any questions about or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals:


Sharon Mollman Elliott
Madison, Wisconsin

Paul Monsees
Washington, D.C.

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