BizLawBuz …. The Power of Know

Increasingly, employers are providing employees with mobile communication devices such as smart phones and laptops. Most employers permit personal use of those devices, yet they tend to lack clear-cut policies to protect themselves from liability stemming from that personal use.

Perhaps the most serious risk to employers is invasion of privacy claims arising out of an employer accessing an employee’s emails or text messages on a company-issued phone or computer. Less serious, but probably more widespread, is the risk for unexpected overtime claims arising out of after-hours use of mobile devices.

Company policies should clearly state that the employer retains ownership of all company-issued devices, and that, in the course of accessing communications as needed for business purposes, personal content may necessarily be viewed.

In addition to establishing that employees should have no expectation of privacy with regard to mobile device content, employer policies should identify and prohibit harmful or illegal activities in order to better protect employers from liability relating to misuse of phones and other devices.

Similarly, well-crafted policies and practices can help an employer avoid unexpected overtime liability. For instance, the business use of mobile devices by nonexempt employees should be restricted wherever possible. Also, nonexempt employees should be required to log and report all work performed on their mobile devices outside of business hours.

Mobile communication devices can be extremely valuable business tools. Well-crafted policies and practices can help to keep them that way!

Lee Flaherty

My dad was a lifetime smoker. Sadly, he died with cancer at age 71. Although I repeatedly urged him to quit, I must admit I felt some sympathy for him as social attitudes toward smoking evolved, and he found himself, increasingly, smoking outside and alone. Today, it is unlawful to smoke in most public buildings in many states including Michigan and Ohio. Employers who have employees who smoke struggle with work rules that are considered “fair” by smokers and non-smokers alike. At the heart of the debate is the “smoke break.” Must employers accommodate those five minute breaks throughout the day when diehard smokers huddle in the cold outside the office door? Must they pay for this time away from the workstation?

Generally speaking, employers are not required to provide work breaks of any specific length or frequency. So long as the employer compensates its employees for any hours worked in excess of 40 hours in a week, it has considerable latitude to set the workday schedule. In theory, an employer could schedule a twelve hour workday without even a lunch or bathroom break. Practically speaking, that employer will have a hard time retaining employees. So, in general, an employer is not required to offer breaks to accommodate smoking.

But to the extent the employer does provide breaks, it generally cannot dock pay for those breaks that are less than 20 minutes in duration. If people are permitted to walk to the lavatory or the water cooler or outside for a smoke, the employer cannot turn around and dock the employee for this lost productivity. Although some exceptions may apply, the general rule of thumb to be remembered is this: Permitted breaks of 20 minutes or less are with pay. If a break is to be without pay, it should be greater than 20 minutes, and it is imperative that the employee is completely relieved of duties during the unpaid break.

Dirk A. Beamer

In 2009, the Credit Card Act (”CCA”) was enacted to provide protections for American consumers against unfair credit card company practices. Since roughly 80% of American families have at least one credit card, and 44% of families carry balances on their credit cards, it is important for consumers to know their rights under the CCA.

Here are a few notable reforms:

The CCA bans retroactive interest rate hikes on existing balances. Credit card companies cannot increase the interest rate due to “any time, any reason” and retroactive rate increases due to late payments are restricted. Some exceptions that permit card companies to increase the interest rate include:

• The end of an introductory or “teaser” period;
• The interest rate is tied to an index and is variable;
• The consumer completes the terms of a workout plan for debt repayment or fails to comply with terms of a workout plan;
• The consumer is more than 60 days late making a monthly payment. The card company must provide the reason for the increase and restore the interest rate to the previous, lower level after six months if the consumer proceeds to make on-time payments during that six-month period;
• Military service members end active duty. As long as service members are on active duty, their card APR cannot exceed 6%. The Federal Reserve Board added a provision that allows card companies to increase interest rates on cards owned by service members to restore APRs to previous levels after they return from active duty.
• “Universal default,” the practice of increasing interest rates based on their payment history on unrelated accounts, is banned under the CCA for existing card balances.Significant first year protections are imposed by the CCA. Contract terms must be clearly spelled out and stable for the entire first year on new accounts, and interest rates cannot increase except under the above exceptions. Promotional rates must be clearly disclosed and last for at least six months.

Unfair late fee traps are no longer permissible. Card companies have to give consumers a reasonable time to pay the monthly bill – at least 21 days from the time of mailing. Weekend deadlines, due dates that change each month, and middle-of-the-day deadlines are also impermissible.

Card companies must obtain a consumer’s permission to impose over-limit fees. Without this permission, purchases that would exceed credit limits will be rejected. If a consumer chooses over-limit fees, the consumer must be informed of the amount of the fees and must have the right to revoke permission at any time.

College students and young adults also receive additional protections under the CCA. For example, card companies and universities must disclose agreements with respect to the marketing or distribution of credit cards to students.

Card companies must disclose card terms in plain sight and in plain language so that consumers can see and understand the terms and plan accordingly to avoid unnecessary costs and manage their finances.

Julie Pfitzenmaier

A recent update from the State Bar Business Law Section addresses a recent decision out of the Oakland County Circuit Court, where Judge Colleen O’Brien granted a preliminary injunction requiring an auto supplier to keep shipping parts even though the customer was delinquent in payments and, as a result, in breach of the purchase order. To the extent you work in the auto sector, be aware of what could be an ongoing bias in favor of OEMs and larger tier suppliers. The hopes were this would lessen with the shake-up in the industry, but this case suggests otherwise.

Appended below is an Opinion and Order from Judge Colleen O’Brien in Oakland County Circuit Court in Metavation LLC v. Grede LLC, Case No. 11-116105-CK granting a preliminary injunction in a supplier dispute, provided by Adam Kochenderfer of Wolfson Bolton PLLC.

In the Metavation action, the Court granted Plaintiff’s motion for a preliminary injunction after Defendant refused to produce component parts under supply contracts between the parties. Among other things, Defendant claimed that alleged late payments entitled Defendant to unilaterally terminate the contracts. Defendant further argued that the shutdown of Plaintiff’s assembly operations, and consequent employment losses, would not constitute “irreparable harm” under Michigan law. The Court disagreed, holding that

1. the terms of the parties’ contracts control and “[d]e minimus delays in payment do not permit a party to unilaterally terminate a contract;”
2. the factor regarding irreparable harm weighs in favor of Plaintiff because Plaintiff relied on frequent shipments of parts from Defendant, and, if Defendant ceased shipments, “Plaintiff’s manufacturing business would come to a halt;” and
3. “the prevention of job losses serves the public interest.”

Therefore, the Court issued a preliminary injunction ordering Defendant to continue producing and shipping the component parts to Plaintiff in accordance with the parties’ contracts.

Dirk A. Beamer

Many of us in the Midwest are bracing for what is expected to be the worst snow storm of the season tonight and tomorrow. Many workplaces (including our office in Farmington Hills) will be closed tomorrow to avoid the safety risks of traveling through the ice and snow. If you close early, or for a full day, how do you handle payroll?

Generally speaking, “non-exempt” employees (those people who are eligible for overtime) may be sent home early, or told not to report the following day, without pay. A few states have rules that if an employee travels to work, he or she is entitled to a certain base amount of compensation, but Michigan and Ohio are not among them. Therefore, if you close early today or tomorrow, you do not need to pay non-exempt employees for the time off.

On the other hand, you do need to pay your “exempt” employees, which will include many salaried employees. The only reliable exception to the rule is if you are closed an entire week at a time, you need not pay for that week. While the forecast is bad, it should not have us shut down for a week, so this rule will not likely apply. You do have one other option with “exempt” employees. You can require that they use available paid time off to cover the closing. But if they don’t have sufficient time off available, you still must pay them the difference.

Stay warm, stay safe, and make sure you stay clear of any wage and hour violations.

Dirk A, Beamer