Broward County Passes a Wage Theft Ordinance - The Effect on Retailers that do Business in Florida
On October 23, 2012, Broward County became the second Florida County to pass a Wage Theft Ordinance ("WTO"). Broward Ordinance No. 2012-32 joins Chapter 22, Sections 1-10, of the Code of Miami-Dade County as the first few ordinances of their kind in the Country. Palm Beach County has previously considered the idea of a WTO and is expected to follow suit shortly.
Why are the Florida Wage Theft Ordinances Problematic for Florida Businesses?
Simply put, they create an inconsistent patchwork of administrative remedies and place responsibility in the hands of vaguely defined decision makers (referred to as "Hearing Officers") who act in a quasi-judicial capacity. Further, WTOs are at odds with, or ignore altogether, the legal remedies that already exist to prevent unscrupulous employers from taking advantage of employees. The Florida WTOs may cause many legitimate employers to be needlessly dragged through the administrative process with commensurate expense of time and money.
Why Should Retailers, both Large and Small, Care about Wage Theft Ordinances?
Based upon data from the Florida Agency for Workforce Innovation, in 2010 Broward County was reaching a labor force of one million. The Broward County Department of Urban Planning and Redevelopment classifies the retail sector of Broward as accounting for approximately 12% of the businesses and 8% of all employees in the County. In reality, those figures are probably low based on rigid classifications of businesses and employees. Broward is home to many thriving large retail areas including those in Sunrise, Plantation, Pembroke Pines and Coral Springs. The reality is that given the size of the retail industry in a Broward County, it is inevitable that retailers, both big and small, will be subjected to action under Broward's WTO. This ordinance is more aggressive than its Miami-Dade counterpart by creating added expenses and exposure to liquidated damages, administrative costs, attorney's fees, court costs and interest. Employers beware!
Breaking Down Broward Ordinance 2012-32
Broward's WTO applies to all employers other than the United States Government, The State of Florida and "[A]ny Indian Tribe" that operate in Broward County. Under the Ordinance, all employers in Broward County are required to post a notice of the administrative claim created under the Broward WTO at their place of business.
Definition of Wage Theft
Under Broward's WTO, wage theft occurs when an employer fails to pay any portion of wages ($60 or more) due to an employee within fourteen (14) days from the date on which work is performed unless the employer has a policy or practice to pay employees on a regular schedule.
The Wage Theft Claim Process
The Broward WTO requires 60 days advance written notice to the employer as a condition to bringing an action under the ordinance. If the matter is not resolved, a sworn complaint may be filed. The employer has 20 days to respond to the complaint after service. The WTO offers a conciliation process which is ill-defined and to be run by Broward County. It has the objective of reaching an agreement to avoid any further action between the parties on the claim of wage theft. If conciliation fails, the employer is advised that it may have a "due process" hearing with a Hearing Officer appointed by the County, but if the employer elects to pursue its due process rights, it may also be held liable for the "costs of the Hearing Officer" and so called "enforcement costs." No explanation is provided for the amount associated with use of a Hearing Officer. Likewise, "enforcement costs" are not defined anywhere in the WTO.
The Powers of the "Hearing Officer"
Also troubling, is the fact that there is reference in the WTO to a "qualified" Hearing Officer without any stated criteria outside of the officer being a member in good standing of the Florida Bar for at least 5 years. Further, the quasi-judicial power of the WTO lies within the empowerment of the Hearing Officer to "administer oaths, issue subpoenas, and compel the production of evidence." All parties are required to appear in person at a wage theft hearing. The Hearing Officer may also move to hold an uncooperative witness in contempt. If an issue of contempt is referred to a civil court, penalties for a finding of contempt may include a $500 fine and up to 60 days in prison.
Unfavorable Inference for Employers
Of concern from the standpoint of fairness to small employers, Broward's WTO sets the burden of proof at a "preponderance of the evidence standard" (meaning more probable than not) and creates an inference that an employer has committed wage theft when an employer keeps "imprecise, inadequate" or no records.
When a Violation of Broward's WTO is Found
When an employer is found to have violated Broward's WTO, it is liable for the unpaid wages that are deemed due and owing by the Hearing Officer. The employer is also liable for "liquidated damages" which is a monetary award defined as equal to the wages the employer is found to have failed to pay the employee (while classified as "liquidated" this amounts to a fine or punishment). The Hearing Officer has full discretion to award liquidated damages, reduce them or not to award them at all. A Hearing Officer's ruling is considered a final administrative ruling and enforceable in a court of competent jurisdiction.
Employers are Exposed to Attorney Fees and Costs
Broward's WTO stands very far apart from its Miami-Dade counterpart in setting the stage for a potential cottage industry by offering multiple avenues for employees to recover attorney fees. First, if it is alleged that a conciliation agreement has been breached, the aggrieved party may file an immediate action in Broward County's Civil Court. In that action, the prevailing party is entitled to both costs of the action and attorney's fees. Second, should an employee who is successful under Broward's WTO elect to retain a lawyer to pursue the claim, the employer is required to reimburse the prevailing employee "for any reasonable costs and attorney's fees incurred by the employee in connection with the administrative hearing." The employer is also to "pay the Board of County Commissioners an assessment of costs in an amount not to exceed the actual administrative processing costs and the costs of the hearing." Lastly, if an employee is required to file a civil court action to recover on the final judgment of a hearing officer, the employee is also entitled to an award of court costs, interest retroactive to the date of the order finding wage theft and attorney's fees from the employer for bringing the enforcement action.
When Employees File Frivolous Actions
Employees who are found to have filed frivolous actions are exposed to repay: (1) the County's costs; and (2) the respondent's costs and any attorney fees. The employee may be exposed to a civil action in court if reimbursement if not made in a "timely manner" (not defined in the Ordinance).
Avoidance of Duplicate Actions Under Broward's WTO
The Ordinance provides that an employee cannot simultaneously pursue the same claim for wage theft under Federal, State and County enforcement actions. If the employee brings an action under either Federal or State law for unpaid wages, the County will deem the administrative action "withdrawn" upon notice.
The Broward WTO's Statute of Limitations
The Ordinance has a one-year statute of limitations which runs from the "last date upon which the employee performed work for the employer."
Broward Ordinance 2012-32 takes effect on January 3, 2013 and with it, many employers who believe in paying a fair day's wages for a fair day's work will be pulled into unnecessary and costly litigation. More to come about Florida WTOs.