Carmel Mountain: FLSA Overtime Update

November 25, 2005

In Carmel Mountain, there are many workers who are on salary and some who are paid hourly per week. The below case did not concern workers in Carmel Mountain however the analogy is the same. Our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP practices in estate planning. Please feel free to call or set up an appointment in person for a complimentary consultation. We also have e mail for your convenience.

Unless an employee falls within an exempt category of workers, the federal Fair Labor Standards Act (FLSA) requires the employer to pay the employee overtime at a rate of one and one-half times the regular rate of pay, for hours worked in excess of 40 hours per week. To be exempt is to be ineligible for overtime. The exemption commonly called the "white collar" exemption is for professional employees.

Federal regulations in place since August 2004 have simplified the test for determining which employees come within the white collar exemption. An employee is a professional if each of the following elements is present:

(1) The employee has the primary duty of performing work requiring advanced knowledge, that is, work that is mainly intellectual in nature and which includes the consistent exercise of discretion and judgment;

(2) The employee has advanced knowledge in a field of science or learning; and

(3) The employee has advanced knowledge that is customarily acquired by a prolonged course of specialized intellectual instruction.

In one recent case, a company refused to pay overtime to some of its employees who were licensed pharmacists. Much to the dismay of the employees, the company's reliance on the white collar exemption held up in federal court. All of the parties agreed that the second and third parts of the exemption test were met by the pharmacists, leaving a dispute only over whether the pharmacists' work required the consistent exercise of discretion and judgment. The court found that this element also was present.

The pharmacists, with little supervision, routinely made discretionary decisions about dispensing prescribed drugs to patients, and sometimes the process required consultation with the physicians who prescribed the drugs. The only factor suggesting a lack of discretion was the fact that the employees, as a rule, were expected to follow standard operating procedures from their employer. But this argument by the pharmacists was undermined by the fact that they regularly were asked to consult with the employer about the standard procedures and to review them for any suggested improvements. The pharmacists also had the employer's blessing to stray from the procedures if, in their judgment, it was necessary for a patient's health.

Assuming an employee is eligible for overtime pay, questions can arise as to what comprises an employee's regular rate of pay for purposes of calculating the overtime obligation. It is not always as simple as using an employee's base hourly rate or salary. For example, in another recent case, a federal court ruled that the regular pay of municipal firefighters included payments made to them under a city's sick leave buy-back program. A firefighter who had built up a certain amount of sick leave had the right to "sell" it back to the city for a lump-sum payment. Whenever this happened, the employer effectively was paying the firefighters a bonus for good attendance and for work they had already done. It was as much a part of the firefighters' regular compensation as their base hourly wage, so it had to be taken into account in calculating overtime wages.

Bonita: Golf Balls Can Be Trespassers

November 4, 2005

In Bonita, there are many golf courses including the Bonita Golf Club and the Chula Vista Municipal Golf Course. In our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP we practice in estate planning. Please contact us by phone or e mail for a complimentary consultation. In the below example, neither golf club as listed above was a party that law suit.

Joyce had nothing against golf or golfers. In fact, she was a regular golfer herself and a member of two different golf clubs. But when her home in a subdivision adjoining a private golf course was continuously pelted with errant golf balls, she and a neighbor with the same predicament eventually took the matter to court and won.

The golf course began operating in the late 1980s, and Joyce moved into her home in the late 1990s. But the fact that she "came to the problem" did not prevent Joyce from winning an injunction to stop, or at least minimize, incoming golf balls and the golfers in search of them. No doubt the court was impressed by the evidence showing the extent of the problem, which went well beyond an occasional Titleist in the flower bed. Among other effects, there were five damaged window screens, one large broken window, dented siding, and a dimpled car hood (only the golf balls are supposed to have dimples). At least one wayward shot struck the house hard enough to trigger a burglar alarm. It got so bad that Joyce all but gave up on using her rear deck, and her young son was instructed to play only in the part of the yard that was shielded from the golf course by the house. The clincher piece of evidence may have been the 1,800 golf balls that Joyce had retrieved from her yard during the five years she had lived in her house.

The winning legal theory for Joyce was continuing trespass. The common conception of a trespass is of someone walking across another's property without permission, but the concept is broader than that. A trespass is any invasion of a landowner's interest in exclusive possession of the property. Propelling physical objects onto someone's property regularly, frequently, and without the owner's consent is a continuing trespass.

As for the appropriate remedy, the court in Joyce's case offered some guidance. If the golf course operators were determined to keep the course as it was, they either would have to acquire the adjacent land, or the right to use such land, for the purpose of accommodating all of those wayward golf shots. More realistically, the defendant could solve the problem by shortening the hole that adjoined Joyce's property, thereby removing the property from the landing area for all those bad shots. This would be somewhat burdensome for the golf club, but it was not such a hardship as could relieve the club of its obligation to end the continuing trespass and give Joyce back the "exclusive possession" of her home.

La Jolla: An Introduction To College Savings Plans

November 1, 2005

In La Jolla, many families have children attending local colleges such as the University of San Diego, San Diego State University, University of California San Diego and many others. The costs of these colleges can be very expensive. Estate planning can assist in parents discussing college and other expenses for their children in the event they are deceased at the time the children enter college. Revocable living trusts can be used for funding college educations. Our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP would be pleased to offer you a complimentary and confidential consultation. Please e mail or call us. Our firm does not recommend or endorse any 529 plan or other financial instrument.

The steady rise in the cost of attending college may have become one of those few absolute certainties in life, along with death and taxes. Tuition and fees for public and private institutions alike can seem overwhelming, especially if parents have done little financial preparation ahead of time. Some solace can be taken in the fact that there is a wide variety of approaches for saving for college. For parents who have some foresight, the use of a plan that is tailored to their circumstances can at least soften the blow of financing a college education.

With mutual funds as the primary investment option, state 529 plans are best for those looking to contribute substantial amounts to a college fund. Earnings are tax-free, as are later withdrawals for qualified education costs. These plans generally are in the parents' names, which means that the plans have minimal effects on the family's eligibility for financial aid. The drawbacks are limited investment options and relatively high fees.

A prepaid tuition plan makes the most sense for families that are reasonably certain that their child will attend one of the schools in a state's plan, and that are satisfied with a rate of return that equals the inflation rate for the costs of schools in the plan. Under prepaid tuition plans, you are buying future tuition at a state's public colleges at today's prices. On the downside, payouts from these plans reduce eligibility for financial aid on a dollar-for-dollar basis. In addition, states dealing with especially tight budgets have been raising the costs of participating, and in some cases have been temporarily closing off enrollment.

For a group of approximately 250 private colleges, there are independent 529 plans. They work like state prepaid plans, including the dollar-for-dollar reduction in financial aid eligibility when funds are distributed. Money from such a plan can be rolled over to a state 529 savings plan or a state prepaid plan without penalty.

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