Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

Following the enactment of the FFCRA on March 18, 2020, employers and employees alike had many questions regarding the Act’s implementation and are left to move forward with uncertainty. However, the Department of Labor (“DOL”) has provided new questions and answers to provide much needed clarity to all those struggling to ensure compliance with the new Emergency Family and Medical Leave Expansion Act (“E-FMLA”) and The Emergency Paid Sick Leave Act (“E-PSLA”).

Over the past week, the DOL has issued written guidance in the form of a published set of FAQ’s on its website found here, as well as facts sheets and a new required workplace poster. The DOL has already updated and expanded its written guidance several times, and readily admits that such guidance will continue to be issued on a rolling basis. Also, the DOL has indicated it intends to promulgate further regulations on an unspecified date in April 2020.

Interpretation and implementation of the FFCRA is changing quickly. But to date this is what we know based on the guidance provided by the DOL:

New Effective Date

A considerable curveball, the DOL announced that the FFCRA is going to become effective a day early on April 1, 2020.

 

Benefits Will Not Apply Retroactively

The DOL clarified that FFCRA benefits are not retroactive. As a result, any paid leave given to employees before the effective date of the FFCRA (April 1, 2020), which would have otherwise qualified for either E-FMLA and E-PSLA benefits, will not be counted to towards the FFCRA’s leave requirement. However, employees are entitled to their full entitled of FFCRA leave on April 1, 2020, and beyond.

 

Workplace Poster 

The DOL has issued the notice poster employers must use to educate employees on the new leave opportunities and requirements. Employers can satisfy their notice obligations under the FFCRA by: (1) posting the notice in a conspicuous location in the workplace; (2) directly emailing or mailing the requisite notice to each individual employee; and (3) posting the notice on an employee information internal or external website.

Employers should have the poster up by April 1. The DOL recognized employers are still grappling with the FFRCA going into effect and plans to give a 30-day grace period for enforcement. Employers are not required to issue notices to recently laid-off employees. However, notice should still be provided to furloughed employees, even though they are not entitled to paid leave under the law. Copies of the required notice and the DOL’s guidance concerning notice are available here and here.

 

Small Business Exemptions

The most needed point of clarity pertains to the possibility of small business exemptions from the E-FMLA and E-PSLA. Under the FFCRA, the Secretary of Labor reserved the authority to issue regulations exempting small businesses with fewer than 50 employees when the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. Unfortunately, the DOL has not issued any further elaboration on the implementation or requirements of these exemption provisions. The DOL simply advised small businesses should “document” why the E-FMLA and E-PSLA provisions of the FFCRA “jeopardize the viability” of your business. However, the DOL promised that forthcoming regulations will address this is in more detail.

 

Large Employers (500 or more employee)

The DOL clarified that the number of employees should be calculated “at the time your employee’s leave is to be taken.” This could greatly impact the 500-employee threshold outlined in the FFCRA. Based on this language, the DOL is requiring employers to determine whether it has 500 employees at the time any individual employee takes leave under the FFCRA. As a result, the 500-employee threshold to qualify as a large employer is a moving target. For businesses hovering around 500 employees, this could have substantial implications for businesses contemplating layoffs before and after the April 1 effective date. If the contemplated layoffs would bring the overall number of employees under 500, then FFRCA coverage would be triggered.

Moreover, the DOL also issued detailed guidance on how to calculate the number of employees when multiple entities exist under the same corporate family, and in situations where multiple entities may constitute “joint employers” or “integrated employers.”

 

Documentation and Certification Requirements

The DOL clarified that employers must require employees to provide appropriate documentation and written notice supporting the reason for their leave in order for the employer to claim a payroll tax credit for FFCRA leave payments. The appropriate notice should include:

  • the employee’s name;
  • the qualifying reason for requesting leave;
  • a statement that the employee is unable to work for that reason; and
  • the date(s) for which leave is requested

Documentation of the reason for leave is also necessary. This includes the source of any quarantine or isolation order, the name of the health care providers who advised the employee to self-quarantine, or notice of a school disclosure or lack of child care. Importantly, unlike traditional FMLA leave, no signed third-party certification is required for FFCRA paid leave.

Employers should retain all documentation and create written policies advising their employees of the documentation required to receive benefits. Employers who grant their employees paid leave under the FFCRA without keeping such documentation will not be eligible for a payroll tax credit.

 

Layoffs, Worksite Closures, and Furloughs

The DOL explained that if an employer closed its worksite before or after the April 1st effective date, but prior to the employee requesting leave under the FFCRA, the employee is not entitled to leave under the FFCRA. Additionally, if an employer closes its worksite during a time when an employee is on leave pursuant to the FFCRA, employee is no longer eligible for FFCRA benefits.

In the case of a furlough, an employee will not be entitled to leave under the FFCRA, even if the employer remains in operation. Further, if an employer reduces an employee’s hours, the employee may use leave under the FFCRA to supplement for the hours the employee is no longer working.

 

Existing Employer Leave Policies and FFCRA Paid Leave

The DOL clarifies that E-PSLA benefits are not to be denied or reduced based on existing accrued leave provided by the employer. As of April 1st, employers may permit—but may not require—employees to choose between their existing accrued leave and FFCRA’s E-PSLA or E-FMLA. However, employers may permit—but may not require—employees to supplement any partially paid leave under the FFCRA with existing accrued paid leave in order to receive their full compensation. Ultimately, an employer cannot require an employee to use existing accrued paid leave if the employee prefers not to.

In sum, the DOL has provided beneficial guidance for the interpretation and implementation of the FFCRA. However, we are still far from clarity on each detail. And for employers trying to ensure compliance with the FFCRA, the devil is in the details. We anticipate this is still going to be an evolving area of law in the upcoming months. The employment law team at ShuffieldLowman is available to advise employers in these uncertain times based on the current legal updates available. For more information on COVID-19 legal updates, visit our resources page HERE.

 

View our other FFCRA Blogs Here:

Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

FFCRA Emergency Unemployment Insurance Stabilization Act

FFCRA: Emergency Paid Sick Leave Act

**ShuffieldLowman anticipates changes to develop as both federal and Florida government responds to this unprecedented health emergency. We will provide updates as we are able in this developing legal situation and other COVID-19 related employment legislation that may be enacted in the coming weeks and months.

***Disclaimer: The information contained herein provides an overview of developing and ongoing legislation and does not constitute legal advice for any particular situation.

Authors: Dillon McColgan & Clay Roesch

Enforcing a Settlement Agreement in Florida

Under Florida law and as a matter of public policy, settlements are highly favored and will be enforced whenever possible.  Settlement agreements are governed by the rules of contracts, and the existence of an enforceable contract is contingent upon the Parties’ agreement to the essential terms of the agreement.  What happens when you think you have a settlement agreement, but the other party refuses to sign a formal written settlement agreement?

Is a formal written agreement required to enforce a settlement in Florida?

Creating an enforceable settlement requires agreement to the essential terms of an agreement.  What constitutes a material or essential term varies from cases to case.  Nevertheless, once the parties reach an agreement on the essential terms, a formal written agreement is not required in order to enforce a settlement.  Numerous courts in Florida, both state and federal, have enforced agreements reached through a series of emails between attorneys.

For example, in Warrior Creek Development, Inc. v. Cummings, 56 So. 3d 915 (Fla. 2d DCA 2011) the attorneys involved negotiated a settlement over e-mail.  Their emails set forth the “essential and material terms” of the agreement between the parties.  The attorneys subsequently drafted a written settlement agreement, which one party refused to sign, stating “the deal is off”.  The Second District Court of Appeals affirmed the trial court’s order enforcing the settlement, finding that the “parties had agreed upon all of the essential and material terms for settlement and that those terms were reflected in the November e-mail.  Similarly, in Miles v. Northwestern Mut. Life Ins. Co., 677 F. Supp. 2d 1312, 1315-1317 (M.D. Fla. 2009) the Court held that a written settlement agreement is a mere formality where the parties act with the intent to follow the settlement and the written agreement is essentially what was already agreed upon.

Negotiating a settlement over email – the considerations

These cases illustrate the risks inherent in negotiating a settlement over email.  A party who wants to avoid being bound in the absence of a written settlement agreement should consider making any offer conditional upon the execution of a mutually agreeable settlement agreement and release.  Conversely, setting out the essential terms of an agreement in a written communication can result in a settlement that is enforceable against a party who has gotten cold feet.

Who Can a Trustee Turn to for Advice?

Who Can a Trustee Turn to for Advice?

Trustees are required to administer a trust in good faith, in accordance with the terms and purposes of the trust, and the interests of its beneficiaries. There are, however, many aspects of trust administration that can leave even sophisticated trustees searching for advice. The Florida Legislature recognized there are situations in which a trustee must rely on an expert in order to fulfill his or her fiduciary duty when it enacted the Florida Trust Code. Florida Statute Section 736.0816(20) provides that:

A trustee may: Employ persons, including, but not limited to, attorneys, accountants, investment advisers, or agents, even if they are the trustee, an affiliate of the trustee, or otherwise associated with the trustee, to advise or assist the trustee in the exercise of any of the trustee’s powers and pay reasonable compensation and costs incurred in connection with such employment from the assets of the trust, and act without independent investigation on the recommendations of such persons.

Because it provides that a trustee may act on an advisor’s recommendation without independent investigation, Section 736.0816(20) should provide a trustee with immunity from mistakes made by his or her advisors. Indeed, prior to the enactment of the Florida Trust Code, the Third District Court of Appeals found that a substantively identical provision of the Florida Probate Code, Florida Statute Section 733.612(21), shielded personal representatives from liability resulting from errors made by their accountants. See Wohl v. Lewy, 505 So.2d 525 (Fla. 3rd DCA 1987). Personal representatives and trustees are held to the same standard of care and, as a result, Section 736.0816(20) should shield a trustee from liability for a mistake made by an advisor.

Nevertheless, a recent decision by the Fifth District Court of Appeals casts doubt on whether a trustee can rely on an advisor’s recommendation. In Harrell v. Badger, 171 So. 3d 764 (Fla. 5th DCA 2015) a trustee hired an attorney to decant a testamentary trust into a special needs trust. The trustee’s attorney did not, however, follow the requirements of Florida Statute Section 736.04117 in decanting the original testamentary trust. The Trustee argued that, like the personal representative in Wohl, he relied on his professional advisor’s recommendations and therefore should not be liable for the improper decanting. The court rejected that argument.

In light of the decision in Harrell, it is unclear to what extent a trustee may rely on Section 736.0816(20) for protection from liability for erroneous legal, accounting and other negligent professional advice. Unlike personal representatives who are protected by Section 733.612(21), the Harrell decision suggests that trustees are “de facto” insurers of the professionals they hire. Accordingly, trustees should carefully consider who they hire to render them legal and other professional advice.

ShuffieldLowman’s four downtown offices are located in Orlando, Tavares, DeLand and Daytona Beach.  The firm is a 34 attorney, full service, business law firm, practicing in the areas of corporate law, estate planning, real estate and litigation.  Specific areas include, tax law, securities, mergers and acquisitions, intellectual property, estate planning and probate, planning for families with closely held businesses, guardianship and elder law, tax controversy – Federal and State, non-profit organization law, banking and finance, land use and government law, commercial and civil litigation, fiduciary litigation, construction law, association law, bankruptcy and creditors’ rights, labor and employment, environmental law and mediation.

Who Can a Trustee Turn to for Advice?

Defenses to a Foreign Judgment – Is Ineffective Service a Defense to the Domestication and Enforcement of an Out of Country Foreign Judgment

Section 55.601, Florida Statutes, is Florida’s Uniform Out-of-Country Foreign Money-Judgment Recognition Act (the “Act”), and it governs the recognition of out-of-country foreign money judgments. The Act provides that an out-of-country foreign judgment that is final, conclusive and enforceable where rendered is conclusive between the parties to the extent that it grants or denies recovery of a sum of money. See Fla. Stat. § 55.604. There are, however, certain mandatory and permissive exceptions. Specifically, an out-of-country foreign judgment is not conclusive if the judgment was rendered in a system which does not provide impartial tribunals or due process, the foreign court lacked personal jurisdiction or the foreign court lacked subject matter jurisdiction. See Fla. Stat. § 55.605(1). In contrast, a Florida court may exercise its discretion to refuse to recognize an out-of-country foreign judgment if: (i) the defendant did not receive notice of the foreign proceedings in sufficient time to enable it to present a defense; (ii) the judgment was obtained by fraud; (iii) claim for relief is repugnant to Florida’s public policy; (iv) the judgment conflicts with another final order; (v) the foreign proceeding was contrary to an agreement between the parties to settle the dispute out of court – i.e. an arbitration agreement; (vi) the foreign proceedings a seriously inconvenient forum; (vi) the foreign jurisdiction would not recognize a Florida judgment; or (vii) the foreign judgment is one for defamation under laws that do not provide much protection for freedom of speech and press in that case as would be provided by the United States. See Fla. Stat. §§ 55.605(2).

Insufficiency of service of process is not expressly listed as a grounds for non-recognition of an out of country foreign judgment. Moreover, the Act provides that a “foreign judgment shall not be refused recognition for lack of personal jurisdiction if the defendant was served personally in the foreign state.” Fla. Stat. 55.606(1). Nevertheless, ineffectual service in a location other than the foreign state may still serve as a defense to a foreign judgment by forming the basis for an argument that the foreign court lacked personal jurisdiction. See Fla. Stat. § 55.605 (1)(b) (“An out of country foreign judgment is not conclusive if…. the foreign court did not have personal jurisdiction over the defendant.”).

In Florida, a court’s exercise of personal jurisdiction is dependent on strict compliance with the requirements of service of process. See Kolenski v. Flaherty, 116 So. 2d 767, 769 (Fla. 1959) (“[I]t is the fact of valid service–or the fact of invalid service–as shown by the evidence, that is controlling insofar as the question of jurisdiction over the person of the defendant is concerned…”); Abbate v. Provident Nat’l Bank, 631 So. 2d 312, 315 (Fla. 5th DCA 1994) (“Absent strict compliance with the statutes governing service of process, the court lacks personal jurisdiction over the defendant.”).  Importantly, when analyzing personal jurisdiction, a Florida Court should conduct its own analysis of a foreign court’s exercise of personal jurisdiction, irrespective of the foreign court’s conclusions. See Restatement (Third) of Foreign Relations Law § 482 (1987) (“Even if the rendering court had jurisdiction under the laws of its own state, a court in the United States asked to recognize a foreign judgment should scrutinize the basis for asserting jurisdiction in the light of international concepts of jurisdiction to adjudicate.”); Wellington v. Dept. of Revenue ex rel. Kober, 708 So.2d 1040 (Fla. 4th DCA 1998) (holding Iowa court’s statement about personal service was not determinative where judgment was entered by default). As a result, where a there is ineffective service of process, a foreign court should lack personal jurisdiction providing a defense to the enforcement of the judgment in Florida.

Nevertheless, in a 2008 opinion, the Third District Court of Appeals held that insufficiency of service of process did not provide a defense to enforcement under the Act. See Israel v. Flick Mortgage Investors, Inc., 23 So. 3d 1196 (Fla. 3d DCA 2008). In Flick, the defendant argued that the foreign court lacked jurisdiction because it was notified of the foreign lawsuit by registered mail. The Court rejected that argument holding that “[o]n the particular facts and circumstances of this case, this claim must fail.”  Flick, 23 So. 3d at 1198 (emphasis added). In reaching that conclusion, the court reasoned that: (i) Section (2)(a) of the Florida Act is the only provision potentially authorizing an attack on a foreign money-judgment due to insufficiency of service of process; (ii) Section (2)(a) focuses not the manner in which a defendant received notice of a foreign lawsuit, but on whether the defendant received notice in sufficient time to present a defense; (iii) the defendant actually appeared in the foreign proceedings and presented a defense; and (iv) the defendant challenged the foreign court’s personal jurisdiction in the foreign proceedings, but did not raise insufficiency of service of process as a basis for the foreign court’s lack of personal jurisdiction and therefore, waived that defense. As explained below, the reasoning underlying the Flick opinion is flawed.

First, the Flick court’s holding rests on the faulty premise that Section (2)(a) is the only provision of the Florida Act that relates to insufficiency of service of process. See id. at 1198. Florida law requires effective service of process as a prerequisite to the exercise personal jurisdiction over a defendant, see Kolenski, 116 So. 2d at 769; Abbate, 631 So. 2d at 315, and Section (1)(b) of the Florida Act provides that “[a]n out of country foreign judgment is not conclusive if…. the foreign court did not have personal jurisdiction over the defendant.” Fla. Stat. § 55.605(1)(b). Thus, Section (1)(b) of the Act relates to the sufficiency of service of process. See also Restatement (Third) of Foreign Relations § 482 (“Even if the rendering court had jurisdiction under the laws of its own state, a court in the United States asked to recognize a foreign judgment should scrutinize the basis for asserting jurisdiction in the light of international concepts of jurisdiction to adjudicate.”). As a result, the Flick court mistakenly failed to consider whether ineffective service of process precluded a foreign court from obtaining personal jurisdiction and therefore is a ground for non-recognition of a foreign judgment under Section (1)(b) of the Florida Act.

More importantly, however, the Flick court reasoned that actual notice of a foreign lawsuit, as opposed to strict compliance with Florida Statutes governing service of process, is all that is required for recognition of a foreign judgment under the Florida Act. Flick, 23 So. 3d at 1198. That reasoning is contrary to Florida law, which requires valid service of process, not actual notice, for a court to acquire personal jurisdiction over a defendant. See Abbate, 631 So. 2d at 315 (“The plaintiff asserts a harmless error argument, that service of process is designed to assure that a defendant is given notice of the institution of civil proceedings against him and that this was done here. This argument, however, runs counter to the overwhelming law in Florida that strict compliance with the statutes governing service of process is required. Absent strict compliance with the statutes governing service of process, the court lacks personal jurisdiction over the defendant.”) (internal citations omitted).

Finally, the Flick court’s ultimate holding did not rest on the sufficiency or insufficiency of the plaintiff’s service of process rested on the defendant’s waiver of any argument related to ineffective service of process. See id. at 1199.

While Flick is the only Florida Court to squarely address the question of whether ineffective service of process is a defense to enforcement of a foreign judgment, the Fourth District has indicated that a lack of service may provide a defense to enforcement due to a lack of personal jurisdiction. See Chabert v. Bacquie, 694 So.2d 805 (4th DCA 1997). In Chabert the defendant objected to the recognition of a French judgment arguing that the French court lacked personal jurisdiction over him due to “improper or inadequate service of notice.” Chabert, 694 So. 2d at 811. Considering the defendant’s argument, the Fourth District stated that:

[S]ubsection (1) of section 55.605 of the Act is phrased in mandatory terms: if any of the grounds listed in subsection (1) are found to exist, then the foreign judgment is not conclusive, and a Florida court cannot recognize it. This contrasts with subsection (2) of section 55.605 which is phrased in permissive terms. Hence if Chabert is correct that the French court lacked personal jurisdiction over him under the Hague Service Convention, then under section 55.605(1)(b) we may not accord recognition to the French judgment.

Id. at 811 (emphasis added). The court ultimately overruled the defendant’s objection finding that he had been personally served at the commencement of the foreign suit and therefore the Court could not refuse to recognize the judgment pursuant to Section 55.606, Florida Statutes. Id. at 812. Nevertheless, the Court’s dicta indicated a willingness to consider and accept an argument that the foreign judgment was unenforceable because the court lacked personal jurisdiction due to ineffective service of process.

Courts interpreting other states’ versions of the Uniform Out-of-country Foreign Money-Judgment Recognition Act have reached the same result. In Franco v. Dow Chem. Co., 2003 U.S. Dist. LEXIS 26639, Case No. CV 03-5094 NM (PJWx) (C.D. Cal. Oct. 20, 2003) foreign plaintiffs attempted to domesticate a foreign judgment against Dow Chemical Company (“Dow”). In the foreign lawsuit, the plaintiffs attempted to serve Dow, but mistakenly served an affiliated corporation, Dow Agro Sciences.  See Franco, 2003 U.S. Dist. LEXIS 26639 at *5. The District Court held that the judgment was unenforceable because the foreign court lacked personal jurisdiction. Id at *26-27.

A natural reading of the Act and the Fourth District’s opinion in Chabert support the argument that ineffective service in a foreign litigation is a defense to the enforcement of a foreign judgment in Florida. Notwithstanding the opinion in Flick, a party facing domestication of an out of country judgment in Florida should carefully scrutinize service of process in the underlying lawsuit to determine whether it was defective.

Challenges to a Will or Trust Part IV – Undue Influence, Evidence and Inferences

Challenges to a Will or Trust Part IV – Undue Influence, Evidence and Inferences

Cases involving undue influence often include allegations of diminished mental capacity – i.e. that the alleged victim was suffering from Alzheimer’s, dementia or another mental disorder – and therefore was susceptible to the influence of another. The fact that an individual was susceptible to undue influence at one period of time is not, however, be conclusive as to their state of mind on another date. See Martin v. Martin, 687 So. 2d 903 (Fla. 4th DCA 1997). In Martin, court considered a will executed in August 1989 and a trust in May 1991. The Court held that that a determination the victim was susceptible to undue influence on one of those dates was not conclusive as to his state of mind on the other. As a result, litigants pursuing a claim for undue influence should be prepared to present evidence sufficient to raise the presumption of undue influence for each separate testamentary change or gift that is challenged.

Recently, a Florida court has approved of the use of an inference of undue influence where the influence did not relate to the testamentary change at issue.   See Blinn v. Carlman, 159 So. 3d 390 (Fla. 4th DCA 2015). In finding that the plaintiff had proven undue influence in the execution of a will, the court relied on a voicemail which recorded the defendant exerting influence, in part, by disparaging the plaintiff. Although that conversation that was recorded did not relate to the changes in the decedent’s will, the court reasoned that “if appellant were so bold as to openly display such influence over [the decedent], then the court could reasonably infer that similar or greater influence was occurring in the dark during their marriage.” Id. at *3. Thus, it may be possible to prove undue influence through generalized evidence showing a pattern of influence that is not directly tied to the challenged testamentary changes or gifts during the time those changes or gifts were made.