Loan Modification vs. Foreclosure in Florida: Understanding the Process

For many concerned home owners the definitions of the words “loan modification” and “foreclosure” are interchangeable or highly confusing and hard to understand.  I do not blame them.  All of the advertising and discussions on the topic seem to make it a point to keep it that way.

In plain english, a loan modification is an administrative process of negotiation in which a bank representative (usually a non-lawyer) evaluates whether it makes business sense for a lender to give a “break” to the home owner in order to keep him/her as a customer.  Conversely, a loan modification is an administrative process in which the home owner negotiates better payment terms on his/her mortgage with the lender. Of course, a successful loan modification occurs when both, the lender and the home owner, agree on what the “break” would be.

On the other hand, a foreclosure refers to the judicial process which a lender initiates (through its lawyers) to take property (your house) that was attached as collateral when a loan was funded and the homeowner failed to make payments on that loan (the mortgage).  A successful foreclosure is one in which the lender, through its lawyers, takes your home.

To put in perspective, a “loan modification” and a “foreclosure” are two different processes and to understand how they work is crucial in attempting to keep your home.

A sound advice to homeowners is to immediately defend their foreclosure case (preferrably with a lawyer*) to avoid losing your home in an expedited manner, without raising any potential defense.  This will give you at least more time to better negotiate your mortgage and potentially end up getting a ”break” from your lender.

* A lawyer is better equipped to sail through the judicial process in a foreclosure case and she/he will be able to assist a client to identify any potential defense or claim that may be raised against a lender, all of which will naturally give more opportunity to a homeowner to negotiate his/her mortgage.

R. Martin Saenz, Esq., Partner at The Saenz Law Firm, P.A.

msaenz@saenzlawfirm.com

www.saenzlawfirm.com     

Negotiating the Enforceability of a Non-Compete Agreement in Florida

The right to seek meaningful, fulfilling and enjoyable work is a cornerstone of American values, and is generally supported by our legal system.  Simultaneously, employers often seek to prevent disclosure of trade secrets and other confidential information by former employees. To accomplish this goal, employers often incorporate “non-compete” clauses into employment contracts to restrict former employees from using this confidential information in their geographic area and line of business for a certain time period.  An employer’s right to do so is also generally supported by our legal system, which begs the questions – how do non-compete clauses effectively protect both interests, and what options do former employees have when facing the challenge of complying with unreasonably restrictive non-compete agreements? 

Perhaps the simplest option would be to simply move to a jurisdiction that does not enforce non-compete agreements (California, for example, only enforces non-compete agreements in specific, limited circumstances).  California Business and Professions Code § 16600;  Morris v. Harris (1954) 127 Cal.App.2d 476;  Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244.  The next best option to avoid breaching a non-compete would be to leave the geographic area or line of business to which the agreement applies.  But for those who have established trade skills in a specific line of work and personal ties to their geographic region, these are not realistic options.  For these individuals it becomes necessary to enter into a dialogue with their former employer, who will probably not be very willing to release them from their non-compete agreement. 

Fortunately for these individuals, courts are often willing to change the terms of unreasonably restrictive non-compete agreements.  The two most important issues addressed are (1) whether the employer’s proffered reason for enforcing a non-compete qualifies as a “legitimate business interest,” and (2) whether the non-compete agreement is reasonable as to time, geographic area, and business area to be restricted. § 542.335, Fla. Stat. (2005); Henao v. Prof’l Shoe Repair, Inc.,929 So.2d 723, 726 (Fla. 5th DCA 2006).

If a non-compete agreement does not protect a legitimate business interest, an employer will not be able to enforce the agreement. The most important considerations in analyzing whether a employer has a legitimate business interest to protect include the former employee’s knowledge about trade secrets, valuable confidential business or professional information, substantial relationships with specific prospective or existing clients, customers, and their goodwill associated with ongoing business, trade names, trade marks, and any extraordinary or specialized training.   § 542.335(1)(b)3, Fla. Stat. (2005).  If your former employer disclosed or offered any of this information to you, they may have a legitimate business interest to protect by enforcing a non-compete agreement. 

If an employer does have a legitimate business interest to protect, there is still hope for its former employees: to enforce a non-compete, an employer must not only have these interests, but they must also be able to show that a former employee would threaten these interests by taking a new job.  § 542.335(1)(c), Fla. Stat. (2005).  If the non-compete agreement contains unnecessarily broad restrictions in scope (including time period, geographic area or type of business), a judge has the discretion to change the terms of the agreement to make it more reasonable.  This allows a former employee more opportunities to find new employment without endangering a former employer’s legitimate business interests or subjecting him or herself to the possibility of being sued.

If you have any question as to whether taking a new job would cause (or has caused) you to breach a non-compete agreement, you should seek legal advice.  A lawyer may act as a liaison between you and your former employer, allowing you to negotiate more effectively and with more authority.  Your lawyer can identify whether your former employer actually has a legitimate business interest to protect, and if so which terms of the non-compete may be too broad or unreasonable, often resulting in an amicable, low-cost resolution to the situation.

R. Martin Saenz, Esq., partner at The Saenz Law Firm, P.A.

msaenz@saenzlawfirm.com

www.saenzlawfirm.com

305-577-8551

James Rippel, Juris Doctor Candidate and Summer Intern at The Saenz Law Firm, P.A.

Retaliatory Discharge Under the Fair Labor Standards Act (FLSA)–A Summary

            The Fair Labor Standards Act (FLSA) establishes standards for the pay of hours worked in excess of 40 per week and minimum wages. “Minimum Wage and Overtime Pay.” 16 July 2009. <http://www.dol.gov/compliance/guide/minwage.htm> Although not widely known amongst employers, the FLSA prohibits retaliation by employers against employees for asserting rights under the FLSA.  Section 215(a)(3) of the FLSA states that it shall be unlawful for any person

“to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act generally; for full classification, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee”. 

            To have a case for retaliatory discharge under the FLSA, an employee must demonstrate that: (1) he/she engaged in an activity protected under the FLSA; (2) he/she suffered adverse action by the employer; and (3) a causal connection existed between the employee’s activity and the adverse action.  Wolf v. Coca-Cola Co., 200 F.3d 1337, 1342-43 (11th Cir. 2000).  If the employer presents a valid reason for the adverse action, then the employee may attempt to show that the proffered reason is pretextual.  See id.  The anti-retaliation provision is designed to encourage employees to approach officials with wage-related grievances and to enhance compliance with the substantive provisions of the FLSA.  “Retaliation Under the Fair Labor Standards Act.” 16 July 2009. <http://www.bna.com/bnabooks/ababna/annual/99/annual46.pdf>  In the absence of direct evidence, a plaintiff may prove causation between the exercise of his/her FLSA rights and the adverse employment action by circumstantial evidence.  Higdon v. Jackson, 393 F.3d 1211, 1220 (11th Cir. 2004).

            “Adverse employment action” does not refer only to ultimate employment decisions, such as the decision to discharge an employee.  Shannon v. Bellsouth Telecomm., Inc., 292 F.3d 712, 716 (11th Cir. 2002).  An adverse employment action occurs when there is a serious and material change in the terms, conditions, or privileges of employment.  Davis v. Town of Lake Park, 245 F.3d 1232, 1239 (11th Cir. 2001).  “Not everything that makes an employee unhappy is an actionable adverse employment action.”  Shannon, 292 F.3d at 716.  The relevant inquiry is whether a reasonable person would view the employment action in question as adverse.  Doe v. Dekalb, 145 F.3d 1441, 1448-49 (11th Cir. 1998).  Examples of adverse employment actions include discharge, constructive discharge (making the employee’s life miserable so that the employee voluntarily quits his/her job), reduction of pay and benefits, and demotions.  “Retaliation Under the Fair Labor Standards Act.” 16 July 2009. <http://www.bna.com/bnabooks/ababna/annual/99/annual46.pdf>   

            Section 216(b) of the Act provides that employers who violate the anti-retaliation provisions of Section 215(a)(3) “shall be liable for such legal and equitable relief as may be appropriate to effectuate the purposes of section [215(a)(3)] of this title.”

The anti-retaliation provision of the FLSA is a critical component of the act and is designed by law makers to specifically enforce wage laws.  Employers must be made aware not to retaliate against employees as they may end up paying astronomical sums of money in damages.    

R. Martin Saenz, Esq. (Partner at The Saenz Law Firm, P.A.)

msaenz@saenzlawfirm.com

www.saenzlawfirm.com

(305) 577-8551

Parisa Rassoul (Juris Doctor Candidate 2010 at the University of Miami School of Law and Law Clerk at The Saenz Law Firm, P.A.)

SEMINARIOS DE DERECHO LABORAL EN EL SUR DE LA FLORIDA

The Saenz Law Firm, P.A. esta orgulloso de presentarles su serie de SEMINARIOS DE DERECHO LABORAL–VERANO 2009, totalmente GRATIS.   Este programa esta dirigido a empleados y a pequeñas y medianas empresas. 

Los SEMINARIOS DE DERECHO LABORAL–VERANO 2009 van a ser conducidos por lo menos una vez por semana y los asientos son limitados.  Por favor llamenos al  (305) 777-8551, o al 1 (800) 509-0014, o mandenos un correo electronico a msaenz@saenzlawfirm.com para registrarse y hacer su reservacion para Los SEMINARIOS DE DERECHO LABORAL–VERANO 2009.

Algunos de los topicos a ser discutidos incluyen: El Pago de Horas Extra de Trabajo, El Robo de Salarios, Corporaciones vs. Empresas de Responsabilidad Limitada (LLC), Contratos de Arrendamiento Comerciales, Empleados vs. Contratistas Independientes, Contratos Para No Competir Contra el Empleador, Liquidaciones, Minimizando Responsabilidad Civil, etc.

Los problemas laborales hoy en dia estan impactando nuestra economia y nuestras vidas como nunca antes.  Venga y participe con nosotros en un seminario instructivo sobre la ley que rige los problemas laborales del empleado y del empleador.

Un cordial saludo,

R. Martin Saenz, Esq., Socio

 The Saenz Law Firm, P.A., www.saenzlawfirm.com, 1-800-509-0014, msaenz@saenzlawfirm.com

EMPLOYMENT LAW SEMINARS IN SOUTH FLORIDA

The Saenz Law Firm, P.A. is proud to announce its Summer 2009 FREE Employment Law Seminars directed to employees and to small and medium size business owners. 

The Employment Law Seminars will be conducted at least once a week and seating availability is limited.  Please call our offices at (305) 777-8551, 1 (800) 509-0014 or email us at msaenz@saenzlawfirm.com to register and reserve a seat for our Summer 2009 FREE Employment Law Seminars which will begin on July 18, 2009.

Some of the issues that will be discussed are: Overtime Compensation in Florida, Wage Theft, Corporations vs. LLCs, Lease Agreements, Wrongful Termination, Employees vs. Independent Contractors, Non-Compete Agreements, Severance Packages, Minimizing Liability, etc.

Employment are impacting our economy and our lives in ways we have never seen before.  Come and join us for an instructive seminar on the law affecting employees and small and medium business owners alike.

Best regards,

R. Martin Saenz, Esq., Partner

 The Saenz Law Firm, P.A., www.saenzlawfirm.com, 1-800-509-0014, msaenz@saenzlawfirm.com

What is a Severance Package or a Severance Agreement?

            In today’s job environment, more and more employers are using severance agreements to limit their exposure to future lawsuits and amicably part ways with former employees.  While no law requires employers to provide benefits to employees upon termination, such agreements are often times the matter of negotiation.  J.R.D. Management Corp. v. Dulin, 883 So.2d 314 (Fla. 4th DCA 2004).

            A severance agreement specifies the terms of the employment termination, outlines the benefits (if any) an employee will receive upon termination, and may limit a departing employee’s right to pursue future legal claims.   It is important that departing employees fully understand the rights they may be forfeiting by signing the agreement.  Although a severance agreement may provide an employee with short-term financial perks, there may be accompanying sacrifices and long-term restrictions. 

            Although employers are not legally required to do so, many give severance pay to terminated employees.  There are two methods of severance payment: (1) lump-sum and (2) periodic payments.  Tobias, Paul H. and Susan Sauter. Job Rights and Survival Strategies: A Handbook for Terminated Employees. St. Paul: Jist Publishing (1997).  A lump sum payment is a one-time payment in full of the amount of severance pay agreed to in the severance agreement.  Generally, on the date of the lump-sum payment, the employee’s other fringe benefits will cease and further communication with the employer is no longer required.  Id.  Some employers prefer to issue severance payments to terminated employees in periodic installments.  However, an employee under a periodic payment plan runs the risk of missed or late payments from the employer.  Such uncertainty can disrupt an individual’s financial planning and lead to conflicts. Id. Other benefits that an employer may continue for some time after an employee’s termination include business counseling and insurance coverage. “Severance Pay Plan & Release.”  AmeriLawyer.com. 26 June 2009. <http://www.amerilawyer.com/agreements/agreementindex/

severance/severance.htm>.

            A severance agreement may also include a non-compete provision, which forbids the terminated employee from working for the employer’s direct competitors for a reasonable duration, and a non-solicitation provision, which prevents the terminated employee from soliciting the employer’s staff in any new employment situation.  Winfield, Carl. “Severance: How to Part on the Best Terms.” BusinessWeek. 04 August 2008.  30 June 2009. <http://www.businessweek.com/investor/content/aug2008/pi2008083_988474.htm>.

            An employer may include a provision in the severance agreement whereby the employee waives his/her rights to file a lawsuit against the company at any time in the future.  “Severance Pay Plan & Release.”  AmeriLawyer.com. 26 June 2009.<http://www.amerilawyer.com/

agreements/agreementindex/severance/severance.htm>.  Employers often include covenants not to sue as a condition to a release of benefits to the employee. 

            In order to prevent “gun to the head” decisions by employees, employers must give employees time to consider any offer in a severance agreement.  Klingshirn, Neil E. “Severance Agreements and Severance Pay FAQs.” My Employment Lawyer. 30 June 2009. <http://www.myemploymentlawyer.com/severance-agreement-faqs.htm>  The employer cannot rescind the offer during the waiting period.  Klingshirn, Neil E. “Severance Agreements and Severance Pay FAQs.” My Employment Lawyer. 30 June 2009. <http://www.myemploymentlawyer.com/severance-agreement-faqs.htm> Furthermore, an employer may not coerce an employee into accepting any offer in a severance agreement, i.e. by threatening to withhold wages that are due to the employee. “Severance Agreement.” Employee Issues.com. 30 June 2009. <http://employeeissues.com/severance_agreement.htm>

            During negotiations, if an employee requests changes to the employer’s offer, he/she has “rejected” the employer’s offer by making a “counteroffer”, which the employer can accept or reject.  However, an employee runs the risk of losing the guaranteed offer by making a counteroffer.  Klingshirn, Neil E. “Severance Agreements and Severance Pay FAQs.” My Employment Lawyer. 30 June 2009. <http://www.myemploymentlawyer.com/severance-agreement-faqs.htm>

            A severance agreement can provide financial security and stability to a departing employee upon his/her termination.  However, it is important that the employee fully understands his/her options before signing away any rights; it is a good idea to first consult an attorney. 

Parisa Rassoul (Legal Intern at The Saenz Law Firm, P.A and J.D. Candidate at the University of Miami School of Law)

R. Martin Saenz, Esq. (Partner at The Saenz Law Firm, P.A.)