LEGAL CORNER: Can I be forced into salary pay from hourly pay to - KPLC 7 News, Lake Charles, Louisiana

LEGAL CORNER: Can I be forced into salary pay from hourly pay to avoid overtime?

(Source: KPLC) (Source: KPLC)
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QUESTION: I joined a couple years ago gym with a year-long contract that automatically renews after one year? I tried to cancel, but they gave me a penalty for “breaking” the contract. So, technically it is more than a “one year contract” since it renews itself. So, why was I penalized?

ANSWER: Practical advice before the law – always keep a copy of whatever contract you sign, and if you are not allowed a copy, do not sign. Another red flag is if you are using the phrase “they said,” “but we thought” or “we were never told,” then you are missing the point of a written instrument.

With regards to the law – contracts that have no term (time limits within which to perform or cancel) or almost always invalid in Louisiana. They are referred to as “contracts in perpetuity” and are rarely upheld. If no term is stated, it is implied that the term of the contract is for a “reasonable time.”

However, the company would argue that the contract is not one in perpetuity, as it is a 1-year contract capable of being canceled. When no action is taken that will be considered a renewal of the contract.

However, since contracts that automatically renew can resemble contracts in perpetuity, the legislature put some requirements on those types of contracts. The automatic renewal clause cannot be in fine print on the last page. Title 9, section 2716 requires:

9 §2716. Contracts with automatic renewal clauses

A. Any person, firm, or corporation engaged in commerce that sells, leases, or offers to sell or lease, any products or services to a consumer pursuant to a contract, when the contract automatically renews unless the consumer cancels the contract, shall disclose the automatic renewal clause clearly and conspicuously in the contract or contract offer.

B. Any person, firm, or corporation engaged in commerce that sells, leases, or offers to sell or lease, any products or services to a consumer pursuant to a contract, when the contract automatically renews unless the consumer cancels the contract, shall disclose

clearly and conspicuously how to cancel the contract in the initial contract, contract offer, or with delivery of products or services.

C. A person, firm, or corporation that fails to comply with the requirements of this Section is in violation of this Section unless the person, firm, or corporation demonstrates all of the following:

(1) It has established and implemented written procedures to comply with this Section and enforces compliance with the procedures.

(2) Any failure to comply with this Section is the result of error.

(3) When an error has caused the failure to comply with this Section, it, as a matter of routine business practice, provides a full refund or credit for all amounts billed to or paid by the consumer from the date of the renewal until the date of the termination of the contract, or the date of the subsequent notice of renewal, whichever occurs first.

D. The provisions of this Section shall not apply to the following:

(1) The Louisiana Rental-Purchase Agreement Act as provided in R.S. 9:3351 through 3362.

(2) Banks, trust companies, savings and loan associations, savings banks, credit unions, finance or credit companies, industrial loan companies, or any other financial institution licensed or organized under the laws of any state or the United States, or any foreign bank maintaining a branch or agency licensed under the laws of the United States, or any subsidiary or affiliate thereof.

(3) Insurers licensed under Title 22 of the Louisiana Revised Statutes of 1950.

(4) A contract entered into before January 1, 2011.

(5) A contract that allows for cancellation by the consumer by written notice within thirty days or within one month, after the initial period has expired.

E. Any contract automatically renewed in violation of this Section shall revert to a thirty day renewal contract in accordance with the same terms.

QUESTION: Can an employer legally force an employee to go from hourly pay (once a week) to salary pay (once a month) in order to avoid paying the employee overtime?

ANSWER: Having researched both the Louisiana Department of Labor website, as well as the U.S. Department of Labor website, there is an abundance of information available online regarding employee wages, including overtime pay. The steadfast rule is that any time worked in addition to 40 hours will be compensated at 1.5 times the normal wage, or more commonly known as “time and a half”. It is also clear that overtime hours cannot be manipulated to avoid the increase – for example, if someone works 45 hours in a week, the employer cannot classify or convert the 5 overtime hours into “comp pay” or the like to avoid the increased wage.

However, there appears to be no restriction on an employer demanding that employees work overtime, and so their consent is not required. Refusing to work overtime can, therefore, be a grounds for termination.

The issue gets even more clouded when the employee may be “non-salaried” as with someone who makes either commission or tips. If the employee is classified as non-salaried, then the time-and-a-half rule does not kick in at 40 hours. Of course, it is a very complex formula to determine at what point an employee who receives any kind of commission or tip becomes non-salaried, so both state and national departments have websites in order to review statutes and take note of frequently-asked questions. You can find the State of Louisiana's here and the United States' here.

QUESTION: We were on my boat and we checked by both game wardens and sheriff’s department – one agency told us we had to have our life jackets on, the other one just made sure we had one life jacket for each person. What is the law?

ANSWER: It depends on the type and length of your boat. If it is a “personal” watercraft, such as a jet ski, you have to have the flotation device on at all times. If you are 16 years or younger, and the boat is less than 26 feet and underway, you have to have the device on. Lastly, (and this part is new and some are not aware of it), if your boat is less than 16 feet, and driven by a tiller handle, all occupants must have their life vests on while underway, regardless of age.

You can review the “Boating Requirements” at the Louisiana Department of Wildlife and Fisheries website here

Disclaimer: The information furnished in this answer is general and may not apply to some situations. All legal situations are unique. No one should rely to their detriment on these answers. Anyone with a potential legal problem should seek the advice of a licensed attorney before taking any action or inaction. The answers provided are not intended to be specific legal advice and no attorney-client relationship is created between the SWLA Law Center and the viewers of KPLC-TV.

Copyright 2018 KPLC. All rights reserved.

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