Naturally, lawyers give employer clients advice about the legality of their compensation practices, including who and who is not an independent contractor. Sometimes, an employer defendant will want to use the advice given to them as a defense in a lawsuit charging them with FLSA illegality. An interesting problem arises when an employer wants to use that advice as a shield against liability but refuses to allow the plaintiff to see the advice given and why it exonerates the employer. Two recent cases illustrate the dangers inherent in such a strategy.
For example, in Raymond v. Renew Therapeutic Massage, Inc., the plaintiff sought to keep out of evidence any evidence relating to the advice that the attorney had given his client on the independent contractor status of the plaintiff. The defendant had announced it would use his lawyer’s advice as a defense, but the plaintiff objected. The Court agreed. The Court found that the defendant never identified counsel’s “advice” as an affirmative defense.
The Court also observed that the plaintiff was precluded from even inquiring into the nature of that defense because at the deposition of a defendant witness, the Company asserted attorney-client privilege as a basis not to answer the questions. The Court observed that “it would be unfair to Raymond to argue against a defense regarding communications that she was prevented from inquiring about during discovery.”
In another case, Walters v. Professional Labor Group, LLC, the Rule 30(b)(6) witness, at his deposition, seemed to posit an advice of counsel defense based on advice he received from the Company’s counsel. The problem for this case was that the deponent had received this advice more than a decade earlier when he worked for a different company, although the same lawyer also represented that company. The Court would not allow it.
The Court held that it was only the prior employer who could assert that privilege protecting the advice given before. The Court also ruled that without a waiver from the prior employer the defendant in the current case would not be allowed to offer “testimony or other evidence relating to any advice of counsel” it received while employed at the previous company that owned the privilege. This off-the-beaten path case shows how important it is to identify where the privilege actually lies and who can properly assert it.
The advice of counsel defense can be a valid defense to a FLSA case but the employer cannot play a game of peek-a-boo with it. If you assert the defense, you must (early on) advise the adversary you intend to do so and what it will be. If it is a good, valid defense, what’s the difference.
Let them know what they’re up against…