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Legal Update - October 2017 Newsletter

Yogi Patel - Tuesday, October 10, 2017

Dear valued clients and supporters: This month's newsletter will focus on three significant employment law cases that are expected to be decided by the United States Supreme Court this term. The cases will address: (1) the enforceability of mandatory class-action waivers against employees; (2) the constitutionality of mandatory public-sector union fees; and (3) whether or not car service advisors are exempt employees under federal law.

Mandatory Class Action Waivers

 It has become increasingly common for employers to require employees to sign arbitration agreements as a condition of their employment. Such agreements seek not only to require the employees to seek any redress via arbitration, but also to prohibit the employees from bringing their claims together in a class action. Presently, in three separate but related cases, the Supreme Court will decide whether these employee arbitration agreements are enforceable because they require employees to waive their collective bargaining rights. While similar agreements have been upheld in the consumer context, Circuit Courts across the country have reached different conclusions as to whether employee arbitration agreements are enforceable, thus requiring the Supreme Court to settle the debate. As the Supreme Court's decision will have significant ramifications either on employees' rights to take collective action or on the enforceability of employment agreements, both employers and employees are advised to monitor the outcome of this decision.

Public-Sector Union Fees

 In another case on the current docket, the Supreme Court will address whether requiring public-sector employees to pay certain union fees violates their constitutional rights. Dating back to 1977, in the case Abood v. Detroit Board of Education, the Supreme Court has held that compulsory union dues were not unconstitutional so long as they were used for actions such as collective bargaining and grievance procedures and not for political activity. Recently, the Supreme Court was asked to reconsider the constitutionality of all mandatory union dues for public-sector employees, but Justice Antonin Scalia passed away before a decision was reached, leaving the Court deadlocked at a 4-4 vote. Now, with nine members again presiding, it appears the Court is now poised to issue a decisive ruling on this issue. Unions in particular have a strong interest in this case as it could result in the depletion of a significant source of revenue for them.

Car Service Employee Overtime Exemptions

 Finally, the Supreme Court is expected to resolve the question as to whether or not car dealership service providers are exempt from mandatory overtime requirements. The case is significant not only because of the narrow issue it will resolve regarding the exemption status of certain workers, but also in that it may provide additional guidance as to how much weight courts should give to the statements and opinions of agencies, such as the Department of Labor ("DOL"). The history of the service advisor exemption is essential to appreciating the significance of the current case. In 1966, Congress enacted an overtime exemption for car salesman and related employees, though service advisors were excluded by regulation. Courts later rejected this regulation and the DOL issued an opinion letter agreeing that service advisors could be exempt from mandatory overtime. Then, in 2011, almost 50 years later, the DOL reversed its position and stated that service advisors were not exempt. In 2012, five service advisors from California filed suit against their employer for failing to pay them overtime, a claim which was upheld by the Circuit Court. The Supreme Court then vacated the decision on the basis that the DOL's reversal of its position meant that courts should not rely on it. The case was sent down to the lower courts, made its way back up to the Circuit Court, which again concluded that the workers were nonexempt. Now the Supreme Court will rule again. Most experts expect that the Court will not only rule definitively as to whether or not service providers are exempt from overtime requirements, but also when Courts should rely on agency opinions more broadly.

 

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.


Legal Update - March 2017 Newsletter

Yogi Patel - Wednesday, March 01, 2017

Dear valued clients and supporters: This month's newsletter will focus on: (1) changes to New York State wage and overtime laws; (2) an update in Trademark Law; and (3) intellectual property insurance.

New York State Wage and Overtime Update

While the implementation of the changes to the FLSA were stayed by a federal court late last year, Employer's in New York should be advised that the minimum wage and overtime exemption thresholds have increased under New York State law. Across New York, all employees are entitled to be paid at least $9.70 per hour and must be paid overtime if they earn less than $727.50 per week. However, in certain cities and counties, these figures are higher. In New York City, employers with 11 or more employees must pay their workers at least $11.00 per hour and grant overtime to anyone making less than $825 per week. For smaller NYC employers, these figures amount to $10.50 hourly and $787.50 weekly; in Long Island and Westchester they are $10.00 and $750.00, respectively. Employers and employees alike should be further aware that all of these thresholds are scheduled to increase again at the end of 2017.

Trademark Law Update

The United States Patent & Trademark Office (USPTO) will begin randomly auditing approximately ten percent of all "declarations of use" filed in connection with trademarks that are registered in one or more class as of March 21, 2017. A declaration of use is a document filed by the owner of a trademark stating that the that the mark is still being used in commerce as registered. The declaration of use is required to be filed between the 5th and 6th year after a mark is registered. While owners are generally only required to submit one specimen for each class under which their marks are registered, owners whose declarations are subjected to an audit by the USPTO will be required to provide additional evidence. Owners who supply insufficient evidence will find their marks subject to cancellation. As such, all trademark owners are encouraged to maintain records, including photographs, demonstrating a consistent use of their marks for all their registered purposes in order to best secure their rights in the event of an audit.

IP Insurance

Although intellectual property (trademarks, patents, and copyrights) may represent a significant source of value for a company, business owners often fail to property protect themselves in the event they are faced with an infringement lawsuit. Defensive measures, such as obtaining insurance to cover the cost of any such lawsuit, should be seen as a necessary precaution for any business that places significant value on its intellectual property. Generally, policies that are typically carried by businesses (Comprehensive General Liability or Commercial General Liability Insurance) may offer coverage for claims related to infringement, however, businesses are advised to understand whether their existing policies do in fact offer coverage related to IP infringement and are advised to seek explicit endorsements in the absence of clear language.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.


 

July 2015 NEWSLETTER

Yogi Patel - Tuesday, June 30, 2015

Dear valued clients and supporters: This month's newsletter will focus on: (1) proposed changes to the overtime rules by the U.S. Department of Labor that could potentially extend overtime protection to 5 million white collar workers; (2) New York City's passage of the The Fair Chance Act impacting an employers ability to inquire about a job applicants criminal history prior to hiring and (3) a closer look at selling a company or buying back shares in the context of our continuing series of articles on start-up entrepreneurs.

Proposed changes to overtime rules

The U.S. Department of Labor announced today that it was proposing a rule change that would effectively make millions of white collar employees who are currently considered "exempt" from over-time - eligible for overtime. One of the many factors that currently determines whether an employee is exempt or not from overtime is the total amount of wages earned annually. Today, certain professionals and managers are exempt from overtime if they make more than $23,660 a year and perform specific duties. The proposed rule would now set the overtime threshold to $50,440.00. Additionally, the proposed rule would simplify the identification of nonexempt employees, thus making the executive, administrative and professional employee exemption easier for employers and workers to understand and apply. Both employers and employees are advised to consider the implications of these changes in the event the rule is adopted and implemented as proposed.

The Fair Chance Act

New York City's newly passed Fair Chance Act (the “Act”), which will go into effect on October 27, 2015, prohibits employers from inquiring about a job applicant’s criminal history, including arrest and conviction records, during interviews before a conditional offer of employment is made. In addition, the Act prohibits employers from conducting pre-offer searches of public records and certain consumer reports that contain criminal conviction information. Once a job applicant is given a conditional offer of employment, the employer can do a background check and ask for information about convictions that may be relevant to the job. For more information about the Act, please visit our article here.

Start-up ventures and selling or expanding the business

We invite you to read our last article in the three-part series of articles on start-up ventures and entrepreneurs now posted here. The last article focuses on decisions an entrepreneur who has successfully grown a company and is looking to retire, cash-out, or start a new venture may make. The entrepreneur who is looking to sell should consideration whether the sale should be structured as a stock sale or an asset sale. There are tax and control ramifications that the seller must consider, depending on what they decide to do. The entrepreneur may also decide to buy back the shares that are were issued during the capital raising stage and consolidate control before selling to a third party or simply holding on to the company for a future sale after the buy-back occurs. We invite you to read the full series of articles: Attracting Investment for the Amateur Entrepreneur Part IAttracting Investment for the Amateur Entrepreneur Part II: Additional Capital, and Attracting Investment for the Amateur Entrepreneur Part III: Selling the Business or Buying Back Stock


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