Exempt Employees, Overtime, and the Proposed DOL Rule for 2016

The labor landscape has changed and it will continue to change. The average worker has become increasingly responsible for the more traditional aspects of the employment relationship including health insurance, pension, and job security. There also has been a substantial increase in the numbers of part-time workers, workers/employees classified as exempt from overtime premium pay, and workers misclassified as independent contractors. Commentary and theory abounds as to the reason for the loss of full-time jobs, much less middle class jobs, including outsourcing, computers/software, Affordable Care Act, robots, automation, high taxes, globalization, etc.

Suffice it to say, a legal backlash is building against this new terrain. Proposed restrictive legislation, administrative rule-making, and recent court cases show evidence of a concerted attempt to re-create or retrieve the job security and wages and benefits of days gone by.

Most recently, the U.S. Department of Labor (“DOL”), in a long-awaited announcement on June 30, 2015, proposed a new rule that will decrease the ability of companies to classify their employees as exempt from premium overtime wages under the Fair Labor Standards Act (“FLSA”).

Backdrop – Increase in Part-time Workers

This legal backlash is due, in part, to other recent and dramatic changes in the number of part-time workers:

• Since 2007, the number of “involuntary” part-time workers has doubled.
• Employers are increasingly using software tools such as the use of just-in-time scheduling software. Estimates are that 17 percent of the work force is now employed by companies that use just-in-time scheduling software. Employees accordingly work fluctuating work weeks with uncertain schedules.
• Another contributing factor is business practices, such as the use of “call in shifts” where the employer does not confirm need for services until two hours before start time.

In response, a host of bills are being introduced in many states and municipalities to legislate predictable scheduling.

Backdrop – Misclassification

Likewise, misclassification of workers has also increased. Companies are attempting to shift work from employees to independent contractors, especially in the construction, transportation, and cab industries using a variety of strategies. Continue reading »

OSHA Finalizes Rules Requiring Health Care Employers to Report Injuries

The federal Occupational Safety and Health Administration (OSHA) implemented rules on January 1, 2015 which place additional requirements on employers under OSHA jurisdiction (and with greater than 10 employees) to report occupational injuries and illnesses. This new data is going to be made public, which would allow individuals, companies, or labor unions to view injury reports submitted by health care providers.

Currently, employers in Missouri are required to report work injuries to the state if an employee sustains an injury at work requiring medical treatment beyond immediate first aid. The information is not made public, but is rather provided only to the state as a reporting requirement. In fact, workers’ compensation trials or hearing are not generally open to the public. Express consent is usually required of the parties or their attorneys for a member of the general public to watch these court proceedings.

Under the current OSHA regulations, fatalities must be reported within eight hours. The regulations add additional requirements and require all employers to report work-related in-patient hospitalizations, as well as amputations or incidents where someone loses an eye, within 24 hours. Continue reading »

No-Fly Zones: Using Drones for Commercial Purposes

Drones are all the rage. Actually, drones are causing quite a rage as well.

Last weekend’s Super Bowl in Arizona was a “no drone zone,” where flying drone aircraft for purposes of getting a better view of the action was prohibited. In fact, all NFL games are no-fly zones for drones, as are nearly all professional sporting events and other outdoor stadium events where more than 30,000 people are present.

Drones are threatening to interfere with air travel near airports, and one crashed on the White House lawn recently. The recent explosion of drone usage by the public has even caused one major drone manufacturer to begin a software update for its vehicles that will prohibit them from entering air space in Washington, D.C., or near airports.

Unmanned aerial vehicle (“UAV” or drone) technology is one emerging area where the speed of technology has eclipsed the speed of the law. If you were lucky enough to receive a drone as a gift during the holidays and want to use it for personal use, the good news is that the Federal Aviation Administration (“FAA”) is not stopping you from doing so, as long as you do so in a reasonable manner and do not infringe on others’ rights.

However, commercial use of drone technology is a different story. Continue reading »

Electronic Privacy Amendment May Have Broad Implications for Use of Digital Information

This summer, Missouri voters approved an amendment to the Missouri Constitution protecting electronic data from searches and seizure by law enforcement officers.

Article I, Section 15 of the Missouri Constitution closely resembles the Fourth Amendment to the Federal Constitution: both provide that the people shall be “secure in their persons, papers, homes and effects from unreasonable searches and seizures,” and that law enforcement must demonstrate probable cause before obtaining a search warrant. The recent amendment modifies Section 15 so that it now explicitly protects “electronic communications and data” and requires police to “describe the data or communication to be accessed as nearly as may be” when applying for a warrant.

Surprisingly, the amendment might have ripple effects far removed from searches conducted by law enforcement. Continue reading »

Is Your Property Insured Against a Riot?

The current unrest facing the St. Louis metropolitan region carries with it the elevated risk of damage and/or destruction of both real and personal property. While everyone intends and hopes their insurance policies cover all eventualities that may arise, the truth of the matter is that not all eventualities are covered by insurance.

Unfortunately, it is generally only after something truly unexpected happens that policies are reviewed and tested for actual coverage. At that moment, it may be too late to both prepare for the event and/or adjust coverage.

As a result, it may be wise now to pull out your current auto, homeowners, renters, commercial or other similar policies to review each policy’s specific language.

One of the coverage limitations to consider are so-called “force majeure” clauses. “Force majeure” is a contractual term that relieves parties from performing their contractual obligations when certain circumstances beyond their control arise, often making their performance under the contract impractical or impossible. Examples of these circumstances can include earthquakes, war, strikes, epidemics, acts of God, and riots. Continue reading »

Protecting Your Intellectual Property in a Wild World

Your company is an “A” player and it has done everything right in the U.S. in protecting its intellectual property (“IP”). You have not just relied upon a “smile.” You’ve invented a unique product called Superstar® widget and it is not yet offered by your competitors. Vast amount of resources have been poured into the development of the Superstar widget. Prior to introducing the Superstar widget, you used due diligence and used the IP Awareness Assessment Tool on the U.S. Patent and Trademark Office website to identify what IP you have, if it has value, and if it can be protected under U.S. law.

Upon identifying your IP, the company retained capable attorneys who were successful in obtaining U.S. trademark registrations on the corporate name, non-functional design, and logo so customers could more easily identify the Superstar widget and its association with the company. Superstar widget packaging correctly evidences all registered trademarks.

You made a wise expenditure on patents and the company has received patents on the Superstar widget process. Further, copyright registrations with the U.S. Copyright Office have been obtained on your website, web video, and associated software and you are giving notice to the world of your ownership by using the appropriate symbol of “©2012 Company.” Continue reading »

Inherited IRAs – Once Protected – Now Possibly Fair Game for Creditors

You should read this article if  –

1. You expect to transfer funds to your descendants through an individual retirement account (IRA); or
2. You have inherited an IRA from a relative.

The U.S. Supreme Court has ruled in Clark v. Rameker that the money in an inherited IRA does not qualify for the protection from creditors as provided in the Federal Bankruptcy Code.[1]

The Court concluded that funds in an IRA which was inherited from someone else are not really retirement funds.  It gave three reasons for this conclusion.  The holder of an inherited IRA:

1. Can never invest additional money into the account.
2. Is required to withdraw money from the account, no matter how far away retirement may be.
3. May withdraw the entire balance of the account at any time – and use it for any purpose – without penalty. Continue reading »

Unemployment Insurance in Missouri: Should Employers Respond to Claim Notices?

New regulations require Missouri employers to respond timely to information requests regarding unemployment insurance compensation. The federal Trade Adjustment Assistance Extension Act (“TAAEA” or the “Act”) of 2011 requires, among other things, that states increase employers’ duties regarding unemployment compensation claims. Specifically, the Act provides that states must require employers to respond timely and adequately to Claim Notices, information requests from state agencies relating to unemployment benefit compensation claims. It also requires states to charge the unemployment accounts of employers that repeatedly fail to respond to Claim Notices for unemployment benefits paid to ineligible former employees.

In Missouri, an employee that satisfies all the unemployment insurance benefit eligibility requirements may still be disqualified from receiving benefits for voluntarily quitting without good cause or for being discharged for work misconduct. Once a terminated employee files a claim for unemployment benefits, the Missouri Division of Employment Security (“DES”) mails the former employer a Claim Notice, which requires a response within 10 days. The Claim Notice permits the employer to protest an unemployment benefits claim because the former employee quit voluntarily or was discharged for misconduct. If the claim is not in dispute, the employer must still respond to acknowledge the claim.

Some employers routinely fail to respond to Claim Notices. They may systematically choose not to respond to Claim Notices to avoid becoming involved in a former employee’s benefits appeal. Continue reading »

New Illinois Recording Law Designed to Combat Fraudulent Filings Likely to Have Immediate Impact on Title Insurance Industry

Illinois recorder of deeds offices are now authorized to implement fraud referral and review processes to detect and address fraudulent recorded instruments in their counties with the recent passage of Illinois House Bill 2832 (55 ILCS 5/3-5010.5).

The new law identifies 19 separate indications of potential fraud, but county recorders are each free to create a unique detection system for their county. Under these systems, once the recorder reasonably determines an instrument to be “fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real estate property,” the law affords the recorder two distinct courses of action.

First, recorder personnel may, at their own discretion, notify law enforcement officials, including the Department of Financial and Professional regulation, of the suspected fraud and request assistance for further review and potential criminal investigation.

Second, the recorder may, upon notice and confirmation of the potential fraud with the last owner of record, flag and refer the instrument to a local administrative law judge for hearing. If that judge determines the instrument to be legitimate, a judgment stating so would then be recorded along with the original instrument. However, if determined to be fraudulent, a judgment stating “that the document in question has been found to be fraudulent and shall not be considered to affect the chain of title of the property in any way” would then be recorded with the original instrument. No documents, regardless of legitimacy, would be “unrecorded” or struck from the county records.

Like many new laws, this new recording law is not without controversy. Proponents praise the law as an expedited and cost-effective alternative to filing a lawsuit to clear a victim’s title. However, critics complain the law unconstitutionally expands the powers of county recorders and may lead to unforeseen consequences in the recovering real estate industry.

While the ultimate effect (and constitutionality) of the new law remains to be seen, the law will almost certainly have an immediate impact on Illinois title companies. In some cases, it may lead to longer and more expensive administrative review and closing periods as title companies may be reluctant to insure any title during an active review/referral process. However, in others, the law’s finality in determining the legitimacy of unusual instruments in a chain of title may lead to decreased risks borne by title companies and thus decreased costs borne by the consumer.

Either way, the new law’s application and effect will certainly need to be considered by companies seeking to insure title in Illinois.

Considerations for Buyer Enforcement of Non-competes in the Purchase of a Business

You are a business owner whose company is buying the assets of a Missouri business with locations in both Missouri and Illinois.  Your company intends to hire the seller’s employees. It is your understanding that those employees have signed restrictive covenants/non-competes with the seller (“Seller Agreements”).  You have instructed your attorney to advise you on how to protect your company against the seller’s current highly trained employees walking out the door with the customer relationships, trade secrets, and confidential information you are purchasing.  For administrative purposes, to the extent possible, you would like to use one strategy with both the Missouri and Illinois employees.

Here’s a look at some of the complexities of personal service contracts and non-competes you will want to consider.

Restrictive Covenants and Non-compete Agreements

The phrases “restrictive covenants” and “non-compete agreements” are used interchangeably by the public.  More confusingly, the term “non-compete” is often used to describe three different types of covenants or promises: time and space clause, non-solicitation clause and anti-raiding clause.

The most restrictive non-competition covenant is a promise by the employee not to engage in the same type of business for a stated time in the same geographical market as the employer (“time and space clause”).

More common is a non-solicitation clause, where the employee is allowed to engage in the same type of business in the same geographical area but is prohibited from soliciting the employer’s customers for a stated period of time. Continue reading »