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Photo: Doug Leavitt

Last month the Department of Labor’s Wage and Hour Division officially rejected the 6-part test it had been using to determine if an employer who had an unpaid intern was violating the Fair Labor Standards Act (FLSA).    Going forward the DOL will employ a “primary beneficiary” test which is designed to focus on the specific economic realities between the employer and intern.  The new test affords the DOL more flexibility in its analysis with one factor not being any more or less important than another factor.

Primary Beneficiary Test


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A Delaware business client recently asked me to review his commercial privacy policy to see if his website complied with current online privacy protection requirements.  Not surprisingly in this fast pace and constantly changing digital landscape – the website failed because it did not clearly provide a link to its privacy policy on the home page.  And this is putting aside the May 25, 2018 GDPR compliance deadline that is fast approaching and its severe financial consequences for noncompliance.  The Delaware Privacy Online Act Delaware Online Privacy Protection Act has three stated goals but for purposes of this alert, I will focus on only on the commercial purpose.  Operators of an internet service must  conspicuously post its “privacy policy” if it collects personally identifiable information of Delaware residents.  To better understand this, let’s break this down into its component parts.

Operators of an Internet Service

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Last week on October 13 the Third Circuit Court of Appeals held that an employer must pay a non-exempt employee for all rest breaks of 20 minutes or less.  This is nothing new and has been the law of the land under the Fair Labor Standards Act (FLSA) for quite some time.  The FSLA was established in 1938 and established certain minimum living standard for workers such as minimum wage, time and a half and child labor standards.  What is new under this decision is that the Court decided this is a bright line test and the facts surrounding each break period need not be looked at on a case by case basis.  In other words, if the employer did not pay an employee for a 20 minute employee break, the analysis is over and the employer has violated the FLSA.

Employee Breaks – FLSA as a Federal Floor and State Laws

Employers are governed by both federal (FLSA) and state employment laws.  Understand that the FSLA is a minimum standard, a floor, if your will, and that if a particular state has more stringent employee protection requirements, that state’s law must be complied with as well.  The Department of Labor has a list that identifies (current as of January 2017) what each state requires under their employment laws regarding paid employee breaks.  Click here for that state by state list.

I-9 Form

Employment Eligibility Verification Form

The I-9 form is used by employers to verify both the identity and eligibility of individuals for employment in the United States.  The new form goes into effect on September 18, 2017.  You can download a copy of the new I-9 form by clicking here.   From now through September 17, 2017, both the new form and the prior version are acceptable.  After September 18, 2017, only the new form is acceptable.

Whats New in the I-9?

Non-Disclosure Agreements

Non-Disclosure Agreements – Protect Your Employees

This week I reviewed three Non-Disclosure Agreements and was surprised when two of the NDAs were silent regarding employee solicitation. Working with clients over the years I have found that in virtually every successful company, it is almost always the employees, along with the technology, that are among the most valuable assets that need protection. Yet in the deals my clients were exploring, these valuable assets were not protected, or at least would not have been protected had my clients not shared the NDA with me before signing.  First however, I want to take a step back and discuss why the NDA (also called a Confidentiality Agreement) is used, and identify common NDA scenarios.

Protect Confidential Information

The General Data Protection Regulation, more commonly known as the GDPR, replaced an inconsistent country by country approach to how companies were required to handle the personal data of European Union (EU) residents.  The EU Parliament approved the GDPR  last month and all companies, including US companies, must be compliant by May 25, 2018 or face heavy fines that can be up to 20 million euros or 4% of a company’s prior year world-wide revenue, whichever is higher.   This is not a typo.  Now that I have your attention, let’s break the GDPR down to 2 important questions.

Does my US business offer goods or services to EU residents?  If the answer is yes, you are subject to the GDPR.

First, what is a EU resident?  A EU resident is any individual that resides in any of the 28 member states that form the EU.  This applies to anyone who resides in the EU.  Citizenship is NOT required.  Second, there is no requirement that the company offering the goods or services be located in the EU.  All that is required is that the individual resides in the EU.  The GDPR focuses on the EU resident, known as the “data subject” and not the “data controller”. Consider the following, does your company have a website?  If your website collects data from a EU resident you fall under the purview of the GDPR regardless whether you have a physical business location in the EU or any business transaction was consummated between your business and the EU resident.  The mere surfing of a Pennsylvania business’s website by a EU resident makes your business subject to the GDPR.

Potential clients frequently ask me why they should not buy contract forms online or from an office supply store. Why pay for an attorney when I can buy a legal form for a nominal fee?  I understand the inclination to go online because its entirely at your convenience and it is undoubtedly cheaper.  However, this comes at a potentially high cost.   Legals forms do not always comply with all legal requirements for a given industry and location (federal, state and local).  The danger you expose yourself to by avoiding working with a lawyer is the unknown.  It is the risks you don’t realize you are taking that frequently come back to bite you the hardest.  I am writing this blog today as a cautionary tale why such forms should be avoided because of a recent conversation I had with a potential client.

The Form Office Lease

Last week a potential client came into my office with a complaint that a former tenant had recently filed against him.  The tenant claimed damages against the landlord because the lease did not comply with the Philadelphia Lead Disclosure & Certification Law.  This law applies to any dust, dirt/soil, paint, and as of March 1 pipes that drinking water may pass through. If the allegations set forth in the complaint are true, the landlord will have to refund all rents received during the rental period, pay for his tenant’s attorneys’ fees and other fines up to $2,000.   The landlord in this case thought he followed all of the rules.  He even showed me the lead based paint disclosure form that came with his form lease.  Unfortunately, Philadelphia has very specific requirements concerning lead disclosures for buildings that were built prior to 1978.  Moreover, not only are there requirements for what has to be disclosed; but the manner in which disclosures must be made are also regulated by code.  In fact, this is such a prevalent problem in Philadelphia because it is such and old city that it has an excellent publication on this topic.  Click here for Philadelphia Landlord’s Guide to Lead Disclosure.  While, the form lease that was purchased at the chain office supply store might have complied with Pennsylvania state law, it did not satisfy the Philadelphia Code and this will be an unfortunate and expensive lesson for this landlord.


The American Rule

In the United States, each party is responsible for its own legal fees.  This is known as the “American Rule.”  In other countries, the U.K. for example, the loosing party is responsible for the winner’s legal fees.  This critical difference in approach to the general legal framework explains why litigation in the United States runs amuck as compared to our British counterparts.  New Jersey however has an oft forgotten procedural rule that when used properly turns the “American Rule” on its head and effectively makes the losing party pay for the winner’s attorney fees if certain conditions are met.

Attorney Fees in NJ

The each page of the newest version of the I-9 form is laid out for display.
All US employers are required to use an I-9 form to verify the identity and eligibility of individuals (both citizens and non-citizens) for employment in the United States.  Please take notice that effective today, January 22, 2017, there is a new I-9 form that replaces the one currently in place.  You can download a copy of the new I-9 form by clicking here. For easy access, bookmark this blog entry for when you will need the form in the future.

Whats New?

This new form looks very similar to other recent incarnations with a few specific changes. The digital version linked above is now much easier to fill out online. It also includes the ability to general a QR code upon filling out the form, which can be helpful for providing copies to the appropriate parties. It also includes much more space to indicate preparers, translators, and other information that has often found it’s way to being written in the margins.

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