Articles Posted in Business Law

Starting December 1, 2016, a new overtime rule goes into effect that employers should be aware of that will impact employees on salary.  The Fair Labor Standards Act (FLSA) is a federal law that applies to all employers across the country. It guarantees a minimum wage to all employees as well as overtime compensation if over 40 hours a week is worked.  Overtime pay is calculated at a rate not less than one and one half the employee’s regular rate of pay for all time worked in a week in excess of 40 hours.  Many employers are under the mistaken belief that if they pay an employee a salary that the overtime laws do not apply.  This is incorrect.  Weekly salary divided by 40 (hours) must not be lower than the federal minimum wage then in effect.  As with any law there are exemptions and this is the focus of the new overtime law for salaried employees.

Under the law as it currently stands, there are overtime exemptions for employees who perform professional, executive, administrative, outside sales or computer functions. These exemptions are referred to as white collar exemptions.  To be considered exempt, employees must meet certain minimum criteria related to their primary job function and must be paid on a salary basis of not less than a specific minimum amount set by the Code of Federal Regulations (CFR).  Today that minimum amount under the CFR is not less than $23,660 annually which translates to a weekly salary of $455.  Stated differently, your employees are not entitled to overtime pay if you pay them at least $455 a week and their primary duties fall under the “white collar” exemptions.

Effective on December 1, 2016, this changes drastically and modified white collar exemptions will be put in place. The minimum amount required to be paid on an annual basis will be increased to $47,476, which translates to $913 a week.  If an employer pays its employee a salary of less than the $913 floor, the employee will now be entitled to overtime.  In addition, the highly compensated exemption will be increased from $100,000 to $134,000.  The new law also has automatic increases every 3 years tied to certain performance indices.

Last week, President Obama signed the Defend Trade Secrets Act of 2016 or DTSA into law.  This new law provides the owners of trade secrets a private right of action against those individuals or entities who misappropriate trade secrets.  This new law for theft of trade secrets must be brought in federal court within three years of the theft.

While there are other benefits of the DTSA, the most powerful arrow it adds to your quiver is a civil ex-parte seizure of property.  In extraordinary circumstances, where you can show that an injunction alone will not be sufficient, you can actually petition the court to seize the property or trade secret you allege is in the control of the defendant.  As expected, the threshold for this type of relief is extraordinarily high and requires you to describe with a high degree of specificity the location and description of the property to be seized.  Once seized, a hearing will be held within seven (7) days of the seizure to determine if this was appropriate.  As with injunctive relief, a bond must be placed with the court in case your allegations are ultimately not true.

This new law does not replace the various trade secret laws in each state, but rather provide a uniform approach at the federal level that is more in line with the protections for patents, copyrights and trademarks. Previously if a trade secret was stolen there may have been several states to choose from with regards to where a plaintiff might commence its lawsuits.  Obviously, it would make sense to file in the state where the laws were the most favorable to the client.  Now however, the newly enacted DTSA, being a federal law, will greatly curb against this type of abusive forum shopping.

By now, it is common knowledge that we have lost Prince, one of the greatest artists of our time. Though he is gone, his legacy will live on in his music, movies, and various other distributions of his image and art. Unfortunately, Prince had no will.  According to various estimates, Prince’s net worth at the time of his death was roughly 300 million with an additional 100 million expected in the next five years alone from fans that will continue to purchase the late singer’s songs and other memorabilia in his honor.  And if this is indeed true, this may be one of the worst business succession failures in recent memory in the music industry.  It just takes a second to recognize that Prince’s impact on society was far greater than just his music.  There were literally hundreds of thousands of tweets, articles and blog posts reflecting the impact Prince made upon them.  In short, Prince was an iconic brand that conducted business at his compound known as Paisley Park Studios just outside of Minneapolis.  Without having a will that established who will control his iconic brand, Prince essentially was running a multi-million dollar business without succession planning.

So why then do you want to have continuity succession planning in place? There are many considerations to take into account and in no particular order they are: mortality, tax planning, life changes or events to just name a few.

Mortality.  The only certainty in this world is that no one is getting out of here alive.   What will happen to your business when you are gone?  This can be a very emotional question and likely the biggest reason why people do not have estate plans.  People don’t like to talk or even think about their own death.  However, if you don’t deal with it, your survivors under the laws of intestate succession will be the ones running your business.  Think about how much effort you placed into getting your business going.  How hard you worked to create that brand and what it stands for.  Do you want your brothers and sisters or children running the show?  What about your business partners? The people with whom you share your personal and professional life may not be suited or capable of successfully working together and picking up the pieces after you did not plan carefully enough.  Truth be told, if you have partners (fellow shareholders), then they are also partly to blame here. While they are not responsible for your estate plan, they are equally responsible for not having a business succession agreement in place.  More on this agreement later.