Partridge Snow & Hahn LLP Firm News Feed Apr 2018 00:00:00 -0800firmwise Personal Liability for Business Claims<p>One of the important considerations in starting a new business or operating an existing business is protecting the owner&rsquo;s personal assets and limiting the owner&rsquo;s personal exposure for the liabilities, debts and obligations of the business. A few simple steps can provide a significant level of personal protection and keep your business distinct and separate from you as the owner: 1) incorporate the business as an entity rather than operating as a sole proprietorship; 2) obtain business liability insurance covering the activities of the business and any claims that may arise; and 3) if you own a home, prepare and record a Declaration of Homestead in the Registry of Deeds of the county or district where your home is located.&nbsp; Each of these matters is discussed in further detail below.</p> <p>When operating as a sole proprietorship, there is no distinction between the business owner and the business itself, and the owner is personally liable for the debts, liabilities and obligations of the business and any claims against the business.&nbsp; This also means that the owner&rsquo;s personal assets, such as the owner&rsquo;s house, vehicles, bank accounts, investments, and the like, are also at risk to claims against the business or by the creditors of the business.&nbsp; Rather, to shield owners from personal liability, it is strongly encouraged that you create a separate and distinct legal entity in which to conduct business, typically as a corporation or limited liability company (LLC).&nbsp; By doing so, the debts and liabilities of the business would remain with the business, and creditors and claimants against the business could only look to the business entity and not the owner personally.&nbsp;</p> <p>To form an entity, this would involve filing articles of organization with the Massachusetts Secretary of State and paying the required filing fee.&nbsp; Typically, the business would be formed as either a corporation or a limited liability company.&nbsp; The business owner should consult with its lawyers and accountants or tax advisors as to whether a corporation (including a relatively new form of &lsquo;public benefit corporation&rsquo;) or a limited liability company is the appropriate entity in which to conduct business, as several different factors may impact that decision.&nbsp;</p> <p>Once the entity is created, so long as you conduct business through the entity and respect its separate and distinct existence as a stand-alone legal entity, the debts and liabilities of the business and any claims against the business would be limited to the business entity only, and not the owner personally.&nbsp; To respect this separate nature between the business and the owner individually, this means, among other things, obtaining a separate tax EIN number for the business entity, opening separate bank accounts in the name of the business entity, not commingling business and personal funds and expenses, and signing legal documents in the name of the entity in your capacity as its officer or manager, and not individually.&nbsp; Please remember, however, that if a business owner signs a personal guaranty for any of the debts or obligations of the business (for instance, in the context of a lease or a loan to the business, or as may be required by a business vendor for credit terms), then the owner will be held personally liable for those debts and liabilities of the business to the extent of the personal guaranty.</p> <p>Consideration of business insurance is also a key component to any risk management plan of a new or existing business, and each business owner is strongly encouraged to speak with an insurance agent regarding how best to protect the business and the owner from claims.&nbsp; Some typical forms of insurance, depending on the nature of the business and the risks involved, include: commercial general liability and comprehensive public liability insurance, building and contents coverage, property and casualty, product liability, errors and omissions, hazardous substances and environmental, business interruption, and workers&rsquo; compensation as required by law once you hire employees.&nbsp; It may also be wise to consider adding key man life insurance or disability insurance to cover the unexpected loss of a key employee or owner to replace those services or revenue.&nbsp; Where there are multiple owners, consideration of cross-purchase buy-sell life insurance or disability insurance is also a possibility to fund the buyout of a deceased or disabled owner&rsquo;s interest following their un-timely death or disability.&nbsp; While not all of these coverages, and the expenses involved, will be necessary from the outset, the business owner should nevertheless have these discussions with their agent from the beginning to determine the appropriate kinds and levels of insurance when starting the business, and periodically review the insurance needs as the business grows and expands.</p> <p>Finally, it is advisable for any business owner who also owns a home to file a Declaration of Homestead with respect to the property in the Registry of Deeds of the county or district where the home is located.&nbsp; An estate of homestead is protection for the equity value of a person&rsquo;s principal residence from the claims of creditors (excluding mortgage holders). With an automatic homestead protection, the business owner receives one hundred twenty-five thousand dollars ($125,000) in protection value.&nbsp; However, by filing a Declaration of Homestead form in the Registry of Deeds of the county or district where the property in located, the homeowner/business owner can protect the value of their property up to five hundred thousand dollars ($500,000) from the claims of creditors.&nbsp; If you are not sure whether or not you previously filed a Declaration of Homestead, many of the registries are now online and you can search your property by name or address for prior filings, or a lawyer or the clerks of the registries should be able to assist you with the search and necessary filing.</p> <p>By undertaking these important steps, namely incorporating the business, obtaining proper business insurance, and filing a Declaration of Homestead on their residence, the business owner can significantly safeguard their personal assets and liability from the claims and liabilities of the business.</p>Articles19 Apr 2018 00:00:00 -0800 Ottaviani Hosts Trademark Due Diligence and Trademark Transactions Roundtable<p>PS&amp;H attorney, John Ottaviani, will be hosting a roundtable discussion, sponsored by the International Trademark Association, in our Providence office on April 5th. Please join us for lunch and two RI CLE credits from Noon to 2pm to discuss trademark due diligence and trademark transactions. Only a few more days to register - Register&nbsp;<a href="">here</a>&nbsp;today!</p> <p>IP due diligence, as an important part of overall M&amp;A due diligence, is the process of gathering information and analyzing the value of and risks associated with IP and IT assets. A comprehensive IP due diligence review is particularly important in M&amp;A transactions since IP has been and is increasingly becoming an important component of a seller&rsquo;s business and a buyer&rsquo;s acquisition model. The consequences of mismanaging IP due diligence can be severe. Join us to discuss with peers how to avoid pitfalls and ensure a thorough vetting of a seller&rsquo;s assets.<br /> <br /> The registration fee is US $50 for members and US $75 for non-members. This session includes a buffet luncheon.</p>Event05 Apr 2018 00:00:00 -0800 is Not an Early April Fools' Joke: Give Your Employees the Required Massachusetts Pregnant Workers Fairness Act Notice TODAY Massachusetts Pregnant Workers Fairness Act (the &quot;Act&quot;) goes into effect on Sunday, April 1st, 2018. The Act, which applies to all Massachusetts employers with six or more employees, requires employers to provide pregnant workers or workers with pregnancy-related conditions with reasonable accommodations and protection from discrimination and retaliation under Massachusetts's general anti-discrimination law. Most immediately, the Act requires that Employers provide employees notice of the provisions of the law on or before the effective date.&nbsp; The Massachusetts Commission Against Discrimination has indicated that its guidance can be used to fulfill the notice requirement. Click <a href="" target="_blank">here </a>to view the guidance document. &nbsp;So for employers who have not done so already, this notice needs to be provided to their Massachusetts employees <b><u>today</u></b>.<br /> <br /> <div> <p>The key provisions of the Act are as follows:</p> <ul> <li>Federal and Massachusetts laws generally prohibit employers from subjecting employees to adverse employment actions because they are pregnant. &nbsp;The Act expands these protections to require that &ldquo;ordinary&rdquo; pregnancy and related conditions (such as nursing) be accommodated, in a manner similar to providing workplace accommodations to employees with disabilities. &nbsp;&nbsp;The Act goes beyond some prior Massachusetts precedent, which only provided reasonable accommodations with respect to pregnant employees when the employee exhibits unusual medical conditions or complications sufficient to constitute a disability.</li> <li>Under the Act, upon request from an employee for an accommodation related to pregnancy, the employer has an obligation to communicate with the employee in order to determine a reasonable accommodation for the pregnancy or pregnancy-related condition.&nbsp; This is called an &ldquo;interactive process,&rdquo; and it must be done in good faith.&nbsp; A &ldquo;reasonable accommodation&rdquo; is a modification or adjustment that allows the employee or job applicant to perform the essential functions of the job while pregnant or experiencing a pregnancy-related condition, without undue hardship to the employer.</li> <li>The Act requires that employers accommodate conditions related to pregnancy, including post-pregnancy conditions such as the need to express breast milk for a nursing child, unless doing so would pose an undue hardship on the employer. &ldquo;Undue hardship&rdquo; means that providing the accommodation would cause the employer significant difficulty or expense.</li> <li>The Act provides a list of exemplar reasonable accommodations that might be appropriate for pregnant and nursing employees: more frequent or longer paid or unpaid breaks; &nbsp;time off to recover from childbirth with or without pay; acquisition or modification of equipment or seating; temporary transfer to a less strenuous or hazardous position; job restructuring; light duty; a private non-bathroom space for expressing breast milk; assistance with manual labor or modified work schedules.</li> <li>In general, employers may require medical documentation to substantiate the need for an accommodation.&nbsp; However, the Act is clear that an employer may&nbsp;<u>not</u>&nbsp;require medical documentation to establish a pregnant or nursing employee&rsquo;s need for the following accommodations: more frequent restroom breaks, food or water breaks; seating; limits on lifting more than 20 pounds; and a private, non-bathroom space to express breast milk.</li> <li>An employer cannot refuse to hire a pregnant job applicant or applicant with a pregnancy-related condition, because of the pregnancy or the pregnancy-related condition, if an applicant is capable of performing the essential functions of the position with a reasonable accommodation.</li> <li>In addition to providing the aforementioned notice to employees <b><u>now</u></b>, employers must also provide the notice to new employees at the time of hire and to pregnant or nursing employees within 10 days of the employee's notification of her pregnancy to the employer.</li> </ul> The Partridge Snow &amp; Hahn Employment Law Team is fully conversant with the Act, and is prepare to assist clients in connection with compliance with the law. Please contact our Employment Law Team at 860-861-8200.<br type="_moz" /> &nbsp;</div>Client Alerts30 Mar 2018 00:00:00 -0800 Property Traps for the Unwary Business often have misconceptions when it comes to intellectual property issues. Here are a few questions and answers on topics about which clients often ask us for advice:<br /> <br /> <strong>Q</strong>: The Name is available at the Secretary of State&rsquo;s Office, so it&rsquo;s OK to use, right?<br /> <strong>A</strong>: Not always. Federal and common law trademark rights supersede name availability at the Secretary of State.<br /> <br /> <p><strong>Q</strong>: We hired the photographer to take pictures for our company brochure, so we own them and can use them on our website, right?<br /> <strong>A</strong>: No, not unless you have a written agreement assigning or licensing the copyrights in the photographs to your business. The business only owns the copyrights in works prepared by regular, full time employees. You may need to go back to the photographer and obtain additional rights (and pay an additional fee).</p> <br /> <strong>Q</strong>: We found the (text, picture, graphic, music, video) on the Internet, and it did not have a copyright notice, so we can use it in our company's marketing presentation, right?<br /> <strong>A</strong>: No. Copyright notices have not been required since 1989. The absence of a copyright notice is no assurance that a work is unprotected by copyright. In general, one cannot copy content found on the Internet and use it for a website, brochure, presentation or other promotional materials without obtaining permission from the copyright owner, regardless of whether it has a copyright notice or not.<br /> <br /> <strong>Q</strong>: We have been selling our product for a while, and now we want to apply for a patent. Can we?<br /> <strong>A</strong>: The first act of sale, offer for sale, public use or publication of an invention starts a one year clock ticking within which the U.S. patent application must be filed, and bars filing a patent application in some other countries.<br /> <br /> <strong>Q</strong>: We are keeping the invention a secret, so is there any rush to file the patent application?<br /> <strong>A</strong>: The United States is now a &ldquo;first to file&rdquo; jurisdiction, which means that invention priority is decided by who files first, not who invents first. A delay in filing the application could be costly.<br /> <br /> <strong>Q</strong>: Trademark rights are acquired by use, so there is no hurry to file a trademark application, is there?<br /> <strong>A</strong>: Under federal trademark law, a registration cannot be canceled after 5 years (except on limited grounds) even if the owner of the registration started using its mark after your business started using its mark. So if another business registers a mark that is identical or similar to a mark that your business uses, you could be prevented from registering your mark. Early filing prevents later users from obtaining trademark rights.<br /> <br /> <strong>Q</strong>: We cannot decide on how to allocate the intellectual property ownership while we are working together. Can we just say all intellectual property rights will be &ldquo;jointly owned&rdquo;?<br /> <strong>A</strong>: Joint ownership of intellectual property is very messy, and often has unintended consequences. In general, each co-owner has the right to exploit the intellectual property and grant non-exclusive licenses to others without the consent of the other co-owner. &nbsp;So a co-owner could grant rights in the jointly-owned intellectual property to your competition without your permission.<br /> <br /> <br type="_moz" />Client Alerts29 Mar 2018 00:00:00 -0800 Your Company Will Be in Violation of the Massachusetts Equal Pay Law on July 1st - And How to Fix It<p>As described in our prior <a href=";an=68319&amp;anc=742&amp;format=xml" target="_blank">publications</a>, an <i>Act to Establish Pay Equity in Massachusetts </i>(the &ldquo;Equal Pay Law&rdquo;) will go into effect on <b>July 1, 2018</b>. In basic terms, the Equal Pay Law requires Massachusetts employers to pay the same compensation to men and women performing &ldquo;comparable&rdquo; work.&nbsp; The Equal Pay Law contains a complex regulatory structure that <b><i>fundamentally changes</i></b> the way employee compensation is regulated in Massachusetts and contains severe penalties for violations.&nbsp;</p> <p>Despite the unparalleled breadth of the Equal Pay Law and widely publicized anticipation of its effective date, many employers continue to hold misconceptions about what the law means for them. On March 1, 2018, the Massachusetts Attorney General published <i><a href="" target="_blank">Guidelines</a></i> that offer technical interpretations of the Equal Pay Law to help employers comply with the law.</p> <p align="center"><b><u>WHAT YOU DON&rsquo;T KNOW ABOUT THE LAW (AND SHOULD)</u></b></p> <p><b>I. IT IS NOT REALLY ABOUT GENDER DISCRIMINATION AT ALL.</b></p> <p>While a purpose of the Equal Pay Law is to bridge the gender gap with regard to wages, whether or not gender is the reason for pay differences is actually irrelevant under the law.&nbsp; This is a strict liability law that prohibits employers from paying men and women differently unless the reason fits within the six permissible reasons in the statute.&nbsp; In other words, if you think your company is safe because you know it would never consider gender when setting pay, you are one hundred percent wrong.&nbsp;</p> <p><i>The following hypothetical illustrates the point:</i></p> <p>In 2016, a female job applicant applies for a dog grooming position at a pet shop.&nbsp; The 2016 labor market for pet groomers is &ldquo;soft,&rdquo; owing to a lull in dog ownership and a surplus of trained dog groomers.&nbsp; After an interview process, the pet shop offers the applicant a job at a minimum wage compensation rate.&nbsp; The applicant accepts the position, without negotiation.&nbsp; Between 2016 and 2018, dog ownership spikes, and the demand for competent dog groomers increases substantially.&nbsp; In 2018, in response to this market change, the pet shop decides to hire an additional dog groomer.&nbsp; After testing the job market, the pet shop discovers that it must offer a compensation rate well-above minimum wage to attract competent applicants. &nbsp;The pet shop ultimately hires a male applicant, at a compensation rate that exceeds the rate the shop is paying to its existing female dog groomer. Even though the pay differential between the two employees can be explained by changes in market demand, and not gender bias, a violation of the Equal Pay Law occurs because labor demand is not one of the six enumerated permissible pay variations. &nbsp;This concept is discussed further below.</p> <p><b>II. &nbsp;YOU (AND ANY REASONABLE PERSON) WOULD NOT GUESS WHAT COMPARABLE WORK MEANS UNDER THE STATUTE.</b></p> <p>The core provision of the Equal Pay Law provides that &ldquo;No employer shall . . . pay any person in its employ a salary or a wage rate less than the rates paid to its employees of a different gender for comparable work,&rdquo; unless a statutory exemption applies.&nbsp; So what is comparable work?</p> <p>The Equal Pay Law defines &ldquo;comparable work&rdquo; broadly as work that requires substantially similar skills, effort, and responsibility, and is performed under similar working conditions.&nbsp; Under this standard, two jobs, <i>that relate to entirely different subject matters or disciplines</i>, may be considered &ldquo;comparable,&rdquo; so long as the skill, effort, responsibility, and working conditions of the jobs are otherwise similar.</p> <p>For example, as suggested in the <i>Guidelines</i>, insurance brokers selling different lines of insurance for the same employer may be engaged in &ldquo;comparable work&rdquo; if, despite subject-matter differences, general skill-levels are common across the job functions.&nbsp; As another example, a public school cafeteria worker may be &ldquo;comparable&rdquo; to a janitor if both job functions require the same general skill-levels (according to the <i>Guidelines</i>).&nbsp; Prior to the <i>Guidelines</i>, a reasonable person probably would have limited comparisons to jobs in the same department or of the same subject matter.&nbsp; Now this broad definition of &ldquo;comparable work&rdquo; will require tracking compensation rates across disciplines and departments for many employers, and comparing pay of employees whose job functions are not obviously related.</p> <p><b>III. THE PERMISSIBLE VARIATIONS IN PAY ARE VERY NARROW.</b></p> <p>As previously mentioned, an employer avoids a &ldquo;pay equity&rdquo; discrimination claim only if it can prove that pay variations between male and female employees can be attributed to one or more of the following six&nbsp; &ldquo;permissible pay variations&rdquo;:</p> <ol> <li>A Seniority System - a pre-determined, pre-defined compensation plan that rewards seniority.</li> <li>A Merit System &ndash; a pre-determined, pre-defined plan that awards compensation based on employee performance, as measured through uniformly applied, legitimate criteria that are job related.&nbsp; End-of-Year merit bonuses based on informal, subjective standards do not constitute a &ldquo;merit system&rdquo; under this standard.</li> <li>A Production System &ndash; a pre-determined, pre-defined plan that awards compensation based on quantity or quality of production, sales, or revenue (e.g., a commission).</li> <li>The Geographic Location of the Comparable Employees &ndash; a different location alone will not be enough.&nbsp; The employer will have to show the pay difference makes sense given the cost of living differences or other differences between the two locations.&nbsp;&nbsp;&nbsp;</li> <li>Variations in Pay Based on the Education, Training, or Experience-Levels Among Comparable Employees &ndash; these elements must however, be related to the job.&nbsp; So the employer who wants to support education and thus pays employees more if they have a doctorate degree violates the law unless that degree relates to the job.&nbsp;</li> <li>Variation in Pay Based on Differing Travel Requirements Among Comparable Employees.&nbsp; Commuting (<i>i.e</i>., longer travel time to work based upon where the employee lives) is not a valid reason to pay differently.&nbsp;</li> </ol> <p>Perhaps the biggest misconception about the exceptions is the one for merit.&nbsp; The exception applies to a merit system.&nbsp; An employer with no system that believes one employee is better than the other based upon their retroactive subjective assessment does not fall within a permissible exception.</p> <p><b>IV. ACCORDING TO THE GUIDELINES, EMPLOYERS VIOLATE THE LAW EVEN IF OVERALL THEIR PAY PRACTICES RESULT IN EQUAL PAY.</b></p> <p>An interesting part of the <i>Guidelines</i> is that the Attorney General has taken the position that looking at average pay amongst individuals in a position is not enough, and that a one-to-one comparison of men and women in the same position is needed.&nbsp;</p> <p>The outcome of this interpretation yields a bizarre result.&nbsp; Imagine an employer has four recruiters, two men and two women.&nbsp; The baseline rate for the position is $16 per hour and because of that baseline, Joe and Jane are both paid $16.&nbsp; Sally is paid $20 an hour because she is a tough negotiator and threatened to walk out if not paid the higher wage.&nbsp; Doug is paid $20 because he is dating the owner&rsquo;s daughter.&nbsp; Under the statute, the Company could face &ndash; and lose &ndash; a lawsuit by Joe, because Sally is paid a higher wage because of a factor (negotiating skill) that is outside of the six enumerated permissible pay variations AND a lawsuit by Jane, because Doug is paid a higher wage because of a factor (nepotism) similarly outside the permissible pay variations. Given the odd result, employers may see challenges to the <i>Guidelines </i>in future cases.&nbsp;</p> <p><b>V. THE ATTORNEY GENERAL SAYS BEING PAID THE SAME MEANS&nbsp;<u>EXACTLY</u> THE SAME (IN BOTH THE MANNER AND THE AMOUNT).</b></p> <p>The Equal Pay Law requires pay to be the same amongst men and women and defines pay to include all forms of remuneration offered to an employee for work performed, including commissions, bonuses, profit sharing, deferred compensation, paid personal time off, vacation, holiday pay, expense accounts, car and gas allowances, retirement plans, health insurance, and other benefits, whether accepted or not, and whether paid directly to the employee or to a third-party on the employee&rsquo;s behalf.&nbsp;</p> <p>As was stressed in a recent webinar presentation by the Attorney General, the &ldquo;same&rdquo; means &ldquo;exactly the same&rdquo;.&nbsp; In other words, close does not count - $15.00 will not be considered &ldquo;the same&rdquo; as $15.50.&nbsp;</p> <p>In addition, in order for pay rates to be &ldquo;equal&rdquo; under the Equal Pay Law, the pay rates must be equivalent in terms of total remuneration (<i>equivalent with respect to the total value of the remunerations offered</i>) and component breakdown (<i>equivalent with respect to the value of each remuneration component offered</i>)<i>.&nbsp; </i>Accordingly, if two comparable employees share the same total compensation rate, but the breakdown of their base salaries and bonuses differ, there is a pay variation between the employees for purposes of the Equal Pay Law.&nbsp;</p> <p>Thus, employers need to understand they cannot wait until the end of the year and just pay bonuses to equal things out.&nbsp;</p> <p align="center"><b><u>WHAT TO DO ABOUT THE LAW</u></b></p> <p>Before throwing your hands up in despair, there is some good news.&nbsp; The Equal Pay Law provides a &ldquo;safe-harbor&rdquo; for employers.&nbsp; An employer is immune from liability from an Equal Pay Law claim if: (i) the employer, within the previous three years before an action is filed against it, conducts a good faith &ldquo;self-evaluation&rdquo; of its pay practices that is reasonable in detail and scope; and (ii) if impermissible pay disparities are identified through such a self-evaluation, the employer demonstrates reasonable progress toward eliminating such disparities.&nbsp; For purposes of this standard:</p> <ul> <li>A &ldquo;good faith&rdquo; self-evaluation is one that an employer conducts in a genuine attempt to identify any unlawful pay disparities among employees performing comparable work.&nbsp; This good faith requirement applies to both an employer&rsquo;s analysis of which jobs are comparable and to its analysis of pay differentials.&nbsp; A self-evaluation that is conducted as a sham (<i>i.e.,</i> to find no disparities) or to justify known disparities likely will not qualify as good faith.</li> <li>Whether a self-evaluation is &ldquo;reasonable in detail and scope&rdquo; depends on the size and complexity of an employer&rsquo;s workforce.&nbsp; For some employers, a non-statistical analysis will be enough, but in all cases employers are advised to consult with counsel to increase the chances that their efforts are found to be reasonable.&nbsp; For employers with large workforces and complicated pay structures, the self-evaluation may require a complex, multi-variable statistical analysis to evaluate whether pay variations among male and female comparators are permissible or violate Equal Pay Law standards.</li> <li>Whether or not an employer has made sufficiently &ldquo;reasonable progress toward eliminating disparities&rdquo; will depend on how much time has passed, the nature and degree of its progress as compared to the scope of the disparities identified, and the size and resources of the employer.&nbsp; In order to show that it has made reasonable progress, an employer will have to demonstrate that the steps it is taking will eliminate the disparities in a reasonable amount of time.</li> </ul> <p>If an employer&rsquo;s self-evaluation is found to be insufficient in detail or scope, but was nonetheless conducted in good faith, and the employer has made reasonable progress toward eliminating identified pay disparities, the employer will not be required to pay liquidated damages (double-damages) to an affected employee or employees but will still have to pay the affected employee(s)&rsquo; unpaid wages and attorneys&rsquo; fees and costs.</p> <p>Employers of all sizes should seriously consider how to implement the safe harbor provisions.&nbsp; In addition to providing a defense or partial defense to a claim, taking such steps may make it less likely the employer is picked as a target for a class action lawsuit by the slew of plaintiffs&rsquo; firms circling to find their next employer victim. &nbsp;</p> <p align="center">***</p> <p><b>The Partridge Snow &amp; Hahn Employment Law Team is fully conversant with the Equal Pay Law, and is available to assist employers in connection with the &ldquo;self-evaluation&rdquo; assessment contemplated by the Equal Pay Law.&nbsp; In addition, the Firm has partnered with professional economists and labor statisticians to assist employers that require such services.</b></p> <p><b>Please contact our Employment Law Team at 401-861-8200.</b></p>Client Alerts27 Mar 2018 00:00:00 -0800 Law of Sexual Harassment (How to Address Situations) no social awareness story has generated more publicity in recent memory than the #metoo movement. While the media focuses its coverage of #metoo on celebrities, athletes and politicians, the light is beginning to shine where it is needed most; in the workplace. Sexual harassment is the workplace is not a new problem. But, in large part thanks to #metoo, employers are now talking about it &ndash; a lot &ndash; and realizing that it needs to be addressed. The most effective first step is simple: Training. In fact, the need for effective training is specifically mentioned, in detail, in the EEOC-issued Proposed Guidelines on Sexual Harassment. Training not only educates but it empowers &ndash; both the potential victims but some would say more importantly the managers whose job it is to monitor, &ldquo;issue spot&rdquo; and address inappropriate conduct. Providing employers with these tools is the first step to ensuring the existence of a more productive workplace and to avoiding lawsuits capable of bankrupting a small business. <br /> <br /> Attendees of this 50 minute program will be educated on the law of sexual harassment, how to spot potential harassment situations and how to address issues that, if ignored, may lead to expensive sexual harassment lawsuits.&nbsp;To register for this event, please click <a href="">here</a>.<br /> <br /> The instructor for this course is Michael A. Gamboli. Michael is a partner at Partridge Snow &amp; Hahn and devotes a significant portion of his practice to minimizing the risks arising out of human resource decisions and conflicts. Michael consults with clients on a daily basis on the avoidance of discrimination and harassment claims and extensive experience conducting anti-harassment trainings for employers. &nbsp;<br type="_moz" />Event21 Mar 2018 00:00:00 -0800 Use of Referral Agreements Use of Referral Agreements.pdf&format=xml<p>Insurance agencies rely on referrals as an important method of growing revenues, and many of those referrals happen organically from business-to-business relationships and personal introductions. In those circumstances, there are no written agreements and no expectations of compensation to the referral source.&nbsp; There may be times, however, when the unique relationship between an insurance agency and a particular referral source would benefit substantially from a written referral agreement.&nbsp;</p> <p>When we refer to a &ldquo;referral agreement,&rdquo; we mean an agreement pursuant to which a referral source agrees to provide referrals to an insurance agency in exchange for the sharing of commissions from the agency.&nbsp; Referral agreements tend to work best when the referral source is in a position to recommend to its existing or prospective customers that the insurance agency be part of the customer&rsquo;s team of financial and business advisors.&nbsp; For example, banks can be excellent referral sources, because they typically have numerous customers who require insurance services but do not provide those services themselves.&nbsp;</p> <p>An insurance agency giving thought to entering into a referral arrangement should first consider the pros and cons of formalizing the particular referral relationship. &nbsp;It is also essential to understand and guard against the potential legal risks associated with such an agreement.</p> <p><b>Benefits of Referral Agreements</b></p> <p>The advantages of a written referral agreement are straightforward.&nbsp; For the insurance agency, the key benefit of a well-drafted referral agreement is that it requires the referral source to use reasonable efforts throughout its organization to direct potential referrals to the agency.&nbsp; An agreement can provide the insurance agency with a new, long-lasting, and consistent source of referrals.&nbsp;</p> <p>The referral source also benefits because the insurance agency has an opportunity to build familiarity with the referral source&rsquo;s personnel, brand and procedures, thereby allowing the agency to provide a customer service experience that is more tailored to the referral source&rsquo;s culture and customers.&nbsp; At its best, this creates a recipe for boosting revenues for both the insurance agency and the referral source, while simultaneously providing consistently high quality service to customers.&nbsp; This can make the relationship with a customer &ldquo;stickier&rdquo; and therefore longer lasting.&nbsp;</p> <p><b>Referral Agreement Risks</b></p> <p>The major risk of entering into a referral agreement is that doing so could have an adverse effect on the insurance agency&rsquo;s relationship with its other referral sources.&nbsp; For example, if an agency enters into a formal referral agreement with one bank, then other banks may be disinclined to refer customers to the agency for fear that that the agency will in turn refer its customers to the bank with which it has a referral arrangement.&nbsp; Importantly, the agreement may directly limit the agency from working with other entities in the same industry as the referral source.&nbsp; From a customer&rsquo;s perspective, a referral agreement can send the message that the referral is less about which insurance agency is best, and more about which insurance agency will pay the referral source the highest commission.</p> <p>An additional risk is that the referral source may refer customers who are not a good fit for the insurance agency.&nbsp; The agency should vet the potential referral source to ensure that the quantity and needs of potential customers are consistent with the agency&rsquo;s expectations. Despite both parties&rsquo; best efforts, it is also possible that the referral agreement may simply not work as intended.&nbsp; Perhaps the referral source will not be willing or able to refer the volume of customers it thought it would, or, less likely, the insurance agency will be unable to adequately fulfill the customers&rsquo; insurance needs.&nbsp; &nbsp;&nbsp;</p> <p>A well-drafted referral agreement will help to mitigate these risks while also creating an opportunity for both parties to generate revenue.&nbsp; All referral agreements should be in writing and clearly describe the obligations of the parties.&nbsp; A &ldquo;handshake&rdquo; agreement may save time and money at the outset, but it opens both parties to unnecessary risk and misunderstandings.&nbsp; In the absence of a written agreement, even a minor misunderstanding can destroy a relationship or result in costly and time-consuming litigation.</p> <p><b>Key Provisions</b></p> <p>There are several key provisions that should be set forth in every referral agreement.&nbsp;</p> <p>First, it is essential to include a provision requiring the referral source to obtain and maintain all necessary insurance licenses, approvals and permits as may be necessary for it to receive commissions under applicable state law.&nbsp; This obligation should rest with the referral source, and the insurance agency must have the right to withhold payment of any commissions until such time as the referral source has obtained all necessary approvals.&nbsp; In most states, paying a commission to a referral source that does not have the necessary producer license and other applicable approvals could result in the agency losing its insurance license, as well as steep monetary penalties.&nbsp; Laws regarding payment of commissions for referrals differ in each state, and it is therefore crucial to communicate with legal counsel prior to entering into, or paying commissions in relation to, any referral agreement.</p> <p>Second, the insurance agency should always retain the right to decline to do business with any customer referred by the referral source, and the agreement should carefully describe the parameters for how and when a commission must be paid.&nbsp; The agreement should clearly define what constitutes a &ldquo;referral,&rdquo; the commission that will be paid for referrals, and the metrics that will be used to determine when a commission has been earned.&nbsp; As just one example, the agreement could require all referrals to be made in writing and only deem a commission to be earned if a customer actually purchases insurance within a specified timeframe following the referral.</p> <p>Third, the agreement should also clearly identify the timing of when the commissions will be paid to the referral source.&nbsp; The agreement could call for payment to take place on a monthly, quarterly or yearly basis.</p> <p>Fourth, the referral agreement should be for a short term, typically one year, with an option to extend the term. &nbsp;There should also be a mechanism for either party to terminate the referral agreement prior to the end of the term if the relationship is not working as intended (or for any reason).&nbsp; This limits the potential harm to both parties if one of the parties is either unable or unwilling to meet its obligations under the agreement.</p> <p>Fifth, the parties to the agreement should consider whether mutual non-piracy and nonsolicitation covenants should be incorporated into the document to protect employees from being solicited, and to limit exposure to losing business to the other party after the term of the agreement ends.</p> <p>Finally, every referral agreement should contain a confidentiality provision.&nbsp; These provisions can serve several purposes, but the main benefit of a confidentiality provision is to provide comfort to each party that the other party will not disseminate confidential information, such as commission and premium data or customer lists, to third parties, both during and for a period of time after the term of the agreement has expired.&nbsp; This is particularly valuable if the relationship between the parties ever sours.&nbsp;</p> <p>This article provides a general overview and general guidance regarding referral agreements, but note that every situation is unique.&nbsp; The key to a successful referral relationship is to ensure that the parties are compatible and that the agreement is drafted in a manner to mitigate risk while providing both parties with an opportunity to thrive.&nbsp;</p> <p>&nbsp;</p>Articles16 Mar 2018 00:00:00 -0800 Use of Referral Agreements.pdf&format=xmlProposed Rhode Island Sick Leave Regulations Fail to Provide Clarity and Will Increase Employer Headaches if Finalized<p>The Rhode Island Department of Labor and Training (DLT) has finally released its proposed regulations, <a href="">260-RICR-30-05-5</a> regarding the Rhode Island Healthy and Safe Families and Workplaces Act (the &ldquo;Sick Leave Law&rdquo;). As we alerted you in <a href=";an=69169&amp;anc=742&amp;format=xml">October</a>,&nbsp;the text of the Sick Leave Law &ndash; which will require employers with 18 or more employees in Rhode Island to provide paid sick days - leaves many key questions regarding how an employer could comply with the law.&nbsp; DLT regulations will hopefully address these issues prior to the law going into effect on July 1, 2018.&nbsp; Unfortunately, the current draft of the proposed regulations does not do so.&nbsp;</p> <p><b><i>Lingering Questions</i></b></p> <p>The proposed regulations fail to appropriately address the two biggest questions created by the Sick Leave Law &ndash; what smaller employers are required to do under the law and how the carryover and accrual provisions relate to paid time off (PTO) policies.</p> <p>First, the proposed regulations fail to address unpaid time off. The regulations specifically state that their only purpose is to clarify the <i>paid</i> provisions of the Sick Leave Law.&nbsp; No regulations or guidance has been provided yet as to the unpaid leave obligations that appear to be applicable to employers with less than 18 employees..&nbsp;</p> <p>Second, as to the exemption for the carryover and accrual provisions of certain PTO policies, the proposed regulations make clear there are two types of policies in play.&nbsp; One exemption, found in 5.4.1(B), is relatively straightforward.&nbsp; Employers can avoid the accrual and carryover provisions if the employer has a paid time off policy if:</p> <p>(a) the employee is allowed to use the time for all the protected Sick Leave Law reasons;</p> <p>(b) the employer front loads the time (gives it all to the employee on January 1<sup>st</sup> or the employee&rsquo;s start date in their first year of employment); and</p> <p>(c) all employees are given at least 24 hours of paid time in 2018, 32 hours of paid time in 2019 and 40 hours of paid time off thereafter.</p> <p>Oddly, in addition to exempting these employers from carryover and accrual provisions, 5.4.1(B) contains an exemption from &ldquo;paying employees for unused time&rdquo;, which the Sick Leave Law does not require.&nbsp; The Sick Leave Law allows the employer to avoid the carry over provisions by paying out unused time in lieu of carrying the time over, but this would clearly be irrelevant given the exemption from carryover provisions. The other exemption, found in 5.4.1(A) is more difficult to understand. Under this exemption, the regulations state that an employer with a PTO policy ) providing at least 24 hours of paid time in 2018, 32 hours of paid time in 2019 and 40 hours of paid time off thereafter is exempt from the accrual and carry over provisions, but does not require front loading of the time.&nbsp; As discussed in our prior alert, this exemption at face value would seem to render the accrual and carry over provisions irrelevant except for employers who had policies accruing time at 1 hour for every 35 hours paid and also had part-time employees, or new employees that did not accrue the 24/32/40 hour yearly minimums.&nbsp; &nbsp;Another interpretation of the 5.4.1(A) exemption is that it is intended to apply only to employers whose PTO policy is a general time off policy (allowing for paid time off that can be used for any purpose, such as taking a vacation) and the 5.4.1(B) exemption was intended to limited PTO policies (such as a sick time policy).&nbsp; This might explain why the exemption in (B) explicitly references employers being exempt from payment of unused time and (A) does not, as a different statute requires employers who offer general time off policies to pay unused time upon termination for certain employees.&nbsp; This might also help explain why the exemption in (A) does not reference use of the PTO time for sick time purposes and the exemption in (B) does.</p> <p><b><i>New Headaches</i></b></p> <p>The proposed regulations would also create four new problems for employers.&nbsp;</p> <p>The first relates to getting doctor&rsquo;s notes.&nbsp; Under the Sick Leave Law, employers can require medical documentation (signed by a health care professional) if the employee is absent for three or more consecutive sick days.&nbsp; Under the proposed regulations, an employer <i>cannot</i> ask for that documentation if the <i>total </i>cost to the employee of obtaining the documentation would be more than two and a half times their hourly rate of pay.&nbsp; In other words, if the employee makes $16 an hour, the amount of the employee&rsquo;s co-pay, tolls, mileage and copy costs to get to the doctor and obtain the note could not exceed $40.&nbsp;</p> <p>The second relates to the confidentiality issue.&nbsp; The proposed regulations only allow employers to disclose information relating to protected Sick Leave Law use as part of a defense in an administrative or judicial proceeding.&nbsp; Even then, it would only allow disclosure in the proceeding regarding the accrual, use and request to use time, as well whether the employee adhered to the existing policy regarding use, and not disclosure of the details of the illness or other reason for the absence.&nbsp; This is extremely problematic as it means that employers will not be able to respond to a valid subpoena for a personnel file.&nbsp; In addition, it will create real problems when defending a claim unrelated to the Sick Leave Law &ndash; such as a disability discrimination claim &ndash; where information contained in notes and documentation submitted in connection with a Sick Leave Law absence would be vital to the defense of the claim.</p> <p>The third relates to out-of-of state employers.&nbsp; The proposed regulations make it abundantly clear that the paid time off requirement would apply to employers &ndash; including out of state employers &ndash; with eighteen employees who either worked in Rhode Island fifty percent of the time or spent the most time working in Rhode Island, even if it was less than fifty percent of the time (which could happen if the employee worked in three or more states).&nbsp; This means employers with no office location and employees who only worked in Rhode Island part of the time (including working from home) would be subject to the law.</p> <p>Finally, the proposed regulations state that employers must accrue based upon hours <i>paid</i>not worked, meaning that employees accrue time on vacations, on sick or other leave and on holidays.&nbsp;&nbsp;</p> <p><b><i>Next Steps</i></b></p> <p>The hearing on the proposed regulations takes place on April 2, 2018 at 5:00pm and the comment period expires on April 8, 2018.&nbsp; Hopefully the DLT addresses these issues after receiving comments and implements a more comprehensive and explanatory set of regulations prior to the Sick Leave Law&rsquo;s July 1, 2018 effective date. &nbsp;&nbsp;</p>Client Alerts14 Mar 2018 00:00:00 -0800 The Pitfalls Of Pre-Employment Background Checks<em>This article was originally published on March 6 by </em><a href=""><em>Law360</em></a><em>.<br /> </em><br /> <p>A federal judge in the Middle District of Florida has allowed a class action to proceed against Amazon, on allegations that Amazon engaged in unfair pre-employment background check practices. The cases, Hargrett v. Amazon&nbsp;and Austin v. Amazon DEDC LLC (Hargrett)[1], which involve alleged technical violations of the Fair Credit Report Act, highlight the many and varied compliance challenges that employers face when conducting pre-employment background checks.<br /> <br /> <strong>Employee Background Checks and the FCRA</strong><br /> <br /> Pre-employment background checks are often used by employers to screen job candidates for job functions that involve safety, security or trust interests. These checks typically include an examination of the candidate&rsquo;s past employment, and an assessment of the candidate&rsquo;s criminal and credit histories. As such, pre-employment background checks implicate privacy rights, as these checks sometimes involve employer access to a candidate&rsquo;s personal information.<br /> <br /> Pre-employment background checks are governed by an ever-growing web of federal and state regulations. For example, many states have adopted so-called &ldquo;ban-the-box&rdquo; laws that place limits on the collection and use of a job candidate&rsquo;s criminal history. These state laws further limit when, in the hiring process, an employer may conduct a criminal background check. The&nbsp;U.S. Equal Employment Opportunity Commission&nbsp;has also issued enforcement guidelines concerning pre-employment background checks. Those guidelines prohibit an employer from conducting a pre-employment background check on a job applicant if the decision to conduct the check is based on the job applicant&rsquo;s race, national origin, color, sex, religion, disability, genetic information or age. Several states have adopted similar laws prohibiting discriminatory practices in the pre-employment background check context.<br /> <br /> One of the more complicated laws that regulate the area is the Fair Credit Reporting Act[2]. The FCRA is a federal law intended to promote the accuracy, fairness and privacy of so-called &ldquo;consumer reports&rdquo; (which the FCRA defines broadly as any information about any person collected and reported by third-party agencies, including criminal history). The FCRA also regulates the use of such consumer reports in pre-employment background checks and other employment decisions. Among other restrictions, the FCRA prohibits an employer from procuring a consumer report for pre-employment background check purposes, unless:</p> <ol> <li>A clear and conspicuous disclosure has been made in writing to the [job candidate] at any time before the report is procured or caused to be procured,&nbsp;<em>in a document that consists solely of the disclosure</em>, that a consumer report may be obtained for employment purposes; and</li> <li>The [job candidate] has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.</li> </ol> <p>15 U.S.C. &sect;1681b(b)(2)(A) (emphasis added).<br /> <br /> These highly technical and varied regulations require employers to be ever vigilant to ensure that their pre-employment background check procedures are compliant with applicable law.<br /> <br /> <strong>Enter Hargrett</strong><br /> <br /> In Hargrett, the class action plaintiffs are individuals who sought employment at Amazon&rsquo;s fulfillment center in Ruskin, Florida in 2015. In connection with their employment inquiries to Amazon, the plaintiffs were required to apply for employment through an online, electronic application form. A &ldquo;page&rdquo; of that electronic application form was titled &ldquo;Background Check Disclosure.&rdquo; The disclosure page explained to the plaintiffs that Amazon intended to conduct a criminal history background check, through a third-party vendor, in connection with their job applications. The disclosure page also asked the plaintiffs to authorize the background check by &ldquo;clicking through&rdquo; to a subsequent electronic authorization page. After selecting &ldquo;I Accept&rdquo; and &ldquo;Save &amp; Continue&rdquo; on the disclosure page, the plaintiffs were directed to a &ldquo;Background Check Authorization&rdquo; page that asked the plaintiffs, by electronic signature, to authorize the background check, and to release Amazon from certain liability. The authorization page also contained paragraphs of information concerning several state laws that regulate background checks.<br /> <br /> In their class complaint, the plaintiffs allege that Amazon violated the above-described provisions of the FCRA because Amazon failed to provide them with stand-alone disclosure or authorization forms, as required by 15 U.S.C. &sect;1681b(b)(2)(A). Specially, plaintiffs allege that:</p> <ol> <li>The background check disclosure was part of Amazon&rsquo;s general employment application form, and was not &ldquo;in a document that consists solely of the disclosure;&rdquo; and</li> <li>The authorization form included &ldquo;extraneous&rdquo; information concerning other state laws and a release of claims, and was not solely related to an authorization required by the FCRA.</li> </ol> <p>The plaintiffs do not contend that they suffered any monetary harm from the disclosure and authorization forms used by Amazon. Rather, the plaintiffs contend that Amazon, a sophisticated employer, was aware, or should have been aware, of the FCRA disclosure and authorization rules that require stand-alone forms. As such, the plaintiffs contend that they are eligible for statutory penalties as a result of Amazon&rsquo;s &ldquo;reckless&rdquo; or &ldquo;willful&rdquo; violations of these rules.<br /> <br /> Amazon moved to dismiss the class complaint, contending that the plaintiffs lacked standing to sue because they had, admittedly, suffered no actual damages. On Jan. 30, 2018, the court rejected Amazon&rsquo;s argument, concluding, in part, that Amazon&rsquo;s alleged violations of the FCRA, albeit technical in nature, implicate &ldquo;intangible damages&rdquo; sufficient to establish a valid class complaint. As a result of the decision, the plaintiffs are permitted to proceed against Amazon on a class action basis. The case remains pending, and Amazon is now subject to a class action that may involve thousands of potential claimants.<br /> <br /> <strong>The Takeaway</strong><br /> <br /> Pre-employment background checks have become a ubiquitous part of the hiring process. The Hargrett case highlights that even the most sophisticated employer can struggle with the varied and highly technical laws that govern this common employer function.<br /> <br /> Partnering with third-party vendors that specialize in pre-employment background checks may be an important resource available to assist employers. However, as Hargrett demonstrates, it is the employer that is ultimately responsible for compliance. Employers are cautioned to have their own legal counsel review all forms, electronic applications and procedures used in their hiring process, and related to background checks, on a regular basis.</p> <div><hr size="1" width="100%" noshade="" align="left" /> </div> <p>[1]&nbsp;Hargrett v. Amazon and Austin v. Amazon DEDC LLC, C.A. 8:15-cv-2456-T-26EAJ (M.D. Fl.)<br /> <br /> [2]&nbsp;Fair Credit Reporting Act, 15 U.S.C. &sect;1681 et seq</p>Articles07 Mar 2018 00:00:00 -0800 Follow Through With Commitment to Protect Net Neutrality<p>As we discussed in our January <a href=";an=73198&amp;anc=868&amp;format=xml">blog</a>, states are taking the protection of net neutrality into their own hands. This week Washington&rsquo;s Governor Jay Inslee signed the first state net neutrality bill to prevent internet service providers blocking from websites or charging more for faster delivery of certain sites, which is now permissible under the Federal Communication Commission&rsquo;s recent order repealing the rules prohibiting paid preferences, throttling, and blocking that were adopted under President Obama.&nbsp; A number of other states have proposed similar legislation, and governors in New York and Montana have signed executive actions with prohibiting such conduct. &nbsp;In addition, twenty-three states, including Massachusetts and Rhode Island, have filed of a petition for protective review challenging the repeal of net neutrality.&nbsp;&nbsp;</p> <p>The success of these state efforts remains to be seen as any laws enacted by the states and executive actions taken will unquestionably end up being litigated.&nbsp; In its order repealing net neutrality, the FCC explicitly stated that the states could not create their own rules as only the FCC has authority to oversee broadband internet services given its interstate nature.&nbsp; There are also sure to be challenges by internet service providers in favor of the repeal of the net neutrality rules, as they (and the FCC) believe the repeal will foster innovation and modernization and ultimately benefit consumers.</p> <p>As we predicted, net neutrality remains a contentious issue in 2018&mdash;stay tuned for further developments. &nbsp;</p>Blog06 Mar 2018 00:00:00 -0800