Category Archives: Ryan Duckett

SAM Alert – “The Final Rule – United States DOL Regulations Regarding Overtime Pay”

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The Obama Administration and the Department of Labor (DOL) enacted the “Overtime Final Rule” regulation 6 months ago, which was supposed to be effective as of December 1, 2016.  However, in the recently consolidated pending cases Nevada v. U.S. Department of Labor and Plano Chamber of Commerce v. Perez, on November 22, 2016, the United States District Court, Eastern District of Texas enjoined enforcement of the Final Rule.  The Court upheld the challenges against the Final Rule based on arguments in support of the 10th Amendment – limiting the power of the federal government over the states.  It appears the DOL’s regulation will note be enforced as of December 1, however the ultimate outcome and the timing as to whether the Final Rule will be enforced is unknown.  The uncertainty has several employers scrambling for immediate answers and for good reason.

By the Final Rule, 4.2 million workers nationwide currently not eligible for overtime pay will automatically qualify as “non-exempt” employees entitled to overtime pay.  If effective, California employers will be required to align their policies with the Final Rule.  This includes approximately 400,000 employees in California.

What Happens.

Previously, California employees who worked at a managerial or other executive level and were paid a base annual salary higher than $23,660 were exempt from overtime.  The Final Rule establishes a bright-line divide between exempt and non-exempt employees by placing all employees making less than $47,476 annually or $913 per week into the non-exempt category – which means they are entitled to overtime.  This is over a 200% jump from the standard salary set in 2004.  Literally, any employee making under $22.85 per hour would be entitled to overtime regardless of his or her position.

Essentially, the Final Rule forces employers to either increase the gross salaries of all exempt employees making less than the new threshold, or in the alternative to ensure all employees under the threshold are paid overtime.  However, it gets trickier.  In California, if an employee works 9 hours in one day and 7 the next day, that employee is still likely entitled to an hour of overtime even if the work week balances at 40 hours – this depends on the “regularly scheduled” work week, and whether it is a 3 or 4 day work week rather than a 5 day work week.

What To Expect.

Employers were given a chance to change their overtime policies well in advance of the effective date of this new regulation.  As the grace period ended, the District Court prolonged it – but for how long?  As of today, employees who were not properly compensated would have had the right to sue for failure to pay overtime.  Certainly, several attorneys are already searching for employers not currently in compliance with the Final Rule.  If the regulation remains in effect, employers should be prepared to face widespread litigation – potentially class actions depending on the size of your company or quasi-class actions, such as Private Attorney General Act of 2004 (PAGA) complaints regardless of the company’s size.  Employers not already adjusted for the upcoming overtime policy should monitor the recent developments knowing a potential tidal wave of lawsuits may come.

What To Do.

Employers used the “exempt” classification as an excuse to work its employees late-nights and on weekends, without keeping track of their hours.  That luxury no longer exists.  If an employee makes less than the threshold, an employer needs to have records to challenge an employee’s potential overtime claim.   Employers should immediately implement a system to monitor the hours each employee works, whether it be enacting a policy prohibiting employees from working more than 8 hours in a day and 40 hours in a week, or requiring timesheets or clocking in-and-out.

Don’t subject your company to attorneys’ fees, statutory penalties, possible class actions and not to mention your own litigation costs.  It’s simply not worth it.  Keep track of your employees’ hours, and if your pay period begins before December 1, 2016, pro-rate the increase in salary or make sure you pay overtime.

Also, the recently enacted Labor Code Section 558.1 holds individuals liable for a company’s failure to pay overtime.  These individuals include managing agents, owners, directors or officers.  For more information on Section 558.1, stand-by for further analysis from Ryan C. C. Duckett and Jeffrey F. Gersh.

Now What.

The far-reaching implications of the recent November 22, 2016 ruling by the District Court raises many concerns that cannot yet be answered, such as: If the rule is enforced, will it be retroactive as of December 1st? or, How are employers and employees affected if this ruling is appealed? or, What do employers do who have already promised overtime pay or an increase in salaries to its employees? or, Should I start paying overtime, to play it safe?

For help on complying with the Final Rule and following the developments of District Court’s decision, contact Ryan C. C. Duckett (rduckett@stubbsalderton.com) or Jeffrey F. Gersh (jgersh@stubbsalderton.com) at (818) 444-4500.  Please note that nothing herein constitutes legal advice.

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“How to Tighten Contracts & Minimize the Expense of Litigation” by Ryan C.C. Duckett

Simple Contract Drafting and Negotiation Tips

From the inception of creating a contract to the closing prior to execution, word accuracy and term clarity helps shield contracts from that not so slim chance that, my contract won’t be litigated.  Do not be so quick to “Frankenstein” a contract with a myriad of cut and pastes. A little precaution can save your client a great deal of fortune.

Introduction of Contracts: The introductory clause of a contract is as critical as the body because it identifies the parties of an agreement. What seems so simple is easy to overlook. For instance, in a 2015 celebrity case dismissed on 9/11, and affirmed in 2016 by the California Court of Appeal, Kanye West and Kim Kardashian filed suit against Chad Hurley and AVOS Systems, Inc. for broadcasting confidential video of Kanye’s marriage proposal to Kim in violation of a confidentiality provision precluding publishing any video of Kanye’s proposal before it was published by Kim’s reality TV show Keeping Up With The Kardashians. The case was decided on whether Hurley’s tweet with a link to video of the proposal was a breach of the agreement by AVOS. Although Hurley was CEO of AVOS, he never signed the agreement on behalf of AVOS – according to him – and, whether someone is acting on behalf of a company is a question of facts, which means, it’s for a jury to decide[1]. Hurley was found liable but his company AVOS got off scot-free. Seriously? How could it be more obvious what was intended by Kanye and Kim? Simple…A quick definition defining all parties at the onset of the contract removes any question of fact, making it clear who the agreement binds.

Terms of Contracts: The terms of a contract should be as black and white as the paper it’s on. Many common words such as “material”, “full disclosure” or “efforts,” originally thought of as pinpointing the intentions, recently are vastly becoming more diluted from overuse, leaving too much room for interpretation. For example, what is material to one may not be so material to another, especially in contracts when interests are adverse and what one cares about, the other does not. Unfortunately, parties wait until the heat of litigation until clarifying what was originally intended.

By way of another example: Q. How are best efforts different from reasonable efforts?When parties enter into an exclusive distribution agreement, they like to set the tone for the distributor about the “efforts” the distributor must apply. Although California courts have yet to divulge into intricacies behind levels of effort, New York courts have and find it “murky.” Under the Uniform Commercial Code § 2-306(2), the producer may want to remain silent on the degree of effort to be expended by the distributor because it requires “best efforts…unless otherwise agreed.” In an original case defining best efforts, Falstaff Brewing Co. bought Ballantine brewing labels, trademarks, and everything else but the beer, with a promise to use “best efforts” to distribute it. Well, along came Guinness beer with an unprecedented low price. Falstaff intuitively succumbed to distributing the lower priced beer. Falstaff, however, was held in breach for failing to continue selling Ballantine, even though Falstaff was forced to incur an economic loss by doing so.[2]

Where parties have contracted to use a lesser degree of efforts, such as ”reasonable efforts” or “commercially reasonable efforts,” the courts held that such efforts are “interchangeable” with “best efforts.”[3]  Bottom line being to expressly articulate criteria intended to qualify as meeting your client’s “justifiable expectations,”[4]instead of leaving it to a precarious chance by courts’ “case by case” rulings.

Dispute Resolution of Contracts:  At the negotiation stage, many parties try to rush through the dispute resolution terms in the face of a breach, hoping this will never be the case. Coincidentally, this is the best and only time to negotiate such difficult terms. In a February 18, 2016 case initiated by Allstate Insurance for an insured’s alleged breach, the Defendants successfully dismissed the action immediately when the trial court ruled that a pre-litigation demand letter adequately satisfied the terms to enter into “good-faith negotiations” before filing a lawsuit.[5] Literally, “good faith negotiations before filing a lawsuit” really means an agreement to try to agree, but requires no back and forth process. If you want more good faith interaction before someone races to file a lawsuit, the contract should explicitly state each step a party must take.

Although, only a few primary examples are discussed, there are frequent circumstances that ultimately lead to litigation resulting from contracts using common pitfalls. Taking the time to contact an attorney like those at Stubbs Alderton & Markiles, LLP, may be the solution to tighten a contract enough to minimize the potential expense of litigation.

________________________________

151215-Stubbs-116-retouched_600x400For any further information on tips or avoiding litigation, contact Ryan C. C. Duckett at rduckett@stubbsalderton.comor 818-444-4546. Ryan Duckett is an attorney of Stubbs Alderton & Markiles, LLP. Ryan’s practice focuses primarily on employment, commercial, intellectual property and entertainment litigation. He has successfully litigated cases for both plaintiffs and defendants with trials and appellate experience that has secured over millions of dollars in jury verdicts for his clients, to arguing California jury instructions that were created by the case he second chaired.  He manages and handles all aspects of civil actions from pre-litigation matters to law & motion to trials, post-trials & appeals.

 

[1] Pacific Concrete Products Corp. v. Dimmick (1955) 136 Cal.App.2d 834, 838.

[2] Bloor v. Falstaff Brewing Co. (1979) 601 F.2d 609, 609-613.

[3] Samson Lift Tech., LLC v. Jerr-Dan Co. (Sup. Ct. 2014)

[4] E. Allan Farnsworth, Contracts § 7.17 (3d Ed. 2004)

[5] Allstate Ins. Co. v. Berg (Cal.1st.Dist., Div. 4, Feb. 2016 – affirmed)

The contents of this article do not constitute legal advice and are not intended to be used as a substitute for specific legal advice or opinions.

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“How to Tighten Contracts & Minimize the Expense of Litigation” by Ryan C.C. Duckett

Simple Contract Drafting and Negotiation Tips

From the inception of creating a contract to the closing prior to execution, word accuracy and term clarity helps shield contracts from that not so slim chance that, my contract won’t be litigated.  Do not be so quick to “Frankenstein” a contract with a myriad of cut and pastes. A little precaution can save your client a great deal of fortune.

Introduction of Contracts: The introductory clause of a contract is as critical as the body because it identifies the parties of an agreement. What seems so simple is easy to overlook. For instance, in a 2015 celebrity case dismissed on 9/11, and affirmed in 2016 by the California Court of Appeal, Kanye West and Kim Kardashian filed suit against Chad Hurley and AVOS Systems, Inc. for broadcasting confidential video of Kanye’s marriage proposal to Kim in violation of a confidentiality provision precluding publishing any video of Kanye’s proposal before it was published by Kim’s reality TV show Keeping Up With The Kardashians. The case was decided on whether Hurley’s tweet with a link to video of the proposal was a breach of the agreement by AVOS. Although Hurley was CEO of AVOS, he never signed the agreement on behalf of AVOS – according to him – and, whether someone is acting on behalf of a company is a question of facts, which means, it’s for a jury to decide[1]. Hurley was found liable but his company AVOS got off scot-free. Seriously? How could it be more obvious what was intended by Kanye and Kim? Simple…A quick definition defining all parties at the onset of the contract removes any question of fact, making it clear who the agreement binds.

Terms of Contracts: The terms of a contract should be as black and white as the paper it’s on. Many common words such as “material”, “full disclosure” or “efforts,” originally thought of as pinpointing the intentions, recently are vastly becoming more diluted from overuse, leaving too much room for interpretation. For example, what is material to one may not be so material to another, especially in contracts when interests are adverse and what one cares about, the other does not. Unfortunately, parties wait until the heat of litigation until clarifying what was originally intended.

By way of another example: Q. How are best efforts different from reasonable efforts? When parties enter into an exclusive distribution agreement, they like to set the tone for the distributor about the “efforts” the distributor must apply. Although California courts have yet to divulge into intricacies behind levels of effort, New York courts have and find it “murky.” Under the Uniform Commercial Code § 2-306(2), the producer may want to remain silent on the degree of effort to be expended by the distributor because it requires “best efforts…unless otherwise agreed.” In an original case defining best efforts, Falstaff Brewing Co. bought Ballantine brewing labels, trademarks, and everything else but the beer, with a promise to use “best efforts” to distribute it. Well, along came Guinness beer with an unprecedented low price. Falstaff intuitively succumbed to distributing the lower priced beer. Falstaff, however, was held in breach for failing to continue selling Ballantine, even though Falstaff was forced to incur an economic loss by doing so.[2]

Where parties have contracted to use a lesser degree of efforts, such as ”reasonable efforts” or “commercially reasonable efforts,” the courts held that such efforts are “interchangeable” with “best efforts.”[3]  Bottom line being to expressly articulate criteria intended to qualify as meeting your client’s “justifiable expectations,”[4] instead of leaving it to a precarious chance by courts’ “case by case” rulings.

Dispute Resolution of Contracts:  At the negotiation stage, many parties try to rush through the dispute resolution terms in the face of a breach, hoping this will never be the case. Coincidentally, this is the best and only time to negotiate such difficult terms. In a February 18, 2016 case initiated by Allstate Insurance for an insured’s alleged breach, the Defendants successfully dismissed the action immediately when the trial court ruled that a pre-litigation demand letter adequately satisfied the terms to enter into “good-faith negotiations” before filing a lawsuit.[5] Literally, “good faith negotiations before filing a lawsuit” really means an agreement to try to agree, but requires no back and forth process. If you want more good faith interaction before someone races to file a lawsuit, the contract should explicitly state each step a party must take.

Although, only a few primary examples are discussed, there are frequent circumstances that ultimately lead to litigation resulting from contracts using common pitfalls. Taking the time to contact an attorney like those at Stubbs Alderton & Markiles, LLP, may be the solution to tighten a contract enough to minimize the potential expense of litigation.

________________________________

151215-Stubbs-116-retouched_600x400For any further information on tips or avoiding litigation, contact Ryan C. C. Duckett at rduckett@stubbsalderton.com or 818-444-4546. Ryan Duckett is an attorney of Stubbs Alderton & Markiles, LLP. Ryan’s practice focuses primarily on employment, commercial, intellectual property and entertainment litigation. He has successfully litigated cases for both plaintiffs and defendants with trials and appellate experience that has secured over millions of dollars in jury verdicts for his clients, to arguing California jury instructions that were created by the case he second chaired.  He manages and handles all aspects of civil actions from pre-litigation matters to law & motion to trials, post-trials & appeals.

 

[1] Pacific Concrete Products Corp. v. Dimmick (1955) 136 Cal.App.2d 834, 838.

[2] Bloor v. Falstaff Brewing Co. (1979) 601 F.2d 609, 609-613.

[3] Samson Lift Tech., LLC v. Jerr-Dan Co. (Sup. Ct. 2014)

[4] E. Allan Farnsworth, Contracts § 7.17 (3d Ed. 2004)

[5] Allstate Ins. Co. v. Berg (Cal.1st.Dist., Div. 4, Feb. 2016 – affirmed)

The contents of this article do not constitute legal advice and are not intended to be used as a substitute for specific legal advice or opinions.

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