Katie & Chris Driver attended the annual ‘Playground Ball’, supporting Hale House, Hope House and the Columbia County Community Connections on friday, March 17 2018.
In four decisions rendered by the Georgia Court of Appeals during the week of March 5, 2018, clients of Hull Barrett obtained excellent outcomes.
One case involved a forest products manufacturing facility that was being sued by neighbors for nuisance, trespass and negligence. The Georgia Court of Appeals held that because the facility had been in existence prior to the construction of the neighbors’ residences, O.C.G.A. § 41-1-7 applied and the neighbors’ claim for nuisance was barred. The claims for negligence and breach of trespass were barred because of an inability of the plaintiffs to show a breach of any standard of care by the defendant in the operation of the facility.
In another case, Hull Barrett represented a company that supplied management services to a local hospital. A physician was terminated during a layoff by the hospital, and she filed suit claiming that her termination was based on her status as a whistleblower who had made complaints about patient referral requirements. The Georgia Court of Appeals exonerated the Hull Barrett client because there was no evidence that the executive who made the decision to terminate the physician had any knowledge of prior complaints she may or may not have made. The client was also absolved for any allegedly slanderous comments made by the executive.
In a third appeal, Hull Barrett represented a family member who brought suit contending that the executor of a deceased family member’s estate had misappropriated estate funds and breached fiduciary duties. At the trial court, Hull Barrett’s client obtained a substantial verdict of $206,000 in compensatory damages, $97,000 in attorney fees, and $12,500 in punitive damages. Upon appellate review, this verdict was upheld in its entirety by the Court of Appeals.
Lastly, the Court of Appeals upheld a verdict in favor of the Augusta Housing Authority, a Hull Barrett client, in a case in which a tenant challenged a dispossessory judgment that had been obtained in the trial court.
Hull Barrett is proud to lend a helping hand to the American Red Cross (Augusta Chapter) for their help & support to all of those affected by Hurricane Harvey. Our thoughts will be with Susan Jernigan & her team of volunteers as they head to Texas to assist. Donations are still welcome – see their website for more details.
As his nominators say, ” among fellow lawyers, members of the bench and citizens at large, there are a few, if any, who do not admire Neal Dickert for his many exceptional qualities: his kindness and humility; his service to his fellow citizens and his country; his service to his profession; and service to those throughout the community who need a helping hand.” Returning the the Augusta law firm Hull Barrett P.C. in 2008, Neal W. Dickert concentrates his practice in civil litigation, arbitration, and mediation. Dickert served for eleven years as Judge of the Superior Court for the Augusta Judicial Circuit from January 1997 to November 2007 where he presided over civil, criminal, and domestic cases, including over 100 jury trials.Before his judicial service, Dickert practiced for more than twenty years with Hull Towill Norman & Barrett, P.C. from Augusta 1974 to 1996, handling matters in the State and Federal courts of Georgia and South Carolina. A trained mediator since 1994 he has mediated extensively, is listed in The Best Lawyers in America – Mediation and is a Paul C. Harris Fellow of Rotary International.
Judge Dickert received his J.D. from the University of South Carolina in 1974 and was a member of the South Carolina Law Review and Wig and Robe Scholastic Honorary Society. He earned his M.B.A from the University of South Carolina in 1969 and B.A. in Economics from the Wofford College in 1968. Judge Dickert is a U.S. Army veteran who served as First Lieutenant in the U.S. Army Medical Service Corps from 1969 – 1971 and with the Medical Group Headquarters in Vietnam from July 1970 until July 1971. He received the Bronze Star and Vietnam Service Medal. He was admitted to the South Caroline Bar in 1974 and the Georgia Bar in 1975.
Serving the Community
Dickert has served on the Board of Managers for nine years and as President for one and a half years for the Tuttle-Newton Home that started as an orphanage in 1852 and now serves families and at-risk children by providing scholarships, emergency assistance, and other financial help. He serves as Secretary of the Board of the Augusta Partnership for Children that fosters cooperation among groups serving at risk families and combats teen pregnancies. He and two other lawyers started the Augusta Bar Foundation three years ago which how has an endowment of over $100 000 and has given grants to organizations serving at risk youth. He serves on the Disciplinary Board of the Episcopal Diocese, handling clergy disciplinary issues with the diocese and is a frequent speaker at local public schools and works with Communities in Schools.
Over the years, Dickert has served on the Board of Trustees of the Institute of Continuing Judicial Education for Georgia (Chairman, 2005 -2007), Board of Governors of the State Bar of Georgia (1986-1990), president of the Augusta Rotary Club (1991-1992) and the Wofford College Alumni Association (President, 1996-1997). He has also served on the Board of Directors of the University of South Carolina Law School Association (1992-1998) and as a Senior Warden of the Church of the Good Shepherd (2004-2007).
Married to the former Floride Clarkson for 47 years, they have one son, Dr. Neal W. Dickert, Jr., an Assistant Professor of Cardiology at the Emory University School of Medicine.
See profile here
-Published in the 18th Annual Justice Robert Benham Awards for Community Service Reception Program, Feb 28, 2017
Trade Secret Misappropriation Recourse and Whistleblower Protection
New Legislation Impacting Business
All businesses have intellectual property and trade secrets. A company is in business because it is offering something of “value” which can be a number of things from product to process to promotion. For example, proprietary software, product systems, new product generation, or even client lists. The loss or misappropriation of such can be devastating to the success and profitability of a company.
In a measure to further protect businesses, the Defend Trade Secrets Act (DTSA) of 2016 was signed into law on May 11, 2016 after being unanimously passed in the Senate and ratified in the House. It creates a federal cause of action for trade secret misappropriation. The central provision of the DTSA will be codified as 18 U.S.C. § 1836(b) and reads:
An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.
What this Means
A “trade secret” means “all forms and types of financial, business, scientific, technical, economic, or engineering information … if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.”
Misappropriation includes: without permission (A) obtaining a trade secret that was knowingly obtained through improper means or (B) disclosing or using a trade secret with knowledge that either (1) it is a trade secret or (2) it was obtained through improper means. The “improper means” include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” However, misappropriation does not include “reverse engineering, independent derivation, or any other lawful means of acquisition.”
The DTSA also creates an ex parte seizure procedure for use in extraordinary circumstances where the party against whom the seizure is ordered would “destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person….”
Protection for Whistleblowers Under DTSA
The DTSA seeks to protect whistleblowers from criminal or civil liability for disclosing a trade secret if the disclosure is made for purpose of reporting a violation of law. Employers have an affirmative duty to provide employees notice of the new immunity provision in “any contract or agreement with employee that governs the use of a trade secret or other confidential information.” Failure to comply means that the employer may not recover exemplary damages or attorney fees in an action brought under the DTSA for theft of trade secrets against an employee. The definition of “employee” is drafted broadly to include contractor and consultant work performed by an individual for an employer.
What Companies Should Do Next
Companies should update their employment manuals, employment agreements and confidentiality agreement to disclose the whistleblower immunity provisions in the DTSA. Otherwise the company is not eligible to recover double damages or attorney fees in trade secret litigation.
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A current trend in design and marketing are simplified corporate logos or typeface logos. Take Hull Barrett’s logo as an example:
The words “Hull Barrett Attorneys” in the logo are a typeface and not an artistic element like the peach in the State of Georgia’s logo. Due to this trend, companies often inquire about protecting intellectual property in font or typeface logos.
The Background of Using Font and Typeface Logos
Typefaces and fonts are often used to create logos, designs, and graphics. Such designs are protectable as a form of artistic and intellectual property. There is much confusion, however, regarding typefaces and fonts—particularly who has the rights to use them. Many people are not informed of the law governing the use of typefaces and fonts. Not all typefaces or fonts may be used freely without license to do so. Those interested in intellectual property rights in fonts and typefaces include type designers, lettering artists, punch-cutters, calligraphers, software developers, as well as persons or entities interested in trademark protection of names and logos written in certain typefaces.
What is the Difference Between a Font and a Typeface?
The terms “font” and “typeface” are often used interchangeably. While the colloquial definitions are nearly identical, the difference between the definitions in a legal sense is significant. Put plainly, a typeface refers to the way that a set of characters (sometimes called “glyphs”) appears on paper or a computer screen. Some examples of typefaces are Arial®, Times New Roman®, Helvetica®, and Lucida®. A font, however, is a computer program or software that instructs a printer or computer display the manner in which a glyph or character is intended to be shown. Consequently, what people generally refer to as a “font” in conversation is actually a “typeface.”
Are Fonts and Typefaces Protected by Federal Copyright Law?
Congress has determined that “typefaces as typefaces” are not protectable under United States copyright law. Federal courts, on the other hand, have found that font software programs are protectable under federal copyright law because they are original works of authorship due to the creativity and artistry involved in their creation. Therefore, persons and entities that create typefaces should be aware that they do not have any copyright in such typefaces. But, those that create font software should consult an attorney in order to register and protect from infringers the copyrights that they have in font software.
Are Fonts and Typefaces Protected by Federal Trademark Law?
While copyright law deals with how a typeface or font is written, United States trademark law can protects the name of the typeface or font. Some examples of typefaces which have been registered with the United States Patent and Trademark Office (“USPTO”) include Times New Roman®, Helvetica®, and Lucida®, while some examples of font software include Wingdings® and Helvetica®. The owners of these trademarks may license the trademarks to software programs that use the typefaces. However, this presents the problem that infringers need only to change the name of the typeface or font when using them to skirt the protections of trademark law.
Trademarks can be registered in a stylized design or typeface, or in block lettering. If a trademark is registered in block lettering, its owner enjoys trademark protection regardless of the typeface in which the mark is written. The waters get muddied when you consider that typefaces are commonly used as part of a logo or design. For example, the iconic Coca-Cola® logo mark, which has been registered numerous times, is written with specific cursive characters. As mentioned before, the typeface itself is not subject to copyright protection in the United States, but the logo design in its entirety is protected as by United States trademark law. Thus, trademark law can protect the design of a typeface so far as its use in a design, but not the typeface itself.
Typefaces themselves are not protectable under United States copyright or trademark law. However, the names of the typefaces are protectable by trademark law, and the font software used to produce the typefaces is protectable under copyright law. Those that create typefaces and font software, or design trademark logos should consult an attorney to help protect their intellectual property rights.
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 37 C.F.R. § 202.1(e).
 Adobe Sys. v. Southern Software, Inc., 1998 U.S. Dist. LEXIS 1941, 45 U.S.P.Q.2D 1827 (N.D. Cal. Feb. 2, 1998).
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Changes to the Overtime Rules are Here
On May 18, 2016, the Department of Labor announced the Final Rule defining and delimiting the changes in overtime exemption for Part 541 (“white collar workers”).¹ The new regulations significantly impact white collar overtime rules by more than doubling the salary threshold that would exempt an employer from paying employees overtime. Prior to the new rules, if an employee qualified as a white collar employee, and had a salary more than $23,660 annually, then they were exempt from overtime pay. The new rule changes that threshold to the 40th percentile of earning for full-time salaried workers for the lowest wage Census Region (currently the South), which is $47,476.00 annually ($913 weekly).² The threshold will be automatically updated every three years. However, the Final Rule allows employers to satisfy up to 10% of the standard salary requirement with non-discretionary bonuses, incentive payments and commissions so long as they are paid at least quarterly.
What the Change Means to Businesses
The effective date of the Final Rule is December 1, 2016. Employers should be taking action now to prepare. The change in the overtime threshold for white collar employees will impact employers differently depending on the number of employees to be newly classified as non-exempt. It is likely that the change may be felt more acutely by the retail and restaurant industries.
Cost to Employers
The cost to employers to incorporate overtime changes will vary depending on their industry size, sector and employee distribution. However, the change itself is generally applicable and many businesses and employees will experience a substantial financial impact. Accordingly, when CSRA businesses are budgeting, they should certainly consider the increased expense from the number of employees who are either given a raise above the new threshold to remain exempt or paid overtime because they are suddenly nonexempt. Employers should also factor in the cost of initial compliance to include the changes in human resource and payroll. For many businesses, there may also be cost associated with the possible increase in salary for employees up the chain if lower level employees receive raises because of the regulation.
One additional challenge that businesses may face is the net negative impact on morale on staff from changes since many formerly exempt white collar employees will now be forced to “punch a clock.” Some managers will now have to keep up with their lunch breaks, etc. and many will likely take issue with it. However, if businesses focus some attention to their planning and roll out efforts they may more easily be able to highlight the positive aspects of the changes.
Steps to Prepare for the Overtime Changes
- Gather and assess information such as employee salary and total working hours. Taking the pulse of the organization is a great place to start. Businesses should start to look at salary and benefit information to get an idea of how to most efficiently pay employees. An employer should also take a close look at the hours of employees to assess how much time an employee spends both in the office and at home working. Remember, responding to emails from cellular devices or home computers are a part of total working hours.
- Gather information about the actual duties of employees. An organization should take a close look at the duties of employees. The goal is to discover the actual activities performed in a position, not the written descriptions of the position, which are often outdated. This step is important to determine how best to redistribute employees in the most efficient manner.
- Consider the Types of Changes Possible for your Organization to Comply with the Rules.
a. increase the salaries of currently exempt employees to the new threshold;
b. reclassify exempt employees as nonexempt and pay them hourly;
c. change staffing to eliminate the need for overtime;
d. change benefit plans.
The stage is set, and all of the actors in this production – regulatory agencies, employers and employees – must get ready to play their part. It is imperative that local businesses take the time to familiarize themselves with the changes and start to take stock of their positions so that they can avoid the potentially crippling financial consequences of non-compliance.
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¹ The official document is scheduled to be published in the Federal Register on 05/23/2016 and will be made available online at http://federalregister.gov/a/2016-11754.
² The number was based on data from the fourth quarter of 2015.
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In a decision in November 2015, the Georgia Supreme Court has provided for a greater understanding of Georgia’s Emergency Room statute, O.C.G.A § 51-1-29.5. That statute provides tort immunity arising out of emergency medical care unless the physician or other health care provider is shown by clear and convincing evidence to have been guilty of gross negligence as opposed to ordinary negligence.
The Case – What Happened at the ER
In this case, a six month old child fell while in the custody of a babysitter and was taken to the Phoebe Putney emergency room. A physician assistant examined the child and found no signs of the need to be examined by a physician or for more testing, and the child was discharged. The child appeared normal for the next two days but then stopped breathing and was readmitted to the hospital where the child was found to have a skull fracture and surgery was performed. The child suffered brain damage and now suffers severe developmental deficiencies including an inability to walk or talk.
The Takeaways – ER Statute
In the trial court, it was held that the hospital and its staff were not entitled to the heightened scrutiny of the ER statute. The Georgia Court of Appeals reversed, and the Supreme Court of Georgia affirmed that reversal. In doing so, the Supreme Court provided the following guidance:
- Routine medical services provided in an ER setting do not receive the benefit of the statutory protection. An example would be routine flu shots administered in an ER.
- If patients present themselves and assert that they require emergency care, the protection of the statute will generally be available, even if the diagnosis at the time is that the patient did not require, or no longer needs, emergency treatment. Even if the health care provider mistakenly concludes that the patient has stabilized or does not require emergency treatment, the statute will provide protection if “objectively” the patient appeared to initially need “emergency medical care.”
- While the health care provider’s subjective opinion regarding the patient’s condition is not controlling, it will be relevant evidence to be considered by the trial court.
- The patient’s symptoms or diagnosis after emergency department care will not be relevant to the question of whether the patient presented for emergency medical treatment initially.
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What About It?
When you or your company is presented with a form contract prepared by the other side in a transaction, red flags should go up. This is because the other side in the transaction has had its lawyers draft the form contract in order to maximize the interest of that party – that is what lawyers usually do for their clients.
Maximizing interest can take the form of setting forth only the obligations of the opposing party without setting performance obligations for the drafting party. Or a form contract often limits the damages that may be pursued against the drafting party without setting similar limitations for the opposing party.
Here are some additional items to be on the lookout for:
Indemnity and Hold Harmless Provisions in a Form Contract
The other side will often insert language that you or your company will be responsible for any and all claims that arise out of the contractual arrangement. Don’t agree to it. It is certainly appropriate for you to agree to be responsible for any claims that arise out of your errors or omissions, but you do not want to be in the situation of agreeing to hold harmless or indemnify some other party for its shortcomings.
Venue and Jurisdiction in a Form Contract
Many times a form contract will state that any dispute about the contract or its performance shall be brought exclusively in the home courts of the other party. Don’t agree to it. You never want to agree that you can be hauled into court in some distant place where the cost of litigation and inconvenience is far greater than would otherwise be the case. The best rule is for the contract to be silent on courts and venue as there are general principles of law that allow either party to bring a claim in a court that has significant contacts with the subject matter of the dispute and where the parties are registered or have done business. At the worst, try to compromise so that any claims against you must be brought in your home county, and any claims against the other party to the contract will be brought in its home county.
Arbitration Clauses in a Form Contract
Arbitration is another way for disputes to be resolved privately rather than in a court. One of the main drawbacks of arbitration is that the parties have to pay the fees of the arbitration company and for the arbitrator(s). Except for a relatively modest filing fee, the courts and judges are free – subsidized by all taxpayers. Also, if arbitration is agreed to, it is much more economical to conduct arbitration under the arbitration code of the state where the matter will be heard rather than to use the American Arbitration Association or some other arbitration group which charges stiff up-front fees and significant hourly rates for the one or three arbitrators who preside. Arbitration under the law of the state gives the same protection as arbitration in general, but administration fees to an outside company are avoided and the parties together can select the arbitrator or have one appointed by a local court.
These are not the only items of concern that might be found in a form contract, but they are three that often arise.
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Focus of Estate Planning Shifts
As many of you have heard, recent tax law changes are turning traditional estate planning on its head – causing a shift in attention from an estate tax focus to an income tax focus. Planning techniques long considered wise – e.g., shifting wealth to younger generations while senior family members are still alive or automatically leaving assets to a bypass “credit shelter” trust – may no longer be necessary to save estate tax and could now leave many families paying income tax they would not otherwise owe. Chances are, if you have accumulated modest wealth, your existing estate planning documents drafted prior to 2013 contains planning techniques that are out of date.
The New Law Changing Estate Tax
The legislative deal Congress passed in January 2013 set the top estate and gift tax rate at 40% and raised the exemption to $5 million per person, adjusted for inflation. It now stands at $5.43 million and will rise to $5.45 million in 2016. That means an individual can leave $5.45 million to heirs and pay no federal estate or gift tax. Not only will this exemption rise with inflation, but spouses can now share–and effectively inherit through a portability election–each other’s exclusions. In other words, a married couple will be able to shield $10.9 million from federal estate and gift taxes before the 40% rate will kick in.
As a result, the federal estate tax is no longer the biggest concern for most Americans who want to avoid taxes on wealth they leave to heirs. In fact, according to the Tax Policy Center, only about 4,000 estates, or approximately .14% of the total, are expected to owe federal estate tax this year. To provide perspective, 2.3% of estates were subject to tax in 1999 and 7.65% in 1976, according to the Tax Policy Center.
Income Tax Focused Planning
Although the legislative deal Congress passed in January of 2013 provided a generous estate and gift tax exemption, it also raised the top income tax rate on long-term capital gains to 20% – its highest level since 1997. With the new 3.8% net investment income tax that took effect as a part of the Affordable Care Act, the top rate on long-term capital gains from investments is now 23.8%, up from 15% in 2012. As a result, a main focus of current estate planning is what some practitioners refer to as “freebasing” – or utilizing planning techniques so that it frees survivors to get the most income tax savings from the step-up in basis of the decedent’s property. In other words, while historical planning techniques oftentimes arranged for assets to be excluded from a loved one’s estate, under the new law, the greatest tax savings is now most often achieved through planning for estate inclusion, and minimizing capital gains.
For example, when you sell an asset such as stock, you owe capital gains tax on the difference between what you paid for it (its basis) and the sales price. If you inherit certain assets you can “step up” the decedent’s tax basis to whatever the asset is worth at death. Thus, highly appreciated inherited property can be sold immediately with no capital gains (or later, with all the gains before you inherited it disregarded). On the other hand, if you receive property from a living donor, or receive a remainder interest from a standard “credit-shelter” trust, you do not get the stepped up basis and can result in significant capital gains tax.
Do not fall victim to the trap that estate planning is just about reducing estate taxes. Just because you do not have a taxable estate, does not mean that your existing estate documents still suit you. While the true meaning of estate planning is more about people and relationships than about cold, hard numbers, if you are not diligent with your estate planning, you could be losing a stepped up basis in appreciated assets. These new rules are complex, but they present tax-saving opportunities that many people planning estates remain unaware of.
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Starting in 2012, the editor of the Georgia Perimeter College student newspaper commenced open records requests for documents concerning a $25 million budget shortfall at the College and personnel layoffs. The request for document by Schick was expansive and would have been costly to fulfill. For example, the documents covered a period of time of approximately six years. College and Board of Regents representatives discussed with Schick that he might want to narrow the scope of his request and the amount he would have to pay to have the documents provided. As the Board undertook these discussions with Schick, the Board never invoked any statutory exemption to withhold any of the requested documents. Ultimately, with the assistance of counsel, the Board’s cost estimate to produce the documents was reduced from approximately $2,500 to $291.
The Board then began the process of reviewing and providing documents to Schick. By February 2013, the Board had produced over 12,000 pages of documents and it notified Schick that the compliance with his request was complete.
Schick believed there were certain “missing” documents and filed suit in June 2013 seeking complete production of documents responsive to his request. In its answer, the Board asserted that some documents were withheld under O.C.G.A § 50-18-72(a)(4) [for law enforcement, prosecution or regulatory agency pending investigation documents], and the Board produced an additional 713 pages of documents.
The case went to trial in Superior Court. The trial court found that the Board had violated the Open Records Act by failing to timely designate specific exemptions upon which it relied to withhold documents, and imposed a $1,000 penalty. The trial court did agree that the Board could withhold documents under the “pending investigation” exception, and Schick appealed.
On appeal, the key holdings of the Court in connection with the Open Records Act were these:
- The Court reaffirmed that the Open Records Act is to be broadly construed in favor of allowing inspection of government records, and any exceptions should be narrowly interpreted.
- One purpose of the Act is to make the production of records expeditious.
- The Court did not accept the argument that the Board of Regents was a “regulatory agency” for purposes of the pending investigation exception in 50-18-72(a)(4).
- And most importantly, the Court of Appeals rejected the argument that some documents were exempt just because the Board had shared these documents or provided them to “a law enforcement agency.” The Court of Appeals said that the exemption in (a)(4) is for records of a law enforcement, prosecution or regulatory agency, and not records merely related or pertaining to an investigation.
- There is a separate exemption in 50-18-72(a)(3) of records “compiled for” law enforcement purposes, but these are limited to documents that would identify a confidential source, disclose confidential investigation or prosecution material that would endanger life or physical safety, or that would disclose a confidential surveillance or investigation.
- The Court of Appeals affirmed the trial court’s refusal to impose attorney’s fees on the Board for the amount of time it took to produce the voluminous records. The Court found that the Board had worked diligently including nights, weekends and holidays to provide documents.
- However, the Court of Appeals did remand the case for the trial court to determine if attorney’s fees should be assessed because of the Board’s invalid reliance on withholding some records based on the pending investigation exception.
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Current Overtime Law
The Fair Labor Standards Act (FLSA) requires that covered, nonexempt employees in the United States be paid at least the Federal minimum wage for each hour worked and receive overtime pay at one and one-half times the employee’s regular rate of pay for all hours worked over 40 in a workweek. However, there are a number of overtime exceptions to this rule. For example, the current law does not require employers to pay overtime compensation to executive, administrative, professional and outside sales employees who are paid on a salary basis and receive more than $23,660.00 per year or $455.00 per week, even if they work over 40 hours. See 29 U.S.C. 213(a)(1). This is referred to colloquially as the “white collar exemption.”
Overtime Exemption Change
The Department of Labor (DOL) proposes to more than double the salary level that would qualify white collar workers for overtime exemption. Among other things, the proposal sets the standard salary level equal to the 40th percentile of earnings for full-time salaried workers as of 2016, which is projected to be $970 per week, or $50,440.00 annually for a full-year worker. More importantly, in order to prevent the salary levels from becoming outdated, the DOL is proposing to include a mechanism to automatically update the salary and compensation thresholds on an annual basis. The DOL estimates that during the first year alone, 4.6 million currently exempt workers would become non-exempt and entitled to minimum wage and overtime protection under FLSA, without some intervening act by their employers. See Federal Reg. Vol. 80, No. 128 (Mon. July 6, 2015).
Impact on Business
The period for public comment on the proposal closed on September 4, 2015, and the proposed change attracted both praise and criticism from worker’s groups and businesses. The comment period also served to demonstrate some of the confusion that exists under the current regulation such as the mistaken belief that payment of a salary automatically disqualifies an employee from overtime pay; or that if a white collar employee is in fact nonexempt she would have to be converted to hourly pay. See Federal Reg. Vol. 80, No. 128 (Mon. July 6, 2015). The specific impact of the proposed changes on the CSRA is difficult to project, but the potential impact could be staggering for some businesses. The pending approval of the rule would be a good time for local businesses to reassess the exemption status of their employees in preparation for the change, which many believe to be inevitable.
Since the ultimate burden of proof for the actual application of an exemption rests on the employer, employers should begin evaluating the exemption status of employees as soon as possible so that they have enough time to adjust to the proposed rule. While the proposed bright-line salary test is one step of meeting exempt status, it works in concert with the “duties test.” As was previously the case, job titles, descriptions and paying a salary versus an hourly rate are not determinative of exemption status. In order to qualify as exempt under the proposed rule, an employee must not only meet the more than doubled pay requirement, but employees must also continue to meet certain tests regarding their job duties. There is potential for employees/positions that have traditionally been exempt to be treated as non-exempt for the first time in their careers or the history of the position.
The new overtime white-collar exemption rule will be issued approximately July 2016, according to the U.S. Department of Labor’s fall 2015 regulatory agenda. The DOL may also make some changes to the “duties test,” which have yet to be proposed. The proposed change is particularly relevant in Georgia and South Carolina where the annual pay is often less than the national average. The bottom line is that it matters, and moving forward, employers should pay close attention to employee’s job functions and make sure they brace for the impact of change to their current classification structure. A specific strategy is based on the needs of each individual business, but reclassification will require an effective roll-out strategy for all. As the DOL gears up to double down on overtime exemption, CSRA businesses should not gamble with their economic security. Businesses should be prepared to incorporate a communication plan, maintain proper documentation of the reclassification and schedule training regarding policies affecting employees.
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Navigating a workplace incident can be a company’s nightmare. Claims of workplace injury, harassment, hostile work environment, OSHA violations, or the like put employers on pause as to the manner of properly handling legal proceedings. This is compounded when opposing attorneys interview company employees about the workplace incident without the presence and/or permission from the company’s counsel to interview such employees (commonly referred to as ex parte communications).
Ex parte communications can result in more than a few harmless comments. The interviewing attorneys may call upon these employees as liability witnesses at trial—often on cross examination. Under Georgia agency law, the statements and actions of employees regarding incidents for which an employer may be liable can be attributed to the employer. And, statements made by these employees are admissible at trial if it concerns a matter within the scope of the employment and is made during the time of employment. Thus, employees may make statements during ex parte communications with attorneys without the presence of defense counsel that could potentially be damaging to the company in a subsequent trial.
Know the Ethical Violations of Ex Parte Communications
Lawyers must subscribe to ethical standards, and pursuant to Georgia Rule of Professional Conduct 4.2(a), “[a] lawyer who is representing a client in a matter shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or court order.” Comment 4A to this rule clarifies that a lawyer cannot have ex parte communications with:
- Officers, directors, managers, and supervisors.
- Employees who have the authority to obligate the organization with respect to the matter.
- Employees who regularly consult with the organization’s lawyer concerning the matter.
- Employees whose act or omission in connection with the matter may be attributed to the organization for purposes of civil or criminal liability.
The above parties are protected as clients under the counsel of the company. It is a violation of ethics, therefore, for an attorney to have ex parte communications with a company’s current employees regarding a dispute without the presence and/or permission from defense counsel if the employee falls within one of these categories.
There Are Always Exceptions
1. Georgia Rule of Professional Conduct 4.2 requires that opposing counsel must know that the employer is represented by counsel at the time of the communications. Documentation will prove knowledge! Thus, a company should have its counsel send a letter of representation to the opposing attorney immediately upon receipt of information that the complainant has retained representation. Without such a letter, the opposing attorney will likely be able to participate in ex parte communications with employees by disclaiming knowledge of representation of the company.
2. An attorney is allowed to have ex parte communications with employees who do not fit the descriptions listed in Comment 4A including:
- Employees who do not hold positions with responsibilities related to directing, managing, or supervising;
- Employees whose acts or omissions cannot be ascribed to the company; and
- Former employees.
An employer’s counsel should, therefore, encourage employees to refer any questions related to incidents to counsel to prevent such ex parte communications.
3. Georgia case law allows an attorney to call co-workers of the plaintiff for cross-examination in suits against a company. In order to prevent this, defense counsel should argue to the trial judge that if the opposing attorney can interview a party’s co-workers without the presence and/or permission from defense counsel, then the attorney should not also be permitted to cross-examine the employee.
What To Do If Ex Parte Communication Has Taken Place
It is critical for an employer to protect itself in that event that ex parte communications occur between an employee and opposing counsel. If such communications do transpire, an employer and/or its counsel should do the following:
- Confirm with the employee-witness the timing and substance of the communications.
- Depose any investigators that have conducted interviews in the case.
- Request copies of all interview statements with witnesses in discovery.
- Require opposing attorney early in litigation to seek a court order prior to speaking directly with employees.
- Seek the appropriate remedy based on the facts of your case.
What Remedies Can an Employer Seek?
The primary remedy for a company in this situation is the disqualification of the offending opposing counsel. This is quite helpful when the case is nearing trial because another attorney (who is likely less familiar with the case) must assume the responsibilities of the case from the offending counsel. Additionally, other remedies are available. A court may exclude the employee-witness with whom counsel had ex parte communications, a court may issue sanctions, or the attorneys could enter into an agreement to stipulate to a jury instruction that the acts or omissions of the employee-witness with whom the offending counsel had ex parte communications cannot be used for the basis of any liability against the defendant employer. Finally, defense counsel could request a mistrial, but this is rarely granted.
If your company finds itself with a notice of lawsuit or investigation by an attorney for a workplace incident, converse with your lawyer, educate your employees about communication, and make sure opposing counsel has documentation that your company is represented.
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Court Of Appeals Nixes Part Of The City Of Cummings Open Meetings Decision
Gravitt v. Olens, 2015 Ga. App. LEXIS, was decided by the Georgia Court of Appeals on July 16, 2015. It was the appeal of an enforcement action brought by the Attorney General of Georgia against the City of Cummings and its Mayor for having denied a journalist the right to video a city council meeting and also for having her removed from the meeting. The trial court imposed civil fines and attorney’s fees against the Mayor and the City. In the appellate decision, the following rulings were made:
- The City is not protected by sovereign immunity in an open meetings action filed against it by the Attorney General of Georgia. Since the Attorney General has been authorized by O.C.G.A § 50-14-5(a) to bring a civil enforcement action, it amounts to a legislative waiver of any immunity the City might have had.
- The Court further held that the Mayor had a “ministerial” duty not to violate the Open Meetings Act. Since it was a ministerial duty rather than a discretionary duty, the Mayor was not protected by official immunity.
- However, the Court of Appeals held that the City itself was not subject to the civil fines of $1,000 for the first violation and $2,500 for subsequent violations as provided in O.C.G.A § 50-14-6. According to the Court of Appeals, those penalties may only be imposed against “any person” who violates the Act, and that a municipality is not deemed a person.
- The Court of Appeals held that a fine in excess of $1,000 could not be imposed even though the lawsuit alleged three different violations against the journalist at the same meeting. The Court held that there had to be violations at a subsequent meeting to impose the $2,500 penalty, and that the lawsuit filed by the Attorney General concerned only violations at one meeting.
Left undisturbed was a $1,000 fine against the Mayor and attorney’s fees yet to be determined by the Superior Court. It is anticipated that either the City and its Mayor or the Attorney General will seek further review from the Court of Appeals or the Georgia Supreme Court on the rulings that one or the other may disagree with.
1. Harvest year-end investment losses.
Determine positions in taxable investment accounts that have losses and see if you have gains that may be offset by those losses. This is ideally done when re-balancing your investment portfolio to your target asset allocation.
2. Maximize retirement plan contributions.
Determine the maximum amount that can be contributed to your retirement plan. Calculate what has been deposited year-to-date so that you can maximize current year contributions before year-end. This is the best remaining tax deduction because you are avoiding income tax on contributions made to your account. If you are in a combined 34% tax rate for federal and state purposes, this is a 34% return on your money the day you make a contribution. That is hard to beat!
3. Consider a Roth conversion.
If your income is likely to be higher in future years, it may make sense to convert IRA funds to a Roth IRA. If the current year income is unusually low, you will likely pay less tax on conversion and future growth will be tax free. Additionally, you may re-characterize or “undo” the Roth conversion until October 15th following the year of conversion and receive back all of the tax paid at conversion. This would make sense if the value of the converted funds substantially decreased in value.
Gifts of appreciated securities will avoid capital gains tax and allow for a charitable deduction for income tax purposes. Determine taxable income for the current year and compare to next year. Based on your tax rate in the respective years, plan contributions based on tax rate. Be sure to watch out for charitable contributions limitations.
5. Plan itemized deductions.
Review your current year income and compare to next year’s anticipated income. If your income is higher this year, itemized deductions will be more valuable this year. In that case, accelerate deductions into the current year when they will be worth more. Some deductions are subject to a floor based on income. These deductions can be worth more as well in low income years, or vice versa.
6. Watch mutual fund purchases & distributions.
Be careful when purchasing mutual funds late in the year. Over the course of the year, a mutual fund’s share price will typically increase commensurate with the interest, dividends and capital gains that are accruing within the fund’s investment portfolio. Near year-end, mutual funds will make distributions of those items and that will cause the fund’s share price to fall by the amount of the distributions. Purchasing a mutual fund just before such distributions can create a calamity by causing a tax liability on the distributions while the value of the investment has declined.
About the Author: Gene has over twenty-five years of experience helping people simplify their financial lives He is the creator of The Lifetime Financial Solution™, a unique process for identifying, managing and monitoring life and financial goals. Gene is a native of Aiken and has spent most of his career in Augusta building successful accounting, financial planning, investing, and risk management businesses. Gene is a 1985 graduate of Clemson University. He presently serves on the board of University Health Services, Inc. and chairs the Richmond County Hospital Authority. He is a past member of the Finance, Accounting and Legal Studies Board at Clemson University. He currently serves on the Finance Committee and chairs the Investment Committee for The Catholic Diocese of Savannah. Gene is a member of St. Mary On The Hill Catholic Church. He formerly chaired the Finance Committee at Aquinas High School, served on the Finance Committee of St. Mary’s Church, served as President of the Uptown Kiwanis Club and served on the Board of Directors for Ceritas Corporation.
Copyright © 2015 AP Wealth Management, LLC. All rights reserved.
This blog post was prepared by Eugene F. McManus, CPA, CFP® of AP Wealth Management, LLC. This piece was republished on the Hull Barrett webpage with permission from AP Wealth Management for the purpose of assisting and informing clients, but does not represent legal advice. When making financial or legal decisions, it is always advisable to receive advice based on personal circumstances. If you have questions, please contact a lawyer and/or financial planner.