Time to Start Preparing for The New Overtime Regulations

**SEE UPDATED BLOG POSTED DECEMBER 2016**

Starting on December 1, 2016, the minimum salary level to qualify for the executive, administrative or professional exemptions (the so called “white collar exemptions”) under the Fair Labor Standards Act (“FLSA”) will increase to $47,476 annually.  This is a big jump from the previous minimum salary level of $23,000 annually.  Put in simple terms, white-collar employees making less than $47,476 will not meet the test for the “white collar exemption” and the employee will be eligible for overtime pay if they work over 40 hours in a given week.

What should employers do to prepare?

Make a list of all employees (and their salaries) who are currently exempt under the “white collar exemptions.”  If they are paid $47,476 or more then no change is warranted (assuming they meet the duties test of the “white collar exemptions” which are not changing under the new regulations).  On the other hand, if the employee makes less than $47,476 they will be entitled to overtime under the new regulations.  Employers have a few options to handle this situation.

  • Raise the employee’s salary to $47,476 or higher;
  • Do not increase the employee’s salary but make sure the employee does not work more than 40 hours in a given week; or
  • Do not increase the employee’s salary and pay the 1.5 overtime premium for all hours worked over 40 hours in a given week.

This decision should not be made until after considering the financial impact of each option and after thorough discussion with a competent employment law attorney.  The author of this blog post, Scott A, Mirsky, Esquire, assists businesses deal with complicated employment issues and employment litigation.   He can be reached at (301) 664-7710 or samirsky@mirskylawgroup.com.

 

Disclaimer: The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by state and jurisdiction. The information on this blog may not apply to every reader. You should not take any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Mirsky Law Group, LLC.

 

It’s a Letter of Intent. It’s a Term Sheet. No, It’s a Contract!

Letters of intent and term sheets (LOI’s) are frequently used to help parties set forth the framework to a transaction as an aid in negotiating a final contract.  Most LOI’s include a disclaimer sentence saying that with possibly a few exceptions, the LOI is “non-binding.”

However, LOI’s and Clark Kent have a lot in common in that both aren’t quite what they seem.  Just like the stalwart and ordinary Clark Kent can enter a phone booth and transform into Superman, without careful language and planning, a seemingly mundane LOI can transform into a binding contract.

It takes an evil supervillain to cause Clark Kent to transform into Superman.  However, some of the triggers that can cause an LOI to transform into a contract may not look like supervillains to the untrained eye:

Binding Language – The LOI might include binding language. Use of mandatory words like “must” or “shall”, rather than precatory ones like “may” or “would,” can make the LOI look like a contract.

Using Contract Language – The LOI might include words like “offer”, “acceptance,” or “agree” that implies that the parties have a contract.

Future Conditions – The LOI might be conditioned upon a future event so that if/when that happens, the LOI becomes binding.

Agreement to Negotiate “in good faith” –  If an LOI requires that the parties negotiate in good faith to enter into a contract and one party fails to do so, the other party might be able to collect damages for the benefit of its bargain.

Change in Position – One party to the LOI may have changed its position to its detriment in reliance on the LOI

Conduct of the Parties – The parties to the LOI may have behaved like they believe they have a binding contract by issuing news releases, sending e-mails that refer to a final deal, or referring to each other as partners.

Companies that want to prevent their LOIs from becoming binding contracts should start by following the following steps:

Good Form:  Have a strong standard form LOI tailored to the company’s typical business needs prepared by an experienced attorney who is familiar with LOIs.

Stick to the Form:  Having a good form LOI isn’t worth much if company employees don’t use it or make changes to it.  An experienced business attorney can create a form LOI with suggested alternate language to cover anticipated business needs.  Employees should be discouraged from making changes that haven’t been approved by the company’s attorney.

Disclaim:  In addition to disclaimers in the LOI, itself, until a formal contract is assigned, company employees should frequently disclaim the existence of a contract in their post-LOI communications to the other party.

With consistent use of a strong LOI form, frequent disclaimers, and the help of an experienced business attorney, a company can find that LOIs are a valuable step in the negotiation process, rather than the company’s kryptonite.

— Elizabeth Whitman

 

 

Disclaimer: The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by state and jurisdiction. The information on this blog may not apply to every reader. You should not take any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Mirsky Law Group, LLC.