New Overtime Rule Deadline Stayed

By Dennis Ford Eagan, Esq.

The changes to the overtime regulations that had been set for implementation on December 1, 2016, have been placed on hold.

A decision by the United States District Court (E.D. Tex.) on November 22, 2016, has stayed the enforcement and implementation deadline for the recently enacted Department of Labor regulations intended to expanded the pool of employees eligible for overtime under the Fair Labor Standards Act.

The new overtime regulations, issued earlier this year, increased the salary basis for overtime exemptions from $ 455 ($23,660 annually) to $913 ($47,476 per year), with with automatic increases set for every three years based on wage growth over time.  By the Dept. of Labor’s projections, the new regulations would have impacted 84,000 Massachusetts employees.

With the Court’s decision to extend the December 1, 2016 deadline, and with the pending transition to the President Trump administration, the new regulations now face an uncertain future.

That said, it is important for all employers to ensure that they are compliant with existing overtime obligations under both state and federal laws.  Careful attention must be made in determining the exemption status of employees, including scrutiny of employee handbooks, job descriptions and day-to-day managerial decisions.  In Massachusetts, failure to comply with these obligations can result in awards of treble damages, attorneys fees and costs.

For additional information please do not hesitate to contact Finneran & Nicholson, P.C. at (978) 462-1514 or via email at cases@finnic.com.

Posted in Employment, Uncategorized

Sexual Harassment Policies

Under Massachusetts law, all businesses must adopt a Sexual Harassment Policy, outlining prohibited conduct in the workplace and providing details on complaint and reporting procedures to address misconduct.

A business’ sexual harassment policy must be distributed annually to all employees and should be posted in a visible area in the office. Businesses should consider having each employee sign an acknowledgment and receipt and saving the same in each employee’s personnel records, or distributing the policy through means by which the company can track and confirm delivery, i.e., sending the same via e-mail to an address that the employee acknowledges and checks on a consistent basis. Records of such delivery should be kept in the personnel records for each employee.

For additional information please do not hesitate to contact Finneran & Nicholson, P.C. at (978) 462-1514 or via email at cases@finnic.com.

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Massachusetts Parental Leave

The Massachusetts Parental Leave bill has been recently amended impacting the rights afforded to employees in the state who have given birth to or adopted children, or are expecting. The new Parental Leave act took effect as of April 7, 2015.

The statute now expands the statutory leave obligations to parents of both genders with respect to the birth or adoption of a child. An employer must provide eight (8) weeks of parental leave to both male and female employee for the purpose of giving birth to a child or for adoption of a child under 18 (or under age 23 if the child is mentally or physically disabled). If an employer employs both parents, the couple combined is only entitled one 8 week leave period. The employee’s job status must be protected while on leave, with few specific exceptions. The new act furthers the job-protection presumption to any agreed-upon extensions of the 8 week leave period.

The parental leave need not be paid and employers can cease the accrual of benefits, including paid time off and sick leave during the leave period. However, the leave cannot affect their accrued rights or eligibility status for such benefits. Further, there is no obligation for employers to continue to make cost contributions to any benefits, plans, or programs during the leave period, unless such costs and contributions are made for employees taking other leave periods, i.e., disability leave, leaves of absences, etc.

Employers should update their policies and postings to comply with this new act and to coordinate their other leave and benefits policies consistent with the new law.

For additional information please do not hesitate to contact Finneran & Nicholson, P.C. at (978) 462-1514 or via email at cases@finnic.com.

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Doing Business in Other States

By Adam D. Page, Esq.

Companies doing business in states other than where the company is incorporated should be aware that there can be differences between the various business laws between and among various states. Generally, shareholders of a corporation are not liable for the debts and obligations of the corporation, except in limited instances where a creditor can “pierce the corporate veil” and proceed against the shareholders.

For instance, New York’s Business Corporation Law has included a provision since the 1800s that shareholders of New York corporations, in certain circumstances, are liable for the debts and obligations of the corporation. This past January, the New York State Assembly expanded that provision to all corporations doing business in New York, whether incorporated in New York or in any other state, such as Delaware or Massachusetts.

Before deciding where to incorporate or do business, a review of the laws that could impose unlimited liability on the company’s owners is prudent. Please contact us if you are contemplating incorporating or conducting business through a limited liability entity.

Adam D. Page is the Managing Director of the Corporate Department of Finneran & Nicholson, P.C. He can be reached at (978) 462-1514.

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Arbitration and Governing Law Clauses

By George H. Schadler, Esq.

Arbitration can provide many benefits in business disputes, including faster resolution times and lower costs as compared to traditional litigation. However, arbitration provisions must be very clear as to the law that governs and to the scope of the arbitrator’s authority. Where the parties are not clear in the text of their contracts, courts may interpret agreements to include authority that was never intended by either party.

Recent court decisions, both in Massachusetts and in the United States Supreme Court, emphasize the importance of closely reviewing the arbitration and governing law clauses in your contracts, lest they lead to unintended consequences. A Massachusetts court recently found that an arbitrator was allowed to award triple damages under Pennsylvania law, even where the Agreement stated that it was to be governed by the law of Massachusetts, because the arbitration clause did not limit the jurisdiction of the arbitrator. Likewise, the United States Supreme Court recently decided that where a class-action statement in an arbitration provision stated it was dependent on whether class-actions were permissible in the “law of your state”, and Federal law preempted the state’s laws regarding class-actions, the arbitrator must look to Federal law, as opposed to the invalid state law.

Contact us today if you would like for us to review your agreements to ensure they clearly reflect your choice of applicable law and best protect your interests.

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Wage Claims Can Be Subject To Mandatory Arbitration Agreement

Following a recent trend of court decisions upholding broad application and enforceability of arbitration agreements, the Massachusetts Supreme Judicial Court has held that Wage Act claims may be subject to arbitration if agreed to by the employer and employee through a binding mandatory arbitration agreement. In so doing, the SJC noted that Massachusetts courts generally permit arbitration agreements that shorten the statute of limitations period to raise a claim. Specifically, the SJC held that the arbitration agreement’s clause shortening the three year limitations period within which an employee could raise a claim under the Wage to one year or eighteen months was not unreasonable or unconscionable.

As an arbitration agreement can be viewed as a waiver of the rights to raise claims through the courts, in order to be enforceable in the wage and employment context, the arbitration agreement must be very and understandable to the employee. And while not necessarily required for enforcement, the employer should consider including specific reference to Wage Act, and other specific laws and matters intended to be covered by the arbitration agreement.

As arbitration can offer a more efficient and affordable alternative to court proceedings, particularly if coupled with an agreement to shorten the limitations periods for claims, mandatory arbitration agreement may present a beneficial risk management option for employers. However, such agreements do not alter the employer’s responsibility to comply with its Wage Act obligations. It is important to note that an arbitration agreement would not limit the statutory penalties under the Massachusetts Wage Act, namely mandatory treble damages, costs and attorney fees, that an prevailing employee is entitled when a violation of the law is determined.

Please note that the arbitration agreements should be carefully tailored and reviewed for the specific circumstances and practices of your business. Should you require assistance or would like more information, please do not hesitate to contact us.

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Personnel Records

Applicable laws in Massachusetts may require that employers maintain certain documents and information for each employee in separate personnel records. These records must be retained for the term of the employment and at least three (3) years after termination. The definition of “personnel records” under the Massachusetts law is broad, encompassing all information that has been used or could be used to determine the employee’s qualifications for employment, promotion, transfer, additional compensation, and disciplinary action. Records that may generally be required to be retained in each employee’s separate personnel records include:

  • General information: name, address, date of birth;
  • Job title and description;
  • Rate and basis of pay, time when workweek begins and hours worked each day;
  • Starting date of employment;
  • Employment application, inquiry and/or resume, if provided;
  • Performance evaluations, if any;
  • Disciplinary warnings, or other disciplinary documents, and warnings of substandard performance, if any;
  • List of probationary periods, if any;
  • Waivers, acknowledgements (i.e., acknowledging receipt of personnel handbook, sexual harassment policy, etc.) signed by the employee, if any;
  • Copies of dated termination notices, if any.

Under the Massachusetts personnel records law, employers are required to give notice to an employee within 10 days of placing certain negative information into the employee’s personnel record. Specifically, notice to the employee is required “within 10 days of the employer placing in the employee’s personnel record any information to the extent that the information is, has been used or may be used, to negatively affect the employee’s qualification for employment, promotion, transfer, additional compensation or the possibility that the employee will be subject to disciplinary action.”

Further, employers must provide employees with access to their personnel records, including making a copy available to an employee within five (5) business days from an employee’s written request.

For additional information please do not hesitate to contact Finneran & Nicholson, P.C. at (978) 462-1514 or via email at cases@finnic.com.

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