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DOL Minimum Wage and Overtime Changes: What Employers Need to Know

25 Apr 2024 00:00:00 -0800

On April 23, 2024, the United States Department of Labor (“DOL”) announced a final rule regarding minimum wage and overtime pay requirements for executive, administrative, and professional (“EAP”) employees under the Fair Labor Standards Act (“FLSA”). The final rule takes effect July 1, 2024.

Overview of Proposed Changes

The final rule reflects the following changes:

Effective July 1, 2024:

Increases the minimum salary required for an employee to qualify for exemption (the salary threshold) from the currently-enforced level of $684 per week (equivalent to $35,568 annually) to $844 per week (equivalent to $43,888 annually); and
Increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $107,432 per year to $132,964 per year.
Effective January 1, 2025:
Increases the minimum salary required for an employee to qualify for exemption (the salary threshold) to $1,128 per week (equivalent to $58,656 annually);
Increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $132,964 per year to $151,164 per year; and

Commit to periodic review to update the salary threshold (every three years).

Employer Response

Even with these changes, it is important to keep in mind that meeting the newly proposed salary thresholds do not automatically make an employee exempt for overtime pay. The employee’s job duties must also primarily involve executive, administrative or professional duties, as defined by the FLSA. The proposal does not propose changes to the job duties test.

In advance of the rapidly approaching July 1, 2024 deadline, employers should review and audit their compensation, job descriptions, and job duties of current exempt and non-exempt employees, to ensure compliance with the updated rule. Employers should also contact their employment counsel for assistance in developing the most efficient and effective way to navigate the proposed changes.

Click here to view PDF version.

Workers' Compensation Claims in a Post-Pandemic Era

13 Mar 2024 00:00:00 -0800

In a Risk & Insurance column published March 11, 2024, Charleston attorney Liz Wiles provides an overview of workers’ compensation claims in a post-pandemic era. We appreciate Risk & Insurance giving Liz the opportunity to highlight recent trends that impact employee exposure in the workplace.

As Liz shares in the article, “An obvious concern for anyone in the insurance and risk management industry is whether coverage is extended or continues for coronavirus exposure in the workplace.” She writes about the steps some states have taken to ensure that workers’ compensation coverage includes COVID-19 as a compensable illness and other states’ positions on the issue.

Readers can access the complete article on Risk & Insurance’s website here.

Crafting an Enforceable Right of First Refusal

10 Sep 2020 00:00:00 -0800

A Right of First Refusal (the “ROFR”) is a contractual right given by the owner of real property that grants the holder of the ROFR the opportunity to purchase the property before the owner may sell the property to a third party. A ROFR is a useful tool for tenants who anticipate that they may desire to purchase the property in the future, especially at a time when they would otherwise be faced with a new landlord who might not plan to renew their lease beyond their current term. They are also often used by developers and community associations to provide some control over the future of the development.

PPP Loans: No good deed goes unpunished

18 Jun 2020 00:00:00 -0800

In the past weeks, a number of class action lawsuits have been filed against financial institutions by alleged agents of PPP borrowers seeking payment of a portion of the PPP processing fees. It appears this is part of a national trend led by a group of national law firms whose pleadings have been provided to local lawyers. We have become aware of a number of putative class actions filed in federal court pursuant to the Class Action Fairness Act (CAFA). We also have learned of at least one case filed in South Carolina state court seeking certification of a class action against two financial institutions that participated in the PPP lending program.

In general the Plaintiffs allege that PPP lenders have wrongfully withheld the processing fees paid by the SBA and that the lender violated the Interim Rule of the CARES Act that makes lenders responsible for paying fees to agents of the PPP borrowers who assist applicants who obtained a PPP loan. Typically, the plaintiff asserts that the financial institution violated the portion of the Interim Rule that reads: “agent fees will be paid by the lender out of the fees the lender receives from the SBA.”

Many of the class action complaints allege gamesmanship by the financial institutions including allegations that the financial institutions initially engaged with borrowers’ agents – accountants and attorneys – but that they soon ceased communicating with the agents and opened web portals for borrowers to submit loan applications directly. The plaintiffs allege that the online application had no place for the borrower to disclose its agents and that the omission of a place to disclose agent information was an intentional effort by the financial institutions to avoid paying fees to the borrower’s accountants and attorneys.

The model complaint requests for a court declaration that: (1) the plaintiff was an authorized applicant agent entitled to compensation by the PPP lender; (2) that the lender is required under the CARES Act to compensate applicant agents; (3) that state banking laws mandate that the lender comply with the PPP loan program’s terms and conditions; and (4) that a portion of the SBA fees paid to the lender must be placed in trust for the borrower agents. The lawsuits usually contain allegations of Breach of Fiduciary Duty; Unjust Enrichment / Disgorgement; and the tort of Wrongful Conversion. Often the complaints contain allegations of negligence per se based upon some statutory violation. The plaintiffs also typically allege that the financial institution failed to adopt proper procedures to ensure compliance with the CARES Act; that the institution failed to provide appropriate training to its employees; that the institution failed to supervise its employees; and, that the institution created systemic policies that precluded the identification of applicant agents. The complaint may also contain a demand for a temporary restraining order or preliminary injunction

Turner Padget’s Banking and Financial Institutions practitioners and its experienced class actions litigators stand ready to assist in the event this national trend impacts your financial institution. Please feel free to contact Ian McVey at (803) 227-4267 imcvey@turnerpadget.com, Kristen Nichols at (843) 576-2836 knichols@turnerpadget.com, Pierce Campbell at (843) 656-4429 pcampbell@turnerpadget.com, Jeff Payne at (843) 656-4432 jpayne@turnerpadget.com, or Rich Dukes at (843) 576-2810, rdukes@turnerpadget.com, if you would like additional information.

SC Supreme Court Provides Framework for Allocation of Covered and Non-Covered Damages in Declaratory Judgment Actions

14 May 2020 00:00:00 -0800

The Supreme Court of South Carolina affirmed a trial court’s decision to deny several insurance companies’ (“Insurers”) motions to intervene in a construction defect action between a property owners’ association (“Association”) and a number of construction contractors and subcontractors (“Insureds”). The Insurers sought to intervene for the limited purpose of participating in the preparation of a special verdict form. The Insurers did not desire to be named as parties or participate in the defense.

The Insurers objective was to intervene to force the Association and the jury to itemize the damages against each Insured so that the Insurers would be able to determine which portions of the damages would be covered by the CGL policies between the Insurers and the Insured. The trial court denied their motions to intervene. On appeal, the Supreme Court affirmed the denial of the Insurers’ right to intervene for a number of reasons.

First, the Court held Insurers did not have a direct interest in the construction defect litigation to intervene as a matter of right. The Court evaluated Rule 24 on intervention and rationalized that intervention as matter of right and permissive intervention were not warranted under the present facts and case law stating Insurers are not “real parties in interest” to construction defect actions. This finding is likely to have implications in other actions as well.

Second, the Court stated allowing the Insurers to intervene in the construction defect action in an attempt to segregate covered and non-covered damages would effectively place an additional burden of proof on the Association. The Court reasoned that requiring the Association to itemize its damages into Insurer-defined categories would have an increased burden of proof than the Association would otherwise have. Additionally, the Court stated that “in a subsequent declaratory judgment action, the Insureds and the Insurers have the collective burden to show which portions of the general verdict are covered under the CGL policies.” Essentially, the Court held all coverage issues should be handled in a subsequent declaratory judgment action between the Insureds and the Insurers.

Third, the Court held that special verdict form would force counsel for the Insureds to alter their presentation of evidence to shunt as much of the Association's damages as possible into covered damages, thereby conceding the Insureds had, in fact, created faulty workmanship in the first place. Basically, the Court found that requiring the jury to focus on certain issues may prejudice the prosecution or defense of the plaintiff's claim, and may force the insured to take steps to assure coverage of claims rather than defend all claims.

Finally, the Court provided guidance on how the specifics of how a subsequent declaratory judgment action should allocate covered and non-covered damages. The Court stated that it does not oppose the parties coming to an agreement on a framework for allocating damages, subject to the approval of the court. However, if the parties fail to come to an agreement, the Court set forth a default approach to allow litigants to use percentages, rather than exact dollar amounts to determine the amount of covered and non-covered damaged in a general verdict.

It held “the primary source of evidence in the declaratory judgment action should be the transcript of the merits hearing.” Additionally, the Court, at its discretion, could consider narrowly tailored coverage evidence, such as expert testimony, but the transcript of the merits hearings will be the primary source of evidence. The trier of fact (a judge or jury) will make an allocation determination on a percentage basis what portion of the underlying verdict constitutes covered damages and what portion constitutes non-covered damages. The Court opined that the percentage based approach may not be perfectly precise but a fair approximation based on the transcripts of the trial.

In conclusion, the major takeaways are that insurance companies cannot intervene in construction defect actions for the purpose of limited purpose of submitting special interrogatories or special verdict form on damage allocation and that the Court provided a general framework for the allocation of damages in a subsequent declaratory judgment action. The parties will be able to consent to an allocation framework, pursuant to court approval, or the parties can allow the trier of fact to determine allocation on a percentage basis as to portion of the underlying verdict constitutes covered damages and what portion constitutes non-covered damages. The trier of fact allocation appears to be the default for now, thus it may be in the best interest of the parties involved in a declaratory judgment action to attempt to come to a reasonable framework regarding allocation to avoid allowing the judge or jury to exercise too much discretion on allocation. We will continue to monitor how the courts are handling the issue of allocation and update this post after this new framework has been put to the test.

If you have any questions or would like a copy of this opinion, please contact Nick Stewart at nstewart@turnerpadget.com.

Before You Sign a Commercial Lease: The Top Ten Provisions Tenants Should Look Out For

06 May 2020 00:00:00 -0800

Once you’ve found the perfect location for your business, it’s time to review the lease. Before you sign on the dotted line, there are several important lease provisions you should identify and consider negotiating with your future landlord.

1. Use. Your “permitted use” of the premises means the type of business that you will operate. Your permitted use should be clearly defined in the lease as broadly as possible. Anticipate the ways your business might change or expand during the term of the lease. You will want the flexibility to adapt to the marketplace if necessary, perhaps by selling different products or offering complementary services. A broad definition of your permitted use is especially important if your premises will be located in a shopping center because the landlord should agree in the lease to prohibit other tenants from engaging in that use. The landlord will also need to ensure that your permitted use is not prohibited under another tenant’s lease. Also look out for a “radius restriction” – the lease may prohibit you from operating another location of your business within a certain distance from the premises. Make sure this distance is tolerable.

2. Timeline for Initial Improvements. Make sure the lease clearly defines when your business is expected to be up and running and when your rent payments will begin. This is critical if the property is still under construction. Often, the landlord will be responsible for some improvements to the premises (the “landlord’s work”), and the tenant is responsible for the rest of the work necessary to open the business (the “tenant’s work”). The timing for opening the business and commencing rent payments is usually tied to the date of the landlord’s “delivery of possession.” Pay attention to what is required of the landlord before they can deliver possession. Must the landlord’s work be completed in full, or only substantially completed? Will it interfere with your improvements if the landlord’s work isn’t fully completed before the tenant’s work begins?

3. Duration of the Initial Term and Extensions. Make sure you are comfortable with the duration of the initial term, and think about whether the option to extend the lease will be important to your business. If the lease does include extensions, are the rent and other fees for the extension terms provided in the lease, or can the landlord set rates at the time of the extension?

4. Rent, Common Area Maintenance, and Additional Charges. Be sure to take into consideration all of the other expenses provided in the lease besides the base rent. Is it a “triple net lease”, i.e. is the tenant responsible for the real estate taxes, property insurance, and common area maintenance expenses? If the premises are located in a shopping center, does the lease make it clear how these expenses and the utilities will be allocated among all of tenants? Is the allocation based on square footage or actual use? Is there any limitation on how much the operating and maintenance expenses may increase each year, or is it open-ended?

5. Improvements and Maintenance Responsibilities. If the landlord is agreeing to make improvements, these improvements should be clearly defined in the lease. Make sure there is a procedure for you as the tenant to approve the improvements and request revisions. Also, be sure you are willing to make all of improvements that you will be responsible for under the lease. The tenant’s maintenance responsibilities for the premises and the common area should also be clearly described in the lease.

6. Business Operation; Rules and Regulations. Carefully review any rules and regulations in the lease to ensure that they will not interfere with the operation of your business. Are you obligated to be open during certain hours? Are deliveries limited to certain hours? Are there any guidelines for signage and lighting? Must your employees park in a certain area? You may wish to be guaranteed some exclusive customer parking spaces or designated spaces for curbside pickup.

7. Assignment and Subletting. The ability to assign the lease or sublet the premises could be critical if your business struggles or would simply benefit from a relocation during the term of the lease. If allowed, will assignment and/or subleasing be subject to the landlord’s approval? Will the assignee or sublessee have to operate a certain kind of business or provide financial information to the landlord? Such restrictions could greatly limit your ability to find a replacement tenant. Also, check to see if there’s a special fee you will have to pay the landlord.

8. Guarantors. If the lease requires any personal guarantors, look for the form of the guaranty agreement in the exhibits to the lease. Ensure you agree with its terms before signing the lease. The death of a guarantor may be an event of default under the lease. This provision should be removed or at least limited. For example, if two business partners are the guarantors and one dies, the surviving business partner should be given the opportunity to continue the lease by demonstrating to the landlord that the business’ finances are sound.

9. Reporting Requirements. The lease may require you to provide regular reporting to the landlord about your business’ financial status. Are these requirements overly burdensome? Pay attention to how much detail is required and how frequently you will have to provide it. You will want advance notice of any required reporting so that meeting these requirements does not interfere with the operation of your business.

10. Penalties; Events of Default and Remedies. Check to see if the late payment penalties in the lease are reasonable. You might see multiple assessments for the same late payment – an interest charge on the amount due plus a flat rate penalty. Review all events of default for both the landlord and tenant. What are your remedies in the event the landlord fails to maintain the premises or the common areas or complete repairs within a reasonable time? If the issue seriously interferes with operation of your business, will you still owe full rent and fees? Are the tenant’s events of default reasonable? Will you have sufficient opportunity to remedy any damages or deficiencies? Also, look for a provision about attorneys’ fees in the event of a lawsuit due to the tenant’s default. The lease may provide that the landlord be awarded attorney’s fees and costs from the tenant. It is preferable to remove this clause or to modify it so that the prevailing party, whether the landlord or tenant, be awarded these fees.

The main thing to keep in mind when reviewing the lease is that everything is negotiable. Often, landlords will claim that the lease they present to you is their “form lease” and they cannot make any changes. Remember that the landlord is aware that the terms of such a lease weigh heavily in their favor. If you can explain why your concerns are valid while still demonstrating that you would be a reliable tenant, you should be able to negotiate in some of these areas. An experienced real estate lawyer can assist you with identifying these issues in the lease and drafting and negotiating revisions that will better serve you as the tenant.

Financial Compensation to a Birth Mother under Georgia Adoption Law

23 Apr 2020 00:00:00 -0800

In third-party adoption cases, a question that frequently arises is whether a prospective adoptive parent can provide financial compensation to a birth mother. As a prospective adoptive parent clearly has an interest in the health and well-being of the unborn child (and by consequence, the health and well-being of the birth mother), such prospective parents often want to provide financial assistance to the birth mother during the birth mother’s pregnancy and delivery. But what exactly is allowed?

In 2018, the Georgia Adoption Code was updated, providing specific details on the permissibility of such payments, which were previously forbidden absent involvement of a child-placing agency. The obvious concern with such payments is that people would engage in the practice of “buying” and “selling” babies—a horrendous thought, but a concern that cannot be ignored. Because of this underlying concern, a prospective parent’s ability to financially provide for a birth mother is fairly narrow and strictly regulated under Georgia law.

While inducements are strictly forbidden, a prospective adoptive parent may reimburse “reasonable expenses for rent, utilities, food, maternity garments, and maternity accessories for the biological mothers.” While this list seems clear on its face, questions such as “what constitutes a maternity accessory” are not uncommon. The legislature has not provided a great deal of clarity on the subject, but items such as a belly support band or compression socks seem to fit said definition. Prospective parents may also pay or reimburse medical expenses directly related to the pregnancy and hospitalization for the birth of the child and medical care for the child, as well as counseling and legal services directly related to the placement of the child.

It should be noted that all such payments from a prospective parent to a birth mother must be paid from the attorney’s trust account and cannot be made directly from the prospective adoptive parent to the birth mother. All funds must go through the attorney’s trust account, and the attorney is then tasked with including a detailed accounting of all such expenses with the adoption petition.

While child-placing agencies still have more leeway under the 2018 Georgia Adoption Code, prospective parents who choose to move forward without the assistance of an agency now have a limited ability to assist a birth mother with expenses associated with pregnancy and delivery. It is, however, critical, that all payments be made through and attorney’s trust account, and that said payments are limited to the expenses set forth in the Code.

Jacki Thomas’s practice includes family law, with an emphasis on adoption law, and probate matters. Jacki has presented on the 2018 Georgia Adoption Code to other attorneys and colleagues, and has also authored written material on the subject. She takes great pride in ensuring that her clients’ matters are handled correctly, with great attention to detail. Jacki can be reached at jthomas@turnerpadget.com or 706-860-7595.

SBA Loans Approved for South Carolina

20 Mar 2020 00:00:00 -0800

South Carolina small businesses just received a little bit of good news at a time when good news seems few and far between. The United States Small Business Association (“SBA”) has now approved Governor McMaster’s request for South Carolina small businesses to be eligible for the SBA’s Economic Disaster Loans. These Economic Disaster Loans are aimed to provide direct economic support to small businesses to overcome the temporary loss of revenue caused by the COVID-19 virus.

These loans can assist small businesses and non-profits in paying fixed debts, payroll, accounts payable and other bills that cannot be paid by a company due to the COVID-19 virus’ impact. The interest rate for these Economic Disaster Loans is 3.75% for small businesses and 2.75% for non-profits; and these loans offer long-term repayment plans of up to 30 years to allow the payments to be affordable for the businesses. The specific terms of each loan are determined on a case-by-case basis by the SBA, based upon each company’s ability to repay. The deadline to apply for these loans is December 21, 2020.

For more information or to apply for a SBA Economic Disaster Loan please visit https://disasterloan.sba.gov/ela. If you have any questions or need assistance in applying for these loans, please do not hesitate to call your attorneys at Turner Padget who remain dedicated to assisting small businesses navigate through these difficult times.

"COVID-19: Response Tips for Small Businesses," Mark B. Goddard and Reginald W. Belcher

19 Mar 2020 00:00:00 -0800

The past month has seen uncharted waters for small businesses across South Carolina and the United States. With the ever-evolving COVID-19 virus, small businesses are being forced to adjust their planning almost hour-by-hour. In the past week, businesses have had to adjust from “business as usual” to remote work environments, government mandated shutdowns, and the now very familiar term “social distancing.”

With this ever-changing environment, small businesses are suddenly faced with unanticipated financial and employment scenarios, that until this week, were likely not in anyone’s worst case scenario contingency plans. However, there are resources available to small businesses and their employees that are being introduced on a daily basis.

The Federal Government is attacking the COVID-19 virus on multiple fronts, including economic stimulus packages aimed to directly assist small businesses and their employees through these uncharted waters.

RESOURCES FOR YOUR EMPLOYEES WHO NEED EMERGENCY LEAVE

The first phase of the federal legislation signed into law by President Trump includes the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act (“EPSLA”).

The EFMLEA offers significant expansion to the FMLA for situations directly related to COVID-19. The EFMLEA applies to all employers with fewer than 500 employees (does not require 50 or more employees like FMLA), and is available to all employees who have been working for at least 30 days (not 12 months like FMLA). This leave is available to employees who are unable to work or telework due to caring for a child under the age of 18 because of the child’s school closure. The first 10 days of EFMLEA leave is unpaid, but then the remainder of the leave is paid. However, the employee can request its PTO to run concurrently with the 10 day unpaid period. This leave can last up to 12 weeks and offer up to $10,000 in maximum benefits. At the conclusion of the employees’ leave, just like under FMLA, under most circumstances, the employer will be required to allow the employee to return to work.

The EPSLA offers additional resources for your employees. It again applies to all businesses with fewer than 500 employees and ALL full-time and part-time employees are immediately eligible. To qualify, your employee must: (a) be subject to a government quarantine or isolation order, (b) have been advised by a health care provider to self-quarantine, (c) be experiencing or taking care of someone with COVID-19 symptoms, or (d) be caring for a child who is out of school due to school closures. If a person qualifies under both the EFMLEA and EPSLA, then the employee can use the emergency sick leave to cover the 10 days of leave that would otherwise be unpaid under the EFMLEA.

Importantly, small businesses will receive a refundable tax credit equal to 100% of the qualified paid sick leave paid by the employer for each calendar quarter paid under the EPSLA and EFMLEA, subject to certain restrictions. These credits can also be applied self-employed individuals.

If you need assistance guiding your businesses through these uncharted waters and constantly changing legal environments, please contact our Turner Padget lawyers who are here and available to meet your small business needs.

RESOURCES FOR SMALL BUSINESSES THAT NEED EMERGENCY LOANS

These unexpected times have created a financial crisis for many small businesses. Business owners need to be in constant communications with its bankers and other lenders about expanding its relationships during these times. However, there are additional resources that are likely to be available to South Carolina businesses soon.

In the near future, I expect South Carolina to be among the growing number of states approved by the U.S. Small Business Administration for South Carolina businesses to be eligible for Economic Injury Disaster Loans that will create low-interest federal disaster loans. Governor McMaster has already submitted his initial request and this request is currently being processed. These loans provide working capital to small businesses suffering significant economic injury due to COVID-19. These loans will ultimately assist South Carolina small businesses without other credit availability to pay fixed debts, payroll, accounts payable, and other bills at a rate of 3.75% with long-term repayment schedules up to a maximum of 30 years.

If you need assistance with discussions with your current lenders or with navigating these new SBA loan options, Turner Paget’s lawyers are here to discuss your businesses’ best options to find additional funding to keep your business viable.

RESOURCES FOR SMALL BUSINESS WHO HAVE HAD TO LAY OFF OR REDUCE HOURS OF ITS STAFF DUE TO COVID-19

If you are a business that had to reduce your employees’ hours or were forced to lay off your employees due to actions related to COVID-19, your employees ARE eligible for South Carolina unemployment benefits. These benefits are available to individuals who are unemployed or who had their hours reduced through no fault of their own. Importantly, the small business owner will not be charged for the payment of these unemployment benefits due to the state of emergency declared by Governor McMaster and President Trump. For more information, please visit the South Carolina Department of Employment and Workforce.

Common-Law Marriages Can No Longer Be Formed in South Carolina — and Pre-Existing Ones May Also Be Affected by a Recent South Carolina Supreme Court Ruling

31 Jan 2020 00:00:00 -0800

Common-law marriage has existed for centuries in South Carolina. It arose when transportation to the courthouse to obtain a marriage license was difficult and the cost of a marriage license could be burdensome. The State’s recognition of marriages without formal documentation was particularly desirable in order to legitimize children born of the relationship. However, proving that a relationship was a common-law marriage has long caused problems for the parties and the courts, both in divorce and death situations.